After being pioneered by Nestlé in January 2022, an Income Accelerator offers a proven, multi-faceted approach to help address cocoa farmer poverty while also supporting sustainable farming practices and mitigating the risk of child labour.
Hershey’s programme has also been designed and implemented with input from the country’s cocoa regulatory board Conseil du Café-Cacao (CCC), the Rainforest Alliance and CARE.
Cocoa-farming communities, especially in countries like Cote d’Ivoire, 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.
Living Income Differential (LID)
As this publication highlighted, a recent report by Reuters revealed that Ivorian farmers said they are being paid well below the Living Income Differential (LID), a price set by the government to ensure a living wage for farmers. According to the report, industry experts blamed the situation on surpluses that have kept cocoa cheap globally, as well as on chocolate companies, global commodity buyers and intermediaries in the field seeking to protect margins. They cited inherent flaws in the government programme, including a lack of supply management.
"The Income Accelerator is part of Hershey's long-term commitment to make a real difference in the lives of cocoa farmers and their children," said Jason Reiman, Chief Supply Chain Officer at The Hershey Company. "We are proud to begin this important initiative in collaboration with the government of Cote d'Ivoire and our NGO partners. Together, we can support better livelihoods for farming households and ensure bright futures for cocoa-growing communities."
As part of the Income Accelerator, Hershey in partnership with the Rainforest Alliance will distribute mobile cash transfers of up to $600 per household per year to approximately 5,000 cocoa farming households within its supply chain. These CTs, which will offer an additional source of income for households, will be based on the adoption of sustainable and regenerative farm management practices that increase farm profitability and resiliency to unexpected environmental circumstances.
With the support of CARE and cocoa farmer cooperatives, Hershey said it also plans to strengthen approximately 200 existing Village Savings and Loan Associations (VSLAs) in its supply chain and establish another 350 new VSLAs. These 550 VSLAs will support an estimated 15,000 members and their families.
Through these combined efforts, the programme aims to yield meaningful incremental savings per participant within three years of them becoming a VSLA member. VSLAs provide members, particularly women and single mothers, a local structure for increasing savings and accessing loans at low interest rates in farming communities where formal banking and micro-financing services are scarce.
"Low producer income is a root cause of child labour and deforestation. We support this Income Accelerator programme because the issue of producer income is at the heart of our concerns," said Yves Brahima Koné, Managing Director at Conseil du Café-Cacao.
The Income Accelerator is expected to positively impact no fewer than 20,000 households within Hershey's supply chain and related communities. To measure and evaluate progress, Hershey will leverage tools and expertise provided by a Learning Advisory Committee that includes Sustainable Food Lab and is chaired by the Conseil du Café-Cacao. Updates on the programme's progress will be provided on the Hershey website and in its annual ESG report.
Proven strategies
Nanga Kone, Country Director for Cote d'Ivoire at the Rainforest Alliance, said: "One of the most urgent problems cocoa farmers face is that the income they get from their crop is not enough to achieve a decent standard of living. Combined with the impact of climate change, even in good years, many smallholder farmers struggle to make ends meet. Guided by three decades of research and experience, we believe that the Income Accelerator will help ensure long-term financial and quality of life benefit for cocoa farmers and their families in Côte d'Ivoire. The Rainforest Alliance looks forward to working in partnership with Hershey to help farmers link the short-term cash payments to their farm's long-term sustainability and profitability strategy."
Research has shown that farmers receiving financial literacy and farm business training via CTs, and with access to savings and loans institutions, are more likely to have higher household incomes and engagement of women in household decision-making. With increased incomes and more professionalized operations, farming households are less likely to rely on children for hazardous work. They are also more likely to have enhanced food security and additional resources that can be invested in their children's education and overall wellbeing.
A Nestlé’ spokesperson said: "After pioneering the Income Accelerator Program in January 2022, we welcome Hershey’s initiative to launch their own income accelerator contributing further to improve cocoa farming families’ livelihoods. Hershey’s initiative is in line with our ambition to help cocoa farmers and their families fill the living income gap at scale and we are delighted to see the commonality with our approach. We look forward to seeing more stakeholders and industry players taking action and joining our efforts to make a difference at the sector level.”