The Living Income Differential (LID) was the result of a joint initiative of the Ivorian and Ghanaian governments to address the sharp drop in world market cocoa prices which reduced farmers’ income and governments’ revenues from cocoa. The LID is a $400 per ton premium on cocoa exports, to be paid on top of the world market price. This case study describes the process of the LID development from a planned price floor, which was changed into a premium on the export price and which initiated public-private discussions about an Economic Pact.

This case study is an extract from the larger report Components for creating living income policy initiatives: Insights from 3 policy case studies.

The second resource specifically forms a companion to the Living Income Differential (LID) implemented in Cote d’Ivoire and Ghana in 2019. A key lesson of the policy was the need to better understand how the futures market influences cocoa prices. This is due to the fact some industry members resisted a cocoa floor price and later the LID because it affected commercial interest, disturbed the preferred market set up and presented the potential to create additional costs and risks for companies. This resistance affected the policy’s implementation and ultimately the initiative’s ability to support farmers in attaining a living income.