An innovative income accelerator program aimed at addressing child labor risks was announced in January 2022.
Cocoa-farming communities face immense challenges, from rural poverty and increasing climate risks to a lack of access to financial services and basic infrastructure, such as water, health care and education.
These factors can lead to social issues, including the prevalence of child labor risk on family farms. By helping families close the gap to living income, the program aims to tackle child labor risks and deforestation. The program is an important component of our action plan to improve living incomes (pdf, 2Mb), one of our 10 salient human rights issues.
Helping farmers achieve a living income
The income accelerator program aims to improve the livelihoods of cocoa-farming families. The program rewards cocoa-farming families not just for the quantity and quality of their cocoa beans, but also for practices that benefit the environment and local community.
Our holistic approach aims to deliver long-lasting impact by incentivizing the enrollment of children in school while advancing regenerative agriculture practices and gender equality. The program rewards practices that increase crop productivity and help secure additional sources of income, which aim to close the gap to living income and help protect children.
The practices that we incentivize, through cash payments, are:
- School enrollment for all children in the household ages 6-16
- Implementing good agricultural practices, such as pruning, which increase crop productivity
- Performing agroforestry activities to increase climate resilience, like planting shade trees
- Generating diversified incomes, for example through growing other crops; raising livestock such as chickens, beekeeping, or selling vegetables from community led gardens.
These incentives are on top of the premiums offered to farmers for certified cocoa.
Building on the learnings of the Nestlé Cocoa Plan
The income accelerator program builds on the work we have been doing for more than a decade to improve the livelihoods of smallholder farmers in our cocoa supply chains, through the Nestlé Cocoa Plan. What we have learned from this program informs our current approach, focusing on initiatives already proven to positively impact farming families and reduce child labor risks.
As we continue to expand our cocoa sustainability efforts, we plan to invest a total of CHF 1.3 billion between 2022 to 2030, more than tripling our current annual investment.
Early results of the pilot are promising
The latest data - gathered and verified by KIT Royal Tropical Institute - of our pilot covering 1,000 cocoa-farming families shows that:
- Our income accelerator program has positive impact on school enrolment rates among households taking part in the pilot. These are encouraging results in our efforts to tackle the root causes of child labor in cocoa.
- The program also has a positive effect on female involvement in decision-making in agricultural investments and revenues, including through the Village Saving Loan Associations (VSLAs) that have been set up as part of the pilot in Cote d' Ivoire. This can lead to improved resource allocation and utilization as women tend to prioritize investments that benefit the overall well-being of the household, such as enhancing food security, improving access to education and healthcare, or diversifying income sources.
- The cash incentives cocoa households receive as part of the program primarily impact income diversification, cocoa farming costs, and children's health expenditures. More than 96% of eligible households now have a mobile money account providing a safe and reliable means of managing and utilizing financial resources, contributing to greater financial control and flexibility for the households.
- Pruning has a positive effect on cocoa farm productivity among households taking part in the pilot and increases average yield levels by almost 20%.
These are encouraging results, comparing participating households with the comparison group, will be leveraged as part of the expansion of our program (see timeline below).
More on this can be found in our progress report (pdf, 2Mb).
Expanding the income accelerator program to 160 000 cocoa-farming families
Having begun as a pilot with 1000 Nestlé Cocoa Plan farmers in 2020 in Côte d'Ivoire, our program is now part-way through a decade-long rollout, informed by continuous evaluation and learning. By 2030, our ambition is to reach, where relevant, all cocoa-farming families in our global supply chain.
Direct cash incentives to grow income substantially
During the first two years, cocoa-farming families can earn up to CHF 500 in direct bonus payments annually by taking part in the program and reaching the associated targets. As farmers' incomes increase from additional sources and better yields, the cash incentive is reduced to CHF 250.
The income accelerator program pays cash incentives directly to the cocoa-farming families, via secure mobile transfer. The cash incentive is split equally between the male and female head of household to encourage gender equality, share financial responsibilities, and build more resilient households.
Collaboration is crucial
Our ambitious program would not be possible without the support and input of our longstanding partners. Alongside IDH (The Sustainable Trade Initiative), ICI (International Cocoa Initiative), the Rainforest Alliance, governments, suppliers, cooperatives and farmers, we will continuously measure, assess and strengthen the program to deliver maximum impact for farming families.
Increased traceability and transparency
At the same time, we are remodeling our sourcing to segregate and trace all our cocoa products from origin to factory, which contributes to greater transparency in our supply chain.
This will drive greater supply chain transparency and accountability, both internally and on an industry-wide scale, while giving our consumers more visibility into the source of their ingredients.