Perhaps one of the most often cited phrases this year has been ‘supply chains.’ In March and April 2020, as… Read More
As prepared for delivery
“Hello, I am Rick Scobey, the President of the World Cocoa Foundation. I want to extend a warm welcome to this year’s Annual Partnership Meeting.
We had originally planned this year’s Partnership Meeting in Bogota Colombia, but COVID changed that. We debated about cancelling the event, but as Chris McGrath noted, we decided that it was more important than ever for the cocoa family to come together and connect on key issues.
As we just saw on the video, cocoa farmers around the world are facing unprecedented challenges in response to the health, economic, and social impacts of COVID. Indeed, all of our lives — no matter where you live or what you do in this supply chain – have been affected by the pandemic.
At this difficult moment in time, all of us want to do more to ensure a thriving, sustainable, and just cocoa supply chain. That’s why we wanted to bring everyone together this year around the theme of “Scaling Impact in Disruptive Times.”
One of the benefits of moving to a virtual event is that we are able to reach a broader audience from around the world. More than 400 participants have signed up, from 32 countries on six continents. I am particularly pleased that we have 40 member companies of WCF with us, as our diverse membership is our greatest asset.
I want to thank the great WCF Team that rose to the challenge to figure out how to design a dynamic virtual event, and particularly Charlotte Grant, Zoe Genova, and Alex Ferguson who have been the engine behind the program.
I also want to express my sincere thanks to the companies who supported this year’s virtual program:
- Mondelez as Gold Sponsor
- Mars Wrigley as Agenda Sponsor
- Silver sponsors: Barry Callebaut, Cargill, Compañía Nacional de Chocolates, GCB Cocoa, Luker Chocolate
- Bronze Sponsors: ECOM and Olam
- And Cocoa Contributors: Ferrero and SUCDEN
Friends, a lot has happened in the cocoa sector since we last met one year ago in Berlin. I want to flag five important developments.
First, the COVID pandemic has significantly disrupted every part of the cocoa supply chain. Cocoa grindings declined by about 15% in the second and third quarters of 2020, compared to the previous year. This decline in demand has sent cocoa prices sharply lower, and contributed to a decline in global cocoa purchases.
These market developments have created risks and adverse impacts for everyone in the supply chain. Our top priority must be to protect the lives and livelihoods of the millions of cocoa farmers around the world who are facing significant health and economic risks as a result of the COVID crisis – like we saw in the opening video.
This is why WCF companies came together in April and May and made a donation of $835,000 to help farmers in West Africa, Asia, and Latin America fight COVID-19 — on top of numerous individual company contributions that have totaled hundreds of millions of dollars.
Second, over the past year, we have seen a growing global focus and commitment to achieving a living income for cocoa farmers.
The industry has continued to work closely with origin governments, farmers, and other partners to make cocoa farming truly sustainable and profitable, with transformation of farms into modern businesses that enable farmers to earn sufficient income to achieve a decent standard of living.
The industry has been very clear that we support the new Living Income Differential policy that Côte d’Ivoire and Ghana introduced in July 2019 as part of a strategy to raise farmer income. Our company members have independently and voluntarily incorporated the LID into their individual procurement plans for the 2020-21 crop season.
The Conseil du Café Cacao and Ghana Cocoa Board have recently flagged some concerns about the decline in cocoa purchases and the implementation of the LID during the past months of the COVID pandemic– we will hear from JB Aidoo, the Chief Executive of the Ghana Cocoa Board tomorrow on this.
There is no question that we all are facing a difficult cocoa market. More than ever, it is critical that industry and the governments engage in a meaningful dialogue about how to protect farmer income at a time of reduced global demand, continued market uncertainty, and a 2019/20 market surplus according to the latest ICCO forecast.
These are real and complex issues – we must come together and talk through within the confines of anti-trust law how to manage risk and volatility in this difficult market, and how we can most effectively and efficiently maximize the long-term income of farmers.
