Nestlé offers cash incentives for cocoa-farming families

Nestlé last week announced measures to improve cocoa-farming families’ incomes, promote gender equality and advance regenerative agricultural practices as part of a plan to address risks of child labor in production of cocoa.

The world’s largest food and beverage company unveiled plans to more than triple its investment in its cocoa sustainability efforts, devoting 1.3 billion Swiss francs (US$1.4 billion) by 2030.

Cocoa beans are the prime ingredient for chocolate. Statista, a provider of market and consumer data, estimated global cocoa production to reach 4.8 million tons in the 2020/2021 crop year, with the majority of production occurring in Africa.

Nestlé is creating cash incentives up to 500 Swiss francs annually for cocoa-farming families to enroll their children in school; implement good agricultural practices, such as pruning; and engage in certain other activities. The full cash incentive will be available for the first two years of the program, then lowered to 250 Swiss francs thereafter.

Payments will be disbursed evenly between the male and female heads of the home, according to Nestlé.

Pervasive poverty, lack of basic infrastructure and other challenges contribute to the risks of child labor on family cocoa farms, Nestlé said. In order for all members of a household in Côte d’Ivoire (also known as Ivory Coast), West Africa, to “afford a decent standard of living,” they need an estimated average income of 6,365 Swiss francs annually, according to Nestlé’s summary of its income accelerator program.

"Our goal is to have an additional tangible, positive impact on a growing number of cocoa-farming families, especially in areas where poverty is widespread and resources are scarce, and to help close the living income gap they face over time," Nestlé CEO Mark Schneider said in a press release announcing the program. "Building on our longstanding efforts to source cocoa sustainably, we will continue to help children go to school, empower women, improve farming methods and facilitate financial resources.”

The income accelerator program announced by Nestlé was piloted in 2020 with 1,000 farmers in Côte d'Ivoire. The company disclosed it will expand the program this year to include 10,000 families in Côte d'Ivoire, extend it to Ghana in 2024, then “assess the results of that test phase and adapt where necessary, before moving to reach all cocoa-farming families in its global cocoa supply chain by 2030.”

Nestlé suggested the income accelerator program would reach 160,000 families by 2030. The initiative will include full traceability from origin to factory—with plans to introduce a range of cocoa-sourced products, beginning with KitKat products in 2023, Nestlé disclosed.

The International Cocoa Initiative and Rainforest Alliance are among the third parties working with Nestlé to monitor participation in the program.

An estimated 1.56 million children are subjected to child labor in Côte d’Ivoire and Ghana, according to the International Cocoa Initiative, a Swiss-based nonprofit foundation founded in 2002. And 45% of children in agricultural homes in cocoa-growing areas in those two countries were engaged in child labor, according to a Jan. 27 Reuters story reporting on Nestlé’s initiative, citing a recent survey by the University of Chicago.

“We believe that, together with governments, NGOs and others in the cocoa industry, we can help improve the lives of cocoa-farming families and give children the chance to learn and grow in the safe and healthy environment they deserve,” Schneider said.