Covid-19, Living income differential and decline in income of cocoa producers in Côte d'Ivoire

Abstract

Cocoa farmers in Côte d’ Ivoire are mostly below the poverty line. In September 2019, the Ivorian and Ghanaian governments imposed the Living Income Differential (LID) on private companies, an additional $ 400 per ton compared to the international market price, passed on to the producer price (farm gate price). At the beginning of 2020, the Covid-19 arose. In this dual context, how did prices change? Has the hope of increased income been achieved? Three approaches are used: a) monitoring of the selling price of cocoa beans and monitoring of the price of purchased cocoa farming inputs and basic necessities for households; b) monthly monitoring of farm gate cocoa price in 2020– 2021; c) an analysis of national production data from Côte d’ Ivoire and Ghana, the world price, variations in the demand for beans by the grinding industry, and the price paid to producers, over 20 years. The first result is a very temporary and limited rise in the farm gate price of cocoa at the end of 2020, then its fall in 2021 as the price of inputs and basic necessities soar. The 2021– 2022 campaign is even more harmful with a tightening of the price scissor. It is therefore the failure of the LID, but the role of Covid-19 in this failure is very nuanced with regard to the declarations of the State and the multinationals. The drop in prices and the loss of income for cocoa farmers in 2020– 2022 rather fits into the economic theory of games. Without control of their supply, an agreement between two companies or countries cannot work. The failure is part of a largely endogenous structural change: demographic growth, policies to encourage migration and deforestation, opacity of the sector and finally continued growth of the supply of cocoa from Côte d’ Ivoire on the international market.