Fairtrade and cocoa - Curtis Research · 19 Extrapolated om:fr The global chocolate confectionery...
Transcript of Fairtrade and cocoa - Curtis Research · 19 Extrapolated om:fr The global chocolate confectionery...
Commodity BriefingAugust 2011
FAIRTRADE AND CoCoA
2Fairtrade and cocoa
Around 50 million people globally depend on cocoa for their livelihoods. This briefing offers an overview of the industry, explores why Fairtrade is needed, and describes what it can achieve. We hope that this will provide a useful resource for all those involved with, or interested in, Fairtrade, whether from a commercial, campaigning or academic perspective.
FAIRTRADE AND Cocoa
Fast facts: the cocoa lowdown
• Around3.5milliontonnesofcocoabeansareproducedeachyear1
• Demandisexpectedtoexceed4.5milliontonnesby2020
• Withdemandforecasttooutstripsupply,thechocolateindustrycouldbeheading towards a crisis
• Closeto50millionpeoplearedependentoncocoafortheirlivelihood.2
• Côted’IvoireandGhanadominateworldproduction
• Over90percentoftheworld’scocoaisgrownon5.5millionsmallfarms3
• Afurther14millionruralworkersdirectlydependoncocoafortheirlivelihoods4
• Manycocoafarmersandworkersareamongthe2.1billionpeoplelivingon$2aday
• The2009/10cocoacrophasanestimatedexportvalueof$10bn5
• Theglobalchocolateconfectionerymarketwaswortharound$79.4bnin20106
• TheUKchocolateconfectionerymarketwasworth$5.2bn(£3.2bn)in20107
• Worldcocoaprocessingandchocolateproductionandsalesaredominatedbytencompanies
• Cocoagrowerscurrentlyreceivearound6percentofthepriceofchocolatepaidbyconsumersinrichcountries,comparedwitharound16percentinthelate1980s
• UKsalesofFairtradechocolateconfectionerygrewfrom£18min2005to£343min2010
• Around122,000farmersfrom62producerorganisationsin18countriesbenefitfromsupplyingFairtrade cocoa
iNTRODUCTION
1 Average annual production 2004/05 to 2009/10, World Cocoa Foundation, Cocoa market update, May 2010, p.22 World Cocoa Foundation, Cocoa market update, May 2010, p.13 World Cocoa Foundation, Cocoa market update, May 2010, p.14 Tropical Commodity Coalition, Cocoa barometer 2010, p.35 UNCTAD Press Release, New International Cocoa Agreement Concluded, 25 June 2010 (includes cocoa beans, cocoa butter/powder)6 Extrapolated from: The global chocolate confectionery market is estimated to be worth $88.3bn 7 The Grocer, Top Product Survey 2010, 18 December 2010in 2014, growing at 2.7 per cent CAGR (2010-14), Business Insights report,
www.foodnavigator.com, 18 May 2011
3Fairtrade and cocoa
Main producing countriesGlobalcocoaproductionaverages3.5milliontonnesayearandisdominatedbyWestAfricanproducersCôted’Ivoire(IvoryCoast)whichproducesaround1.4milliontonnesayearandGhana(730,000tonnes).TogetherwithIndonesia(500,000tonnes),thesethreecountriesaccountfor73percentoftheworld’soutput.Around70percentofcocoacomesfromAfrica.8
Cocoademandhasbeenincreasingbyanaverageof3percentayearforthepast100years.Productionisprojectedtoriseby6percentbetween2009and20139to3.98milliontonnes.Butindustryrepresentativesestimatethatthesectorwillneedanannualproductionofatleast4.5milliontonnesofcocoaby2020tosatisfythegrowingdemand,10drivenbyrisingincomesinemergingeconomies.
