Cocoa Crisis Made Worse by Underpaying Farmers, Tony’s CEO Says

(Bloomberg) -- Cocoa’s record-breaking rally this year has been exacerbated by the long-term underpayment of farmers in key growers, according to ethical chocolate maker Tony’s Chocolonely.

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Prices soared above $11,000 a ton in New York this year after bad harvests in West Africa caused severe shortages. But growers in top producers Ivory Coast and Ghana haven’t really benefited because prices there are set by the government — at a much lower level — which curbs their ability to invest in outdated plantations, limiting production.

Supply “issues are accentuated by the long-term underinvestment by the industry in paying farmers a living income,” Tony’s Chocolonely Chief Executive Officer Douglas Lamont said in an interview on Bloomberg TV.

Cocoa futures have eased from a peak set in mid-April, but are still up more than 70% so far this year. The rally prompted Ivory Coast and Ghana to raise farmer pay, but it’s still below global prices.

“This short-term crisis is a real wake up call for everybody to make sure that we support farmers to invest in productivity over the long term,” Lamont said.

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