The living income challenge Cocoa farming is at a crossroads. While Tony’s Open Chain builds on years of experience with our proven model, this season, we recognised that an evolution is needed in our living income approach. A living income is a human right. 36 It is defined as the net annual income required for a household to afford a decent standard of living, including food, housing, education, healthcare and savings. It goes beyond poverty lines, aiming for dignity and comfort. In cocoa farming, a living income is a prerequisite for tackling systemic issues. 37 Despite decades of industry initiatives, the majority of cocoa farmers in Côte d’Ivoire and Ghana continue to live in poverty. While global cocoa prices have risen, that has only recently translated to better prices for farmers (the so-called farmgate price for cocoa). Meanwhile, declining yields, combined with climate shocks, disease outbreaks and limited access to financial resources mean that many farmers are unable to benefit fully from these global cocoa price increases. In essence, they receive a higher price now, but for a lot less cocoa. While higher farmgate prices are a welcome development for farmer incomes, they remain unstable in the context of the volatile cocoa market. To truly enable farmers to invest in their farms and build a sustainable future, it is essential that higher farmgate prices that ultimately enable living incomes are maintained over time, not just this season, but every cocoa season. This starts with committing to paying at a minimum the Living Income Reference Price (LIRP) as set by Fairtrade, if cocoa prices fall again. Speaking of which: the LIRP has historically served as a key benchmark. However, over the past seasons, farmgate prices set by the governments of Côte d’Ivoire and Ghana have risen above the LIRP. This highlights a deeper, structural issue: the LIRP does not entirely reflect the realities farmers face. Based on the available data and insights, it is clear that the LIRP must be revised to better align with actual conditions on the ground. We look forward to the outcomes of the multi-stakeholder review of the LIRP launched by Fairtrade in May 2025.
Our responsibility Tony’s Open Chain champions shared responsibility across the supply chain, recognising that while cocoa farmers are expected to uphold sustainable farming practices, companies play a vital role in ensuring fair procurement by paying prices that support investment and progress. Operating within our sphere of control, Tony’s Open Chain partners directly with cooperatives, pays higher prices and commits to long-term, asymmetrical contracts based on equal partnerships with cooperatives, in order to correct structural power imbalances in the cocoa supply chain. 38 We can further scale our impact by growing the cocoa volumes we source this way. That way, more impact is made and the security of cocoa supply for all Mission Allies is strengthened. We recognise that meaningful and lasting change can only be achieved through collaboration. This is why we actively invite cocoa-sourcing companies to join us as Tony’s Open Chain Mission Allies!
36. United Nations. Universal Declaration of Human Rights. 1948, Articles 23 and 25. 37. Fountain, A.C. Good Purchasing Practices in Cocoa, a Barometer Consultation Paper, 2023.
38. Asymmetrical contracts correct structural power imbalances in the cocoa supply chain by enabling farmers to sell to other buyers,and guaranteeing long-term contracts with fixed volumes and prices. For further detail see: Fountain, A.C. Good Purchasing Practices in Cocoa, a Barometer Consultation Paper , 2023.
49
Ending exploitation in cocoa together
Living income
Climate, environment & productivity
Human rights
Governance & finances
Interesting appendices
Scaling for change
Introduction
Made with FlippingBook - Online magazine maker