It is estimated that about 87 percent of cocoa-growing households earn below a living income in Côte d’Ivoire, a country that produces much of the world’s cocoa. At the Rainforest Alliance, we believe cocoa and chocolate companies can go further to ensure farmers and their families are able to thrive, as well as invest in the future of their farms. This shared responsibility approach is embodied in our certification program. It’s also the basis for our current pilot, the Living Income Module, and its next iteration: the Living Income Fund.
The blockchain platform allows our company partners to verify that the cash transfers and agricultural services are reaching 300 cocoa farmers from two cooperatives in the Abengourou region. The platform delivers a feedback loop for farmers to confirm cash transfers and provide input, while allowing stakeholders to view the money chain of custody.
“At Cloetta, we are inspired to participate in this pilot project. Firstly, to support the farmers, and secondly to bring our consumers closer to the people growing their chocolate bars,” says Maria Selling, Cloetta’s Sustainability Manager.
The positive effects of cash transfers
So, why the focus on getting cash in the hands of farmers? A large body of evidence shows that cash transfers have positive impacts for farming communities, including better school attendance for their children, more food security, improved access to healthcare, and increased economic resilience. As a result of our current project in Côte d’Ivoire, 300 cocoa farmers received approximately €500 per year, which has translated to an estimated 11 percent increase in incomes.
Not only that, but we believe that companies have a duty to share the costs and benefits of sustainability with farmers. “Sustainability is a long-term journey, and all supply chain actors have a role to play,” said Nanga Kone, the Rainforest Alliance’s Director – Côte d’Ivoire.
The Living Income Fund
To continue and expand this initiative, we are proposing a Living Income Fund of one million euros to reach approximately one thousand cocoa farmers over the next two years. With this fund, we will facilitate cash transfers to these farmers (amounting to approximately €500 per year), which we estimate will improve household incomes by 8 to 11 percent. Farmers will access funds via mobile money to improve security, and the cash transfers will be verified via blockchain. Because all beneficiaries are Rainforest Alliance Certified, we can ensure a level of performance on key management, farming, social, and environmental practices (like an assess-and-address approach to tackle child labor and no deforestation).
Expanding this work will help us to collectively enhance farmer livelihoods. Therefore, we will continue working with our current partners while forming new partnerships with additional companies.
To raise one million euros that go directly to cocoa farmers, we are looking for company partners to contribute to the Living Income Fund. We are developing a partnership model that aims to attract individual contributions of €120,000 to €200,000 over two years. If your company wants to contribute directly to better incomes, please contact us at email@example.com.
Frequently Asked Questions
What can my company claim about supporting this project?
On average, a partner that contributes €100,000 yearly can claim that they have provided 200 farming households with €500. Based on data from an earlier phase of this project, and assuming similar conditions, we estimate that this could reflect an 8 to 11 percent increase in incomes. A market partner can claim that their contributions can be traced to the farmer; additionally, brands will be improving farmers’ access to cash, since farmers can claim their cash transfers in different locations.
How was the cash transfer amount of €500 calculated?
Research shows the cash transfers need to be large enough to improve outcomes. To reach this amount, the Rainforest Alliance identified a target value that would utilize available funding, optimize the well-being of participating farmers, and reach as many farming families as feasible. Participating cooperatives also requested that the transfer amount be related to the amount of cocoa that farmers sell to their cooperative, in order to incentivize loyalty. Therefore €500 per farmer is an average, but some farmers will get more or less, depending on their production.
Why is this project needed if there is a Rainforest Alliance Sustainability Differential and a West Africa Living Income Differential?
We believe that market mechanisms, such as premiums and differentials, are essential to improve the farm gate price for farmers. However, in origins with systematic poverty (such as the cocoa sector of West Africa), additional solutions are needed. Farm gate prices remained volatile in 2021 despite the roll-out of the recent Côte d’Ivoire and Ghana Living Income Differentials. With cash transfers provided by the Living Income Fund, households will receive a larger infusion of cash which is not subject to international market price volatility and that can be used to invest in the household and the farm. Moreover, in this initiative we are offering four to 10 times more than the price premiums per kg offered in our certification program alone. Finally, the Living Income Differential is not traceable directly to farmers, whereas our cash transfers are.
How have households used the money so far?
In our pilot, farmers are mostly using these funds to cover education fees for their children. As incomes rise, we expect more money to be invested in economic activities such as cocoa production, but not until basic households needs (like education) are first met.
How are payments tracked in this project?
With the help of farmer connect, we are using blockchain technology to track payments. Farming cooperative managers create farmer profiles or digital wallets where they can capture all transactions made to the farmers. Farmers can then provide feedback and confirm payments from the cooperative and the market partner using a mobile phone; payments uploaded to the system generate an SMS with a one-time password for the farmer. The cooperative also validates the digital receipts by entering a one-time code. Additionally, market partners have access to this information in a fully GDPR compliant manner.
Where in Côte d’Ivoire is this project implemented?
Current participating cooperatives are located in the Abengourou region of southeastern Côte d’Ivoire. The next round will continue with the same cooperatives, and may be expanded to include one additional region (currently under evaluation by the Rainforest Alliance).