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Nestlé Set To Pay Cocoa Growers To Keep Children In School

Nestlé has announced plans to start paying cocoa farmers cash if they send their children to school rather than out to tend crops, as part of a push to purchase all of its cocoa through a fully traceable, directly sourced supply chain by 2025.

The food group behind KitKat chocolate bars and Smarties confectionery said it will triple its current annual spending on sustainable cocoa to give a total investment of CHF 1.3 billion (€1.25 billion) by 2030.

To qualify for the payments, farmers have to send their children to school, prune cocoa trees, plant shade trees and diversify their income with other crops or livestock.

Monitoring The Programme

To check that children really are attending school and farmers are following the rules, IDH, The Sustainable Trade Initiative, will monitor the programme with other third parties.

Children casually helping on family farms outside of school time do not fall under the International Labour Organization's definition of child labour.

The sustainability schemes chocolate makers have used to date have had limited success in tackling human rights and environmental issues in cocoa, and Western governments are now looking to legislate.

Nestlé Cocoa Plan

Nestlé said 51% of the cocoa it used in 2021 was directly sourced and traceable, versus 46% in 2020. By 2025, it wants to be able to trace 100% of its cocoa back to specific farms under its in-house sustainability scheme, the Nestlé Cocoa Plan.

Under the new programme, farmers will receive direct cash payments via mobile transfer of up to CHF 500 francs (€481) a year, which represents 20% to 25% of a farmer's average annual income.

The incentive will then be levelled at CHF 250 after two years and progressively extended to all of Nestlé's 160,000 cocoa farmers by 2030.

Unlike current premiums that are paid per tonne and can encourage overproduction, Nestlé, which used over 436,000 tonnes of cocoa in total in 2020, said it would pay farmers and their spouses directly, independently of volumes produced.

Deliver On Shared Values

"Our actions can help catalyse change on an important topic that is so close to our hearts. They will drive accountability and transparency across the industry, at a time when customers, employees and communities increasingly expect companies to deliver on their shared values," commented Magdi Batato, executive vice president and head of operations.

"By increasing traceability at scale, we will help build consumer trust in our products and respond to the growing demand for responsibly and sustainably sourced cocoa."

Nestlé is going to launch KitKat products next year made with cocoa from farms that received cash incentives.

The VOICE Network, a global grouping of non-governmental organisations and trade unions working on sustainability in cocoa, said Nestlé's cash transfer plan was "a big step forward".

It added however, that cash transfers were not a substitute for a commitment to paying a fair overall price for the bean and farmers were still vulnerable to low world market prices.

Last October, Nestlé raised its sales guidance for the full-year, with the business expecting full-year organic growth of between 6% and 7%. It will announce its full-year results on 17 February.

News by Reuters, edited by ESM. For more A-Brands news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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