As we focus on increasing farmer income, we must also ensure that the cocoa is grown responsibly. As the Conseil and COCOBOD said one year ago at our last Partnership Meeting in Berlin, the “the LID and the sustainability programmes would co-exist and complement each other.”
We continue to believe this is the right approach. The LID and the company sustainability programs are both essential and mutually reinforcing – two sides of the same coin. We cannot ensure the long-term sustainability of the sector without farmers receiving fair remuneration for their crop. Likewise, a long-term increase in farmer remuneration must come from responsible cocoa production, with due attention to child labor, deforestation, and stable long-term supply-side management.
Company sustainability programs are playing a critical role to boost farmer income, ensure a responsible supply chain, and accelerate achievement of the Sustainable Development Goals. These programs directly help almost 700,000 farmers and their families, about 45% of all cocoa growers in Côte d’Ivoire and Ghana. We have an exciting panel tomorrow on new work related to living income in the cocoa sector.
Third, over the past year, we have seen encouraging results on the critical issue of climate change and deforestation. The UN Convention on Biological Diversity issued a major report in September which indicated that from 2018 to 2019, the rate of forest loss was halved in both Cote d’Ivoire and Ghana. It specifically called out the industry’s work:
“Several policies and actions have contributed to this success including the Cocoa and Forest Initiative. The initiative is a partnership between the two countries and the World Cocoa Foundation, the Sustainable Trade Initiative, the International Sustainability Unit of the Office of the Prince of Wales, and private cocoa companies, to create an enabling environment for the cocoa sector to contribute positively to the preservation of forests and the economy of the two countries.”
We have an important dialogue later this morning with UK Environment Minister, Lord Goldsmith, and tomorrow morning with the new CEO of the Global Environment Facility, Carlos Manuel Rodriquez, which will look at these issues in more detail. We are very pleased to be working closely with the UK government in the preparations for COP-26 in Glasgow next year.
Fourth, we are making progress on the persistent challenge of child labor in Cote d’Ivoire and Ghana. The recent report by NORC showed that there are today still too many children in cocoa farming doing work for which they are too young, or work that endangers them.
The report indicates that earlier targets to reduce child labor were set without fully understanding the complexity and scale of a challenge associated with poverty in rural Africa. It nevertheless shows that government and company programs to reduce child labor are making a difference. The report emphasizes that the more than 60% increase in total cocoa production in Côte d’Ivoire and Ghana over the past 10 years did not bring a similar surge in child labor.
Analyses by NORC and the International Cocoa Initiative have shown that hazardous child labor has been reduced by one-third in communities where company programs are operating – and by one-half among those child laborers identified by company due diligence measures. These are important findings.
We now know more about what works – and are scaling up these efforts for impact. In a session later this morning led by Nick Weatherill from ICI, you will hear more about how industry is deepening commitments and developing stronger multi-stakeholder collaboration to tackle the root causes of child labor.
Fifth, over the past year, we have seen a deeper focus on cocoa sustainability in the legislatures of cocoa-consuming countries, including increased attention to regulatory options to ensure corporate due diligence and responsible supply chains. We have an important session planned tomorrow with EU Commissioner Jutta Urpilainen and European Parliament Vice President Heidi Hautala on developments in the EU.
Industry has welcomed these regulatory developments. We believe that effective protection of human rights and environmental standards in the supply chain requires three complementary actions: (1) government regulation to set clear standards for environmental and social due diligence, (2) strong public and private partnerships to catalyze joint action of companies and government, and (3) increased aid and trade flows to finance key interventions in producer countries at national scale.
Let me close by again welcoming you to the Partnership Meeting. There is an African proverb that says “Wisdom does not come overnight.” We all are on a shared journey to enhance the sustainability of the cocoa sector, and improve the livelihoods of the cocoa farmers, their families, and their communities.
The farmer video that we showed at the beginning of my remarks opened with 17 year old Isaac Zeinab from Ghana. I hope that our discussions over the next two days enrich our understanding, and inspire us to work harder to accelerate inclusive and sustainable growth in cocoa during these disruptive times for Isaac and his family, and all the cocoa farmers around the world.