Stakeholder perspectives on cocoa’s living income differential and sustainability trade-offs in Ghana

Abstract

Policy responses to balance the trade-offs between nature conservation and socioeconomic development have recently come to the fore in Ghana – the world’s second largest producer of cocoa. In 2019, the Government of Ghana introduced the Living Income Differential (LID), which requires buyers to pay an additional US$400 per ton of cocoa on top of the floor price. With low farmer incomes identified as a critical driver of multiple sustainability issues in Ghana’s cocoa sector, this differential is meant to be directly transferred to cocoa farmers in response to the persistent challenge of poverty in cocoa farming communities. Using the Q methodology, we engaged over 50 stakeholders from various levels (international policy experts, cocoa sector stakeholders in Ghana, and cocoa farmers) to understand how the LID is perceived, including its potential to transform the rural poverty complex embedded in Ghana’s cocoa supply chain. While the LID is lauded for increasing producer price across the board, our findings indicate that the lack of regard for farmer diversity (i.e., tenure rights, sharecroppers, and caretakers), farm size, and land management strategies (agroforestry versus clearing forest to establish farms) risks undermining the ability of this pricing mechanism to reduce farmer poverty. Further, the LID is siloed from on-going sustainability governance efforts in the sector, such as zero deforestation cocoa. If the LID is delivered to farmers across the board without any quid pro quo for how cocoa is produced, the policy’s unintended consequences may include increasing deforestation in the short term, while lowering the world market price of cocoa in the long term as cocoa supply increases. We conclude with policy implications on why different perspectives matter in managing sustainability trade-offs in deforestation frontiers.