The company said the plan is to improve the livelihoods of cocoa-farming families, while also advancing regenerative agriculture practices and gender equality.
A cash incentive will be paid directly to cocoa-farming households for certain activities such as enrolment of children in school and pruning, among several others.
Nestlé said the new plan also supports the company’s work to transform its global sourcing of cocoa to achieve full traceability and segregation for its cocoa products.
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 -- Mark Schneider, Nestlé CEO
Cocoa-farming communities face immense challenges, including widespread rural poverty, increasing climate risks and a lack of access to financial services and basic infrastructures like water, health care and education.
It is well known in the cocoa industry that these complex factors contribute to the risk of child labour on family farms.
Living income for farmers
Achieving a living income is at the heart of creating a sustainable value chain, but it is extremely complex and requires a deep understanding of the drivers and coordination among all the stakeholders.
At last year’s World Cocoa Foundation Partnership Meeting, organisers convened an online session under the banner: Can All Cocoa Farmers Earn a Living Income?
One of the speakers, Yuca Waarts, a senior researcher on sustainable value chains at Wageningen University & Research, said at most one-third of farmers could earn a living income from cocoa alone because of the small farm sizes, their inability to invest which leads to low production volumes, unstable and unremunerative prices as well as a tendency to oversupply.
She said this last point was very important: increasing the price was not sufficient for farmers to reach a living income. Farmers also faced commodity dependence—there were few other options to increase income.
Nestlé is expanding its cocoa sustainability efforts and plans to invest a total of CHF1.3bn ($1.40 bn) by 2030, more than tripling its current annual investment.
Together with partners, including governments, and building on a promising pilot program, Nestlé’s new initiative will sharpen focus on these root causes of child labour, the company claimed.
Cocoa's child labour problem
A US government-funded report in 2020 from National Opinion Research Center at the University of Chicago (NORC) found an estimated 1.56 million children were involved in cocoa-related child labour in Côte d’Ivoire and Ghana in 2018-19, of which 95% (approximately 1.48 million) children were found to be in cocoa-related hazardous child labour.
Nestlé‘s income accelerator programme offers a novel approach to help support farmers and their families in their transition to more sustainable cocoa farming. The incentives will encourage behaviours and agricultural practices that are designed to steadily build social and economic resilience over time.
Cocoa-farming families in its supply chain will now be rewarded not only for the quantity and quality of cocoa beans they produce but also for the benefits they provide to the environment and local communities.
Nestlé said these incentives are on top of the premium introduced by the governments of Côte d’Ivoire and Ghana that Nestlé pays, and the premiums Nestlé offers for certified cocoa.
This cocoa is independently audited against the Rainforest Alliance Sustainable Agriculture Standard, promoting the social, economic and environmental well-being of farmers and local communities.
“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,” said Mark Schneider, Nestlé CEO. “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. 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.”
Through a robust monitoring and remediation system in Nestlé ‘s supply chain, instituted since 2012, 149,443 children have been assisted to protect them against the risk of child labour, and 53 schools have been built or refurbished.
In a departure from normal practice, the programme also offers financial incentives for the farmer's spouse, who is typically responsible for household expenses and childcare. By dividing the payments between the farmer and the spouse, the program helps empower women and improve gender equality - see infographic for more information.