Ivory Coast has suspended its Fairtrade cocoa program on suspicions the system was contaminated with beans that aren’t certified.
According to a spokesperson for Fairtrade International, the Ivorian regulator made the decision after an unusually high volume of Fairtrade-certified cocoa was trading on its platform.
Regulators suspected fraud and moved immediately to shut it down, according to people familiar with the situation.
Cocoa prices have surged this year, causing havoc in futures markets, but higher prices haven’t translated into more income for farmers in top producers where prices are heavily regulated.
Instead, shortages caused by bad weather and disease have just left them with less cocoa to sell.
However, Fairtrade cocoa commands higher prices. According to people familiar with the situation, some cooperatives were trying to use the Fairtrade program to sell regular cocoa to earn more, and buyers desperate to secure scarce beans were happy to pay more than the tightly regulated price, according to traders.
The incident poses a risk to the credibility of Fairtrade, which has become increasingly popular among consumers demanding ethically sourced cocoa.
Farmer cooperatives have to adhere to specific social and environmental standards like prevention of deforestation and eliminating child labor. In exchange companies pay a premium.
Fairtrade Africa and the regulator Le Conseil du Cafe-Cacao — which made the decision to suspend the program on April 19 — are working together to find a quick resolution, the group said.
“For Fairtrade, the integrity of Fairtrade certified cocoa is essential. Hence, we support the ambition of the CCC to confirm the integrity of Fairtrade certified cocoa and ensuring that beans are traded properly,” the group said.
Cocoa-Producing Countries in Africa
Located in West Africa, Ivory Coast is the largest cocoa producer globally, producing about 2.2 million metric tons of cocoa beans annually. Ivory Coast overtook Ghana as the world’s leading producer of cocoa beans in 1978, and today is highly dependent on the crop, which accounts for 40% of national export income.
Ghana is the second-largest cocoa exporter in the world, after Ivory Coast. In 2020/2021, Ghana is estimated to have produced about 1 million metric tons of cocoa beans, the most ever produced by the country. However, this is expected to decrease in 2021/2022 due to the global price of cocoa beans fluctuating yearly.
Ranked as the fourth-largest producer in the world after Cote D’Ivoire, Ghana and Indonesia, cocoa remains a relevant cash crop in Nigeria and is mainly produced by small-scale farmers in the country’s southwest region. Despite the rapid growth in its production and positive impact on the nation’s economy, cocoa production has been witnessing a drastic reduction when compared with the percentage of the population involved in agriculture since the discovery of crude oil in the country.
With a production level between 230,000 and 290,000 tons per year over the last decade, Cameroon is currently the fifth-largest cocoa producer in the world. It exports around 75% of its production as raw beans, which are produced mainly by small-scale farmers located in forest areas and more in savannah areas. Cocoa is an important source of State revenue and economic activity in rural areas.
Cocoa is Uganda’s fourth-biggest commodity export after coffee, tea and fish. According to data from the Uganda Export Promotion Board, cocoa production in Uganda has seen a steady increase over the last few years, with over 30,000 tonnes of cocoa beans produced per year.
