Nestle SA will offer cocoa farmers and their families in the Ivory Coast cash incentives that aim to reduce child labor, as the chocolate industry faces growing scrutiny over the problem. 

The program, under which the KitKat maker plans to spend 1.3 billion francs ($1.4 billion) by 2030, will offer as much as 500 francs per year to households that meet criteria ranging from school enrollments for children to improved agricultural practices. 

The industry has faced years of criticism that it’s doing too little to eradicate child labor on cocoa farms. While companies have implemented programs to mitigate the issue and often emphasize their work with non-profit organizations, they’ve argued that root causes such as poverty need to be addressed.

The prevalence of child labor in cocoa production in the Ivory Coast and Ghana increased 14 percentage points in the decade through 2019, according to a survey by NORC at the University of Chicago, an independent social research organization. Cocoa production rose 62% in that period. 

Nestle’s plan is promising because it doesn’t just focus on production metrics that some other programs impose, according to Antonie Fountain, managing director of the Voice Network, a global network of NGOs and trade unions working on sustainability in cocoa. But it’s missing an important puzzle piece, he said.

Program measures include:

• Enrolling household’s children ages 6 to 16 in school
• Implementing improved agricultural practices
• Planting shade trees and other agroforestry measures
• Generating diversified incomes by growing other crops, raising livestock or processing additional products
• Third parties, including the International Cocoa Initiative and Rainforest Alliance, will help monitor progress

“My concern is that Nestle is putting this in lieu of paying fair prices,” Fountain said. “Our calculations show that an average cocoa farmer needs to be paid $3,000 per ton, and they’re currently getting a third of that.” 

Earlier:
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An average cocoa farmer in the Ivory Coast earns about 2,000 francs a year, while those working under Nestle’s Cocoa Plan — the company’s overarching cocoa program that started in 2009 — make about 3,000 francs, according to Magdi Batato, Nestle’s head of operations.

The new program builds on a pilot project begun in 2020, and is expanding this year to 10,000 farmers. The company plans to extend it to Ghana in 2024 and wants to reach all 160,000 cocoa farmers in its global cocoa supply chain by 2030. 

Nestle, which has annual sales of about 85 billion francs, intends to reduce the cash payments by half after two years but says production improvements linked to the program will help farmers make that up in other ways. 

“We’re confident that the living-income gap will be bridged,” Batato said in an interview.