Main importing/consuming countries
TheNetherlandsistheworld’slargestimporterofcocoabeans,tothevalueof$2.07bnin2009.ItisfollowedbytheUnitedStates($1.18bn),Germany($980m),andMalaysia($768m),withtheUK($422m)inseventh.12
In2009,theUKwastheworld’slargestimporterofretailchocolate,withanimportvalueof$1.29bn,closelyfollowedbyFrance($1.17bn)andGermany($1.16bn).13
Côte d’Ivoire41%
Ghana18%
Indonesia14%
Others9%
Nigeria 6%
Cameroon 5%
Brazil 4%
Ecuador 3%
Figure 1: Largest producers of cocoa
as % of world total, 2005-0911
8 World Cocoa Foundation, Cocoa market update, May 2010, pp.1-29 ‘Cocoa facts & figures’, www.worldcocoafoundation.org; World Cocoa Foundation, Cocoa market update, May 2010, p.210 Armajaro ‘Cocoa Production Outlook in 2020’, World Cocoa Foundation Partner Meeting, October 201011 World Cocoa Foundation, Cocoa market update, May 2010, p.212 World Cocoa Foundation, Cocoa market update, May 2010, p.313 World Cocoa Foundation, Cocoa market update, May 2010, p.314 World Cocoa Foundation, Cocoa market update, May 2010, p.3
Netherland$2,069m
United States$1,179m
Germany$980m
Malaysia$768m
France $493m
Belgium $467m
United Kingdom $422m
Spain $245m
Singapore $209m
Italy $209m
Figure 2: Largest importers of cocoa
beans by value, 200914
1. COCOA: GROWERS AND buyers
4Fairtrade and cocoa
From bean to bar
A brief history of cocoa
ThoughttohaveoriginatedintheAmazonbasin,cocoawasintroducedintoEuropeinthefifteenthcentury.InthelatenineteenthcenturytheSwissdevelopedmilkchocolateandthechocolatebar,andcocoaproductionspreadtoWestAfrica.Around30countriesnowproduce3.5milliontonnesofcocoaayearinaworldmarketworth$10bn.15
How cocoa is grown
Thecocoatreeisatropicalplantgrowninhot,rainyclimatesmainly20degreesnorthandsouthoftheequator.Thetree’sfruitpodscontain30-40seedswhichareextracted–usuallybymachete–beforebeingfermentedanddriedinthesun,sobecomingcocoabeans.Cocoaisadelicatecropaffectedbybadweatherwhilediseasecausescroplossesofupto30percentofworldproduction.16Acocoatreetakesaroundfiveyearstoproduceitsfirstbeansandreachespeakproductioninaround10years.Itwilltypicallyproducealargenumberofpodsforafurther12years.17
Making chocolate
Severalstepsofprocessing(knownasgrinding)arerequiredbeforecocoacanbemadeintochocolate.Oncethebeanshavebeenroastedandshelled,thenibisgroundintoapasteknownascocoaliquorwhichisthenpressedtoextractthecocoabutter.Thisalsoleavesamassknownascocoacakewhichisgroundintofinecocoapowdermainlyusedinthebakingandconfectioneryindustries.
Cocoaliquorandcocoabutterareblendedwithingredientssuchasmilkandsugarandprocessedintoliquidchocolateforthebakingandconfectioneryindustriesorconvertedintobarsfortheconsumermarket.Cocoabutterisalsousedbyasaningredientinbeautyproductslikesoapsandmoisturisingcreams.
15 UNCTAD Press Release, New International Cocoa Agreement Concluded,25 June 2010 (includes cocoa beans, cocoa butter/powder) 16 Cocoa’, www.unctad.org/infocomm17 ‘Growing the cocoa bean’, www.worldcocoafoundation.org
3. CHALLENGes for CocoA: an industry under pressure
Figure 3: The Cocoa Market 1994 – 2011: Comparison of Fairtrade & New York Prices
NB
From1Jan2011: FairtradePrice=FairtradeMinimumPriceof$2000/tonne +$200/tonneFairtradePremium
WhentheNewYorkpriceis$2000orabove,thentheFairtradePrice=NewYorkprice+$200premium TheNewYorkpriceisthe dailysettlementpriceofthe2ndpositionCocoaFuturescontract atICEFuturesU.S.
Cocoahashistoricallybeenahighlyvolatilecommodity,whichhassignificantconsequencesforthosewhodependonitfortheirlivelihood.Seefigure3below:
0
500
1000
1500
2000
2500
3000
3500
4000
US$
per
tonn
e
The Cocoa Market 1994 – 2011: Comparison of Fairtrade & New York Prices
Feb 1994 Aug 2011 Dec 1997
New York
Fairtrade
NB From 1 Jan 2011, Fairtrade Price = Fairtrade Minimum Price of $2000/tonne + $200/tonne Fairtrade Premium (revised from $1600/tonne + $150/tonne) When the New York price is $2000 or above, then the Fairtrade Price = New York price + $200 premium The New York price is the daily settlement price of the 2nd position Cocoa Futures contract at ICE Futures U.S.
May 2004Nov 2000 June 2006
©Fairtrad
e Foundation
Feb1994 Dec1997 Nov2000 May2004 June2006 Aug2011
March 2011 32 yr high $3,775
Oct 2002 16 yr high $2,335
Nov 2000 27 yr low $714
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18 The volume of grindings (the industry term for processing cocoa beans into cocoa liquor, cocoa butter and cocoa powder) is equivalent to demand
19 Extrapolated from: The global chocolate confectionery market is estimated to be worth $88.3bn in 2014, growing at 2.7 per cent CAGR (2010-14), Business Insights report, www.foodnavigator.com, 18 May 2011
20 It is impossible to be precise given that many companies do not break down their profits by business segment. Barry Callebaut made a net profit of CHF209.1 million (£121 million) in 2007/08 from chocolate sales, ‘Barry Callebaut reports full year results for fiscal year 2007/08’, www.barry-callebaut.com; ADM made an operating profit of $423 million (£256 million) in 2008 (year ending 30 June) from its ‘other’ business segment that includes its cocoa activities, ‘ADM company reports annual results’, 4 August 2009, www.adm.com; Cadbury Schweppes reported pre-tax profits of £559 million in 2008, much of which derive from chocolate sales which provide 55 per cent of company revenues, ‘2008 performance’, www.cadbury.com; Hershey reported a net income of $311 million (£188 million) in 2008, ‘2008 Annual report to shareholders’, www.hersheycompany.com
Why is the international price of cocoa so unstable?
Cocoapricesarevolatileandinfluencedbyawiderangeoffactors.Theyreacheda27-yearlow($714/tonne)atNewYorkinNovember2000anda32-yearhigh($3,775/tonne)inMarch2011.
Currenthighpricesarestronglyaffectedby:• productiondeficitsinthreeofthelastfourseasons(2006/07,2007/08,2009/10)
• disruptionofcocoaexportsfollowingthedisputedpresidentialelectioninCôted’Ivoire,November2010.
Longer-termpricetrendsareaffectedby:•changesinsupplyanddemand• theratiobetweenstocksandgrindings18
(afallingstocks-to-grindingsratiopushespricesupandviceversa)
• corporateacquisitionanddisinvestmentinthecocoatradeandprocessingindustry.
Shorter-terminfluencesonpricesinclude:• favourableweatherconditions(goodcrop, fallinprices)
• periodsofextremewetordryweather,cropdisease,pestinfestationorpoorcropmaintenance(poorcrop,increaseinprices)
• costandavailability/lackofpesticides andfertilisers
• producerswithholdingstocksintheexpectationofhigherprices
• politicalinstabilityinproducingcountries•speculativetradingonfuturesmarkets.
Astheworld’slargestcocoaproducer,Côted’Ivoire’sweatherpatternsandvolatilepoliticscanhaveahugeimpactontheworldcocoaindustry.Favourableweatherconditionsin2000contributedtoplentifulsuppliesandhighglobal
stockswhichsawpricesslumptoa27-yearlowof$714atonne.Twoyearslater,afailedcouptooustPresidentLaurenGbagboledtocivilwar.
Theresultingconcernsaboutdisruptiontococoasuppliessawpricesclimbtoa16-yearhighof$2,335.In2010,Gbagbo’srefusaltorelinquishpowertorivalAlassaneOuattarafollowingthedisputedNovemberelectionpushedthecountryonceagainintoacivilwarthatkilledthousandsandlefttheeconomyinruins.Concernsaboutsupplieswereexacerbatedbyabanonexportsthatsawnearlyhalfamilliontonnesofcocoaheldupatthecountry’sports.Thispushedcocoapricestoa32-yearhighof$3,775atonnebeforeGbagbo’sarrestendedtheconflictinApril2011.WithexportsbackontrackandevidenceofabumperWestAfricancrop,pricesfellsharplyto$3,000byAugust,a20%drop.
Value capture: who gets what?
Theglobalchocolateconfectionerymarketwaswortharound$79.4bnin2010.19Worldcocoaandchocolateprocessing(grinding)anddistributioniscontrolledbyahandfulofmultinationalcompanies.Itisestimatedthatin2008,justfourofthem–BarryCallebaut,ADM,Cadbury,andHershey–madecombinedprofitsfromcocoaandchocolateofaround£1bn.20
6Fairtrade and cocoa
Futures markets and speculative trading
Likeothercommodities,cocoacanbetradedintwoways:eitherphysicallyboughtorsoldonthespotmarket,ortradedonthefuturesmarketsinLondon(Liffe)andNewYork(ICE).
Thetradingoffuturescontracts–acommitmenttobuyorsellastandardisedquantityofcocoabeansataspecifiedplaceandtimeinthefuture–isatoolusedbycommercialtradersandproducersto‘hedge’orprotectagainsttheriskoflossthroughfuturepricefluctuations.Futuresmarketsarealsousedbycorporatespeculators(hedgefunds)andprivateindividualstogambleonthepriceofcocoa.AccordingtotheWorldCocoaFoundation,cocoafuturespricesarehighlyinfluencedbyhedgefundmanagersandspeculators,whoseactivitiesserveasadrivingforcebehindshort-termvolatility.21
AtthebeginningofJuly2010,16oftheworld’sbiggestcocoaprocessorscomplainedthatspeculatorswereunderminingtheintegrityofLiffeanddemandedgreatertransparencyoverpositionstakenbytraders.Twoweekslater,itemergedthatthehedgefundarmofBritishcommoditiesfirmArmajarohadbought241,000tonnesofcocoa–about7percentoftheworld’stotalcocoasupply–for$920m(£648m).WithpricesatLiffehitting33-yearhighsamidconcernsaboutwetweatherandinstabilityaffectingproductioninCôted’Ivoire,Armajarowasbettingthatsupplieswouldfallandthesteepriseinpriceswouldcontinue.
Thisspectacularmoveintensifiedconcernsoverhowfinancialbuyersareseizingcontrolofsoftcommoditymarkets,sparkingvolatilityandmakingithardforsmallfarmerstoplanandinvestintheirbusinesses.Infact,inthemonthsimmediatelyfollowingArmajaro’sacquisition,goodweatherboostedproductioninCôted’IvoireandpricesfellbutArmajaroissaidtohaveavoidedlargelossesonthisbetasithadhedgeditspositiononfuturesmarkets.
Aswellashedgefundsandspeculators,investmentfunds[e.g.pensionfunds]areincreasinglybuyingintocommoditiesbecauseofmuchbetterreturnsthanequities.22ArecentreportfromChristianAid23implicatesthisactivityasafactorinthevolatilityofcommoditypricesandrecordhighfoodpricesofJanuary2010whichareputtingstapleslikemaize,riceandwheatbeyondthemeansoftheworld’spoorestpeopleandsignificantlyincreasingpoliticalunrest–reminiscentofthesoaringpricesin2008thatsparkedfoodriotsacrossmorethan30countries.
21 World Cocoa Foundation, Cocoa market update, May 2010, p.522 Wall Street Journal, 7 June 2011 23 Christian Aid, Hungry for justice: fighting starvation in an age of plenty, May 201124 Daniel Sellen, World Bank, Abidjan The Ivorian Cocoa Sector: recent developments, 200825 Agritrade, Executive brief: Cocoa, May 2008, p.5. A figure of 5 per cent is cited in a study from chocolate sales in France in 2002. In an analysis
by Christopher Gilbert (‘Value chain analysis and market power in commodity processing with application to the cocoa and coffee sectors’, Commodity market review, 2007-2008, FAO, pp.8, 23) 3.5 per cent is cited as the proportion accruing to producers of UK milk chocolate retail prices in 2004, but the average producer price share for UK chocolate for 1996-2005 was 5.7 per cent in Côte d’Ivoire and 6.4 per cent in Ghana.
Meanwhilefarmersonthegroundreceiveameagreportionoftheinternationalpriceofcocoa–around36percentinCôted’Ivoirein2008,withgovernmenttaxesaccountingforahuge35percent.24
WestAfricansupplychains,Figure4onpage7,showthatproducersselltheirdriedbeanstolocaltraderswhosellthemontoexporters,oftenforeign-ownedcompanies.Mostofthemoneyfromthecocoatradeismadeafterthebeans
havebeenprocessed,notablyfromthemanufactureofchocolate.Growersin WestAfrica–manyofwhomhavenevertastedchocolate–arelikelytoreceivejust3.5to 6.4percentofthefinalvalueofachocolatebar,dependingonthepercentageofcocoacontent.Thisiscomparedwith16percentinthelate1980s.Bycontrast,themanufacturers’sharehasincreasedfrom56to70percent,andforretailersfrom12to17percent,overthesameperiod.25
7Fairtrade and cocoa
26 The material on p.6 is adapted by the publisher from Towards a Sustainable Cocoa Chain,2009, with the permission of Oxfam GB, Oxfam House, John Smith Drive, Cowley, Oxford OX4 2JY UK, www.oxfam.org.uk. Oxfam GB does not necessarily endorse any text or activities that accompany the materials, nor has it approved the adapted text.
27 World Cocoa Foundation, Cocoa market update, May 2010, p.328 Oxfam, Towards a sustainable cocoa chain: Power and possibilities within the cocoa and chocolate sector, 2009, p.1429 Agritrade, Executive brief: The Cocoa sector in ACP-EU Trade, October 2009, p.6
Figure 4: West African cocoa supply chains26
Ghana
Licensed Buying Companies
Cocobod (industry regulator)
Based on Towards a Sustainable Cocoa Chain, Figure 4, p.17, Oxfam International Research Report, January 2009
Cocoa farmers Co-operatives
Côte d'Ivoire
Local Traders
Cocoa Farmers Co-operatives
Local Grinders Local Market Local Grinders* Local Market
*Local grinding in Ghana is very limited. **These companies are not just involved in the grinding stage of the supply chain: Barry Callebaut, Cargill and ADM sell small amounts of individual chocolate; Blommer and Barry Callebaut manufacture chocolate for consumers. ***Some chocolate companies also have their own grinding capacity, but this is limited.
Distributors Retailers Caterers Specialised Markets
Exporters & International Traders of cocoa beans, semi-processed products
Grinders: processing cocoa into cocoa powder, cocoa butter and industrial
chocolate** Barry Callebaut, Cargill, ADM, Petra
Foods, Blommer & others
Chocolate Companies: manufacturing chocolate
for consumers***
Nestlé, Cadbury Schweppes, Cémoi, Ferrero, Kraft Foods, Mars,
Hershey & others
Consumers
Cocoabeansareprocessedintosemi-finishedproductssuchascocoaliquor,cocoabutterandcocoapowder.Africancountriesproduce70percentoftheworld’scocoa.Butonly18percentofitisthenprocessedinAfricacomparedtoEuropewhichprocesses41percent.27Justthreecompanies–Cargill,ADM,andBarryCallebaut–grind40percentoftheworld’scocoa,amountingtonearly1.5milliontonnesayear.28
Amsterdamishometomanyoftheirmajorprocessinginstallations,whichexplainsthelargevolumesofcocoabeansimportedbythe
Netherlands.TheNetherlandsisalsotheworld’sleadingcocoagrinderandlargestexporterofcocoapaste(24%ofthetotal),cocoapowder(28%)andcocoabutter(30%).29RelativenewcomerOlam,basedinSingapore,isnowoneofthetopfourcocoagrinders.
Encouragedbygovernmenttaxbreaks,foreign-ownedcompaniesincludingCargill,ADM,BarryCallebautandOlamareinvestingheavilyincocoaprocessingfacilitiesinCôted’Ivoiretoreducecostsandensuretheyhave
8Fairtrade and cocoa
consistentsuppliesofcocoa.Withgrindingcapacitynowexceeding500,000tonnes,Côted’IvoireispoisedtoovertaketheNetherlandsastheworld’slargestcocoagrinder.30
Chocolatemanufacturersprocesscocoaliquor,cocoabutterandcocoapowdertoproducearangeofcocoaandliquidchocolateproductsforthebaking,confectioneryandspecialitychocolateindustriesaswellasblockchocolateforprivatebrandsandsupermarketown-labelproducts.Switzerland-basedBarryCallebautmakeschocolateforgroupssuchasNestlé,KraftandHersheyanddominatesworldproduction–preciseandcurrentdataishardtoobtainbutin2003,itcontrolled51percentofthemarket.31Thesecondandthirdlargestcompanies–US-basedADMandBlommer–controlledafurther20percent.32
Globalretailsalesaredominatedbyfivecompanies–Mars,Nestlé,Hershey,Kraft/Cadbury,andFerrero.Combined,thesecompaniesaccountfor57percentofchocolatesales.33Cadbury,MarsandNestléchocolatebrandsdominatetheUKmarketwhileHershey,MarsandNestlécontrol80percentofUSsales.34 ThelastdecadehasseenatrendforthesemajorbrandstophaseoutcocoaprocessingandsubcontractmanufacturetoprocessorslikeBarryCallebautandADMwho,inturn,areexpandingtheirproductioncapacityinEurope,theUSandMexicoandinproducercountriessuchasCôted’Ivoire,MalaysiaandMexico.
Child labour in cocoa production
In2004,theUSDepartmentofStateestimatedthat109,000childreninCôted’Ivoire’scocoaindustryworkedunder‘theworstformsofchildlabour’36,mainlyonfamilyfarms,andthatupto10,000werevictimsofhumantraffickingorenslavement.37Despiteimprovements,arecentreportsaysboysfromGhana,MaliandBurkinaFasocontinuetobetraffickedforforcedlabouronagriculturalplantationsincludingcocoafarms.38Childlabourremainswidespreadinthecocoasectorwithaquarterofchildrenagedbetween5and17livingincocoa-growingregionsinvolvedinitsproduction,mainlyonfamilyfarmsorworkingwithparents.Mostofthesechildrenareexposedtohazardousconditionssuchasusingdangeroustools(94percent)andcarryingheavyloads(80percent)with51percentreportinginjurieswhileatwork.39The2001Harkin-Engelprotocol–acommitmentbythecocoaandchocolateindustrytopromotevoluntarystandardstohelpeliminatechildlabour–hasplayedsomeroleindrivingmoreengagementwiththisissuebuthasclearlybeeninsufficientintransformingtheoverallpicture.
How Fairtrade is tackling child labour
Amajorcauseoftheuseofchildlabouris poverty:farmersreceivesuchlowpricesfortheirproducethattheycan’taffordtopayhiredworkers.Evenwherefarmerswanttheirchildrentoattendschool,thisisoftenhamperedbypooravailabilityofeducationinruralareas,andparentsnotbeingabletoaffordtobuyschoolbooksorpayteachers.
Itisnaturalforchildrentocontributetothehouseholdincomebyhelpingoutonthefamilyfarminappropriateworkthatdoesn’tjeopardisetheirhealthoreducation.ButFairtradestandardsprohibitchildrenfrombeingemployedinillegalorharmfulwork.RegularauditsaredesignedtodetectinstancesofchildlabourandmajorbreachesofFairtradestandardsontheworstformsofchildlabourcanresultinsuspensionoftheproducergroupalongwithcorrectiveactionstobetakentoaddresstheproblem.Theaimof
United Kingdom$1,286m
France$1,168m
Germany$1,159m
UnitedStates$879m
Netherlands$640m
Others$2,186m
Figure 5: Top five importers of retail chocolate by value, 200935
30 Reuters, www.flex-news-food.com, 17 August 2010 31 Agritrade, Executive brief: Cocoa, May 2008, p.532 ‘Cocoa’, www.unctad.org/infocomm33 Oxfam, Towards a sustainable cocoa chain: Power and possibilities within the cocoa and chocolate sector, 2009, p.15. Cadbury was
subsequently taken over by Kraft Foods in an £11.5bn deal on 2 February 201034 Oxfam, Towards a sustainable cocoa chain: Power and possibilities within the cocoa and chocolate sector, 2009, p.1835 World Cocoa Foundation, Cocoa market update, May 2010, p.336 The Worst Forms of Child Labour as defined in ILO Convention 182 of 1999 include: all forms of slavery, the sale and trafficking of children, debt
bondage, forced labour, forced recruitment of children for use in armed conflict, the use of children for prostitution, pornography, and trafficking drugs, and work which is likely to harm the health, safety or morals of children.
37 US Department of State, Country reports on human rights practices: Côte D’Ivoire, 24 February 2004, www.state.gov38 US Department of State, Trafficking in Persons Report, June 2010, www.state.gov39 US Department of State, Country reports on human rights practices: Côte D’Ivoire, 8 April 2011, www.state.gov
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thisprocessistoprovidetrainingandsupporttotheproducerorganisationinsolvingtheproblem,ratherthanimposingharshpunitivemeasuresthatcouldhavetheeffectofpushingfarmersdeeperintopovertyandputtingevenmorechildrenatrisk.MostimportantlyFairtradehelpsaddresstherootsofchildlabourbyempoweringandstrengtheningthepositionoffarmersininternationalsupplychains,helpingthemtobecomeorganisedwithintheircommunities,aswellasenablingthemtoearnabetterdealfromthesaleoftheirproduce.
Manyproducersareactivelytacklingchildlabouranditscauses.KuapaKokoo,aFairtradecertifiedco-operativeinGhana,hassetupawide-rangingChildLabourProgramme.Part-paidbytheFairtradepremium,itincludesataskforcetocarryoutinternalchecksonfarmsandtrainmemberstoidentifychildrenatrisk,aswellasorganisingKids’Campstoteachchildrenabouttheirrights.AndinJanuary2011,theco-operativelaunchedatwo-yearjointprogrammewiththeInternationalLabourOrganization(ILO)tomonitorandcombat childlabour.
Similarly,theKavokivaco-operativeinCôted’Ivoire,alsoFairtradecertified,hasbeenfightingchildlabourformanyyears.FormalisedbyitsChildLabourCharterin2008,programmestosupporttheeducationofchildrenhavebeensupplementedwithestablishingtaskforcestotrainmemberstoidentifychildlabourandtakeappropriateaction.
MoreinformationonhowFairtradeisrespondingtothisissuecanbefoundinaPositionPaperonChildLabourandaFactsheetonChildLabouravailableintheResourcessectionoftheFairtradeInternationalwebsiteatwww.fairtrade.net/info_sheets.html.
3. THis Is why fAirtradE iS neEdeD
Witharound70percentoftheworld’scocoabeinggrowninWestAfrica,particularlyCôted’IvoireandGhana,cocoagrowersaretypicallysubsistencefarmersonaverylowincome.Theygrowstaplefoodssuchasyam,plantainsandcassavaandperhapssellsmallamountsoffruitorvegetablestothelocalmarket.Cocoaisgrownalongsidethesefoodcropsandprovides
themaincashincomethatfarmersrelyontopayschoolfees,medicalbillsandpurchaseothernecessitiesfortheaveragehouseholdofsixpeople.Withonemainharvestayear,farmershavetobudgetcarefullythroughouttherestoftheyearandoftenneedtotakeoutexpensiveloans.Itisimpossibletosavemoneyandbythetimethenextharvestbeginsfarmersaredesperatetoselltheirbeanstogetcash.
Inadequate infrastructure
Asaresultofthelackofgovernmentinvestmentininfrastructure,villagesincocoagrowingareastypicallyhavepooreducationandhealthcareservicesandlackelectricityanddecentsanitation,withwateronlyavailablefromcommunalwells.Accessisviapoorlymaintainedroads,oftenimpassableinthewetseason,withvillagesinGhanatypically10kmfromthenearestpavedroad.Thisisincreasedto15kminCôted’Ivoire,wheretheclosesthospitalcanbeupto35kmaway.
Poor education
IlliteracyratesamongfarmersincocoagrowingcommunitiesofCôted’Ivoirecanbeashighas95percent.Schoolattendanceislow–becauseschoolsaresimplytoofaraway,orbecauseparentscan’taffordschoolfees,booksandothercosts–andisamajorfactorbehindchildlabouroncocoafarms.
Food insecurity
Farmersnowalsofacehigherfoodcostsandincreasingly,foodinsecurity.Therecordhighpricesfollowingthe2008globalfinancialcrisisweretoppedinFebruary2011whenagriculturalproductionwasdisruptedbysevereweather.40Itishardtoforeseeasignificantfallinfoodpricesinthenearfuture.
Lack of technical support
Governmentsinproducingcountrieslevyhighexporttaxesoncocoabeans41toboostnationaleconomiesattheexpenseoffarmerincomes.Buttoolittlehasbeenre-investedinsupportingfarmersbyprovidingtechnicaltrainingtoimproveyields,developco-operatives,buildbusinesscapacityorimprovemarketaccess. InGhanaandCôted’Ivoirefarmersharvestanaverageof300kg–400kgofcocoabeansperhectareperyear–upto50percentlowerthantheirpotentialproductivity.42Thisisduetooutdatedfarmingmethods,thelackof
40 FAO Initiative on Soaring Food Prices http://www.fao.org/isfp/isfp-home/en/ accessed May 201141 Oxfam, Towards a sustainable cocoa chain: Power and possibilities within the cocoa and chocolate sector, 2009, p.1342 Oxfam, Towards a sustainable cocoa chain: Power and possibilities within the cocoa and chocolate sector, 2009, p.6
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accesstotechnologyandfinanceand lackofincentivestoimprovedepletedsoilfertilityorreplaceageingtrees,manyofthemmorethan25yearsoldandpastpeakproductivity.
Rising farm costs
Accesstocreditislimitedbutthepriceoffertilisersandpesticidestocombatpestsanddiseasecontinuestoriseasdofuelandtransportcosts,whilelackoftrainingsupportandpoorfermentinganddryingtechniquesreducethequalityofthecrop.
Climate change
Ontopofallthis,climatechangeprovidestheadditionalthreatofcropfailureasaresultofunpredictablerainpatternsandmorefrequentandlongerdryperiodswhich,inturn,arepredictedtoincreasethenumberandspread ofpestsanddiseases.
Poor market information
Small-scalecocoafarmerstendtohavea lackofunderstandingaboutqualityrequirementsandlackinformationaboutlocalpricechangesandarefrequentlypaidlessthanmarketpricesbymiddlemen.Manyfarmerscomplainthatprivatetradersoftenusedistortedscalestofalselyweighfarmers’produceandunderpaythemfortheircrop.
Falling incomes in real terms
Inrealterms–adjustedforinflation–the pricefarmersreceivefortheircrophasfallenvirtuallyeveryyearsincethelate1970s. Thishasrestrainedeconomicdevelopment andexacerbatedpovertyinvulnerablecommunities.Atthesametime,profitsmade byglobalfoodgiantshavesteadilygrown.Itisonlyinthepastfewyears–amidrealindustryconcernsofastructuraldeficitincocoaproduction–thatthisdownwardtrendhasbeguntobereversed.Wheninternational cocoapricesrise,farmerstendtobenefitbut nottotheextentthattheyareautomaticallyguaranteedadecent,sustainableincome.
Theconsequenceofdecadesofuncertainorlowpricesisthatfarmershaveneithertheincentivenorresourcestoinvestinreplantingorpurchasingexpensiveinputsnecessarytoproduceahighqualitycrop.Youngergenerationswhoseenofutureincocoaareswitchingtomoreprofitablerubberproductionorheadingforthecitiesinthehopeoffindingamoredependablelivelihood,butoftenending upwithanequallyuncertainexistenceonthestreets.Asaresult,theaverageageofcocoafarmersinWestAfricaisnow5143,leadingtoseriousconcernsacrosstheindustryaboutthelong-termsustainabilityofthesupplychain:nococoafarmers=nochocolatebars.
This is how Fairtrade works for cocoa growers...
Fairtradeaimstosupportthedevelopmentofasustainablecocoasectorwherefarmersareabletobuildbetterlivelihoodsforthemselves,theirfamiliesandcommunitiesthroughareliableandsustainablecocoasupplyandmutuallybeneficiallong-termtradingrelationships.
Fairtradecertificationforcocoaproducersisopenonlytosmallfarmerorganisationswhichareownedandgovernedbythefarmersthemselvesandhaveademocraticdecision-makingstructureandtransparentadministrationinplace.
Fairtradestandardsencouragethesocial,economicalandenvironmentaldevelopmentof
Figure 6: Cocoa prices in real terms
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43 Binam, J. N., Gockowski, J. and Nkamleu, G. B. (2008), Technical Efficiency and Productivity Potential of Cocoa Farmers in West African Countries. The Developing Economies, XLVI-3 (September 2008): p. 254
Source:InternationalCocoaOrganization(ICCO)
11Fairtrade and cocoa
producersandtheirorganisations.Thestandardsactasasafetynetforsmallfarmersagainsttheunpredictablemarket,ensuringtheygetapricethatcoverstheiraveragecostsofproduction.
KeyprovisionsandobjectivesofFairtradestandards:• Aminimumpriceof$2,000/tonneforFairtradecertifiedcocoabeans,orthemarketpriceifhigher
• AnadditionalFairtradepremiumof$200/tonneforinvestmentincommunity,businessandenvironmentalprojects
• Anextra$300/tonneforFairtradecertifiedorganiccocoabeans
• Producerorganisationscanrequestpre-finance(credit)ofupto60percentofthepurchaseprice
• Promotionoflong-termtradingpartnershipsandequitablebusinessrelationshipsinthetradingprocess
• Environmentalstandardspromotesoundagriculturalpracticesandenvironmentalstewardshipfocusingonminimisedandsafeuseofagrochemicals,properandsafemanagementofwaste,maintenanceofsoilfertilityandwaterresources,nouseofgeneticallymodifiedorganisms
• Forcedlabourandchildlabourareprohibited.
Thevolatilityofcocoapricesonworldmarketsmakesithardforfarmerstopredicttheirincome,planproductionandmakelong-terminvestmentdecisions.Butonethingisclear:throughpeaksandtroughs,Fairtradedeliversforcocoaproducers,givingthemasustainablepriceandadditionalpremiumtoinvestincommunity,socialandeconomicprojects.
Is Fairtrade cocoa changing the mainstream market?
Consumer pressure
Inrecentyears,effectivecampaignstrategieshaveexposedproblemsinsupplychainsindevelopingcountries,highlightingissuesfromworkers’rights,childlabourandclimatechangetotheimpactofproductiononlocalcommunitiesandtheenvironment.
Arecentsurvey44foundthatUKconsumerscontinuetohavehighexpectationsofhowcompaniesoperateindevelopingcountries:over80percentsaidcompaniesshouldprotecttheenvironmentandensurefarmersandworkersarepaidfairlyandhavesafeworkingconditions.
Consumers,then,areincreasinglyawareoftheimpactoftheirpurchasesandwanttobereassuredthatproductsareethicallyandresponsiblyproduced.
Fairtrade certification is unique
Tomakeappropriatepurchases,consumersmustnegotiateamazeofbrandclaims,industryinitiativesandcertificationschemesandassesstheirmerits.
Whileseveralschemesaimtoprotecttheenvironmentordevelopproducttraceability,Fairtradeistheonlycertificationschemewhoseprimarypurposeistotacklepovertyandempowerproducersindevelopingcountries. Aninternationallyaccredited(ISO65)independentinspectionbodyupholdsFairtradestandardsandunderpinstheintegrityofthecertificationsystem–asendorsedbyarecentsurvey45thatfoundnineoutoftenconsumerstrustFairtrade,significantlyhigherthanforanyotherethicallabel.SopurchasingFairtradegoodsgivesconsumersapowerfulandcrediblewayofaddressingtheseconcernsandreducingpovertythroughtheireverydayshopping.
Fairtradeisalsouniqueasacertificationschemeinbeingsupportedbyawidespread,grassrootscampaign,withover500localcommunitycampaignsintheUKaloneaswellasthousandsofschools,universitiesandfaithgroupsallcampaigninglocallyinsupportofFairtrade andtheprinciplesitembodies.
Businesses respond
Smartbusinessesarerespondingtoconsumerdemandsthatcompaniestreatsuppliersfairlyandrespecttheenvironmentasawin-winscenarioinwhichdoingtherightthingenhancesbrand
44 GlobeScan June 201145 TNS March 2011
12Fairtrade and cocoa
reputation.ThreeoutoffourUKconsumersseethird-partycertificationasthebestwaytoverifycompanies’claimsaboutsocialsustainability.Andwiththree-quartersofconsumersalsosayingtheFAIRTRADEMarkonproductshadapositiveimpactonbrandperceptions,theindependentscrutinyoftheMarkcanplayanimportantroleforbusinessesinmanagingthereputationoftheirbrandswithconsumersanddemonstratingtheirsustainabilitycredentialstomedia,investors,suppliersandgovernments.
Chocolateconfectionerycompaniesacrosstheworldareconcernedaboutthesecurityoffuturesuppliesandsharecommongroundwithfarmersinneedingtoimprovesustainableproductionpracticesandreducepricevolatility.Inthisenvironment,forward-lookingbusinessesunderstandtheimportanceoflong-termrelationswithproducerpartnersasameansofensuringreliablesuppliesofcocoa,andagrowingnumberofbusinessesintheUKarebenefittingfromworkingwithFairtradeandbuildingstableandsecurerelationshipswithcertifiedproducerpartners.
Developing farmer businesses
Fairtradestandardssupportthedevelopment offarmers’organisationsintowell-organisedbusinesses,accountabletotheirmembers.Economiesofscaleallowthemtoprovidefarmerswithtechnicalandmarketingservicesandimplementprogrammestoincreaseyieldand
quality,enablingthemtooffercompaniesreliable,secureandsustainablesuppliesofcocoabeans.
Independentinspectionprovidesthescrutinythatmotivatesproducerorganisationstoactivelyandeffectivelyensurecomplianceandtoprogressivelystrengthentheirorganisationsbydevelopingandadaptinginternalsystemsandprocesses.
Supporting producer organisations
Morebroadly,FairtradeisalsoinvestinginFairtradeProducerNetworksinAfrica,AsiaandLatinAmerica,andinliaisonofficerstohelpproducersgetthebestoutofthesystem,andtosharebestpracticeinfarmingtechniquesandorganisationaldevelopment.FairtradeProducerNetworksarealsodevelopingstrategicpartnershipswithfinancialinstitutions,regionaltechnicalassistanceprogrammesandgovernmentoutreachprojects.TheAfricanFairtradeCocoaNetwork,forexample,wasrecentlyestablishedtosupportpeerlearningandinformationexchangetopromotegreateraccesstomarketsandtechnicalassistance.
Healthy global sales growth
GlobalsalesofFairtradecocoagrewfrom14,000tonnesin2009to35,000tonnesin2010,up114percent,mainlyduetogrowthintheUKmarket.Fairtradeaccountsforaround0.9percentoftheworldcocoamarketandcertifiedproducerorganisationshaveanestimatedcapacityof109,000tonnes.
46 Fairtrade Labelling Organizations International (FLO) internal documents and FLO Annual Reports 2002-09
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13Fairtrade and cocoa
UK chocolate sales soar
Morethan120companiesnowmarketover500Fairtradechocolateconfectioneryproducts47,drivingaten-foldgrowthinretailsalesfrom£32min2008to£343min2010.Withthetotalcategoryworth£3.2bnin201048,Fairtradesalesnowmakeuparound10percentofUKchocolateconfectionerysales.Seethefullrangeat www.fairtrade.org.uk/chocolateproducts.
Alternative trade organisations lead the way
Fairlytradedcocoaandchocolatehadbeensoldbythepioneeringalternativetradeorganisationsformanyyears.Traidcraft,setupin1979,sellsarangeofFairtradechocolatebars,andhasdevelopedsnackproductslikeGeobartobuildsalesforcocoaproducers.Cafédirect,thepioneeringcoffeecompany,alsosellshotchocolatefromfarmersintheDominicanRepublicandSãoTomé.
DivineChocolateisauniqueