Real concern
In recent years, there have been numerous studies attesting that cocoa producers in Côte d’Ivoire, the main producing country, live in poverty. They earn EUR 0.86, around 1 dollar a day, according to Barry-Callebaut and the French Development Agency[1]. This income keeps them below the poverty line[2] and to make ends meet they have to resort to child labour and rampant deforestation (the productivity of cleared land required less labour in the early years).
Disturbing fact: whether producers are certified fair or sustainable does not change much as regards the income they receive. Fairtrade International and True price say[3] that only 42% of Fairtrade certified producers earn above the extreme poverty line[4] and only 23% above the poverty line.
According to the same survey, raising 80% of farmers above the poverty line requires a cocoa price of $ 4.72/kg.[5] In other words, Fairtrade International must raise its guaranteed minimum price which is currently only $2 a kilo of cocoa, to which a development premium of $ 0.2 kg is added.[6] The authors of the 2018 Cocoa Barometer are also convinced that the “Fairtrade minimum price is probably far too low to ensure that farmers escape poverty”[7], which raises questions about how this minimum price, in effect for several years, was calculated. Especially as consumers have been led to believe that a fair price can cover the production cost and ensure decent living conditions.
To be fair, it should be noted that the competition between certification systems is fierce in the cocoa market and is not to Fairtrade’s advantage. Large companies prefer UTZ or Rainforest Alliance certifications, which do not set guaranteed minimum prices for producers. In 2017, just under 1.5 million tonnes[8], or 1/3 of the cocoa produced in the world, was UTZ certified. Added problem: 66% of Fairtrade certified cocoa is not sold under fair trade conditions due to a lack of market opportunities. In Belgium, only 1% of the chocolate sold is fair trade.
But this failure (77% of Fairtrade certified producers are below the poverty line) also has other explanations. According to BASIC, which compared the fair trade cocoa sectors in Peru and Côte d’Ivoire, “fair trade cocoa seems to have little significant impact when it is integrated in standardised mass production value chains (this is even more flagrant in the case of sustainable certification.)” [9] which is the case in Côte d’Ivoire.
Cocoa producers in Côte d’Ivoire © TDC
How to strengthen equity
To be truly beneficial to producers, to be a real force for change, fair chains must tackle various projects, concurrently:
- Prioritise the structure of supply chains that are alternatives to those of large groups by enhancing quality through a differentiated price of farm gate prices depending on the varieties (criollo, mercedes, forastero) and grades (1 or 2) [10] of cocoa. In Côte d’Ivoire it is quite possible to get out of the “commodification” that keeps prices low, and to develop specialty cocoas of origin. An example is the SCEB cooperative which produces high quality organic cocoa, sold to Ethiquable[11] to make a certified “small producers’ label” chocolate.[12]The Südwind research institute noted that the quality of Côte d’Ivoire’s cocoa has increased in recent years, which seems to have pushed some German manufacturers to buy more cocoa in Nigeria, where quality is not as good and prices can be maintained at current low levels.
- Support the structuring of cooperative unions to make producers’ voices heard and try to rebalance the balance of power with buyers.
- Strengthen co-operatives, particularly in governance, member services, marketing and financial management so that they can acquire sufficient working capital, which in turn will help keep their members.
- Promote a minimum income for the various stakeholders in the sector, chief among which are cocoa farmers. Fairtrade International and True Price have just estimated this income at $ 2.51[13] per person a day in Côte d’Ivoire. To get closer to this minimum income, Belvas, a Belgian chocolate maker known for its organic chocolate and Fairtrade, launched a new range of Côte d’Ivoire chocolate in October 2018.[14] $ 2.4 (including $ 1.2 in premium) per kilo goes to the producers’ cooperative. Unaffordable for the consumer? The premium only represents 10 cents a tablet of 180g.
- Increase low yields (435 kg/ha) [15] and promote crop diversification
- Fight against deforestation (Côte d’Ivoire has lost 13 million hectares, or 80% of its forest cover since 1960) to preserve biodiversity, limit its effects on rainfall, yields and therefore, in the long term, its downward impact on revenues. Fair trade chocolate should only be produced with cocoa grown according to the principles of agroforestry.
- It has to be said: increase the size of farms which are sometimes too small to be profitable. In Côte d’Ivoire they should at least be 2 to 3 hectares, with yields of 750 kg/sec/ ha.[16]
- To increase the value added in the country of origin, fair trade could also encourage the local processing of cocoa. In this respect, even if the scale remains very limited, the initiatives of local entrepreneurs who have just launched their chocolate brands in Côte d’Ivoire and Ghana, but also in other African countries, are to be welcomed[17].
Drying ov cocoa © TDC
National platforms that bring together public authorities, cocoa and chocolate manufacturers, retailers, NGOs and research institutes are also good operational tools to contribute to a more sustainable cocoa / chocolate sector, to better traceability and better income for producers. There are some in Germany, Switzerland and the Netherlands.
However, complex dynamics and the importance of the issues mean that to make the value chains genuinely more sustainable, voluntary initiatives such as fair trade are not enough. In the countries of origin, they must be backed by legislation designed to guarantee remunerative prices for producers, to enforce the conventions of the International Labour Organisation and to stop deforestation. In consumer countries, as has been done in France, legislation which holds companies liable for the impact of their activities all along the production and supply chain is necessary.[18]
Samuel Poos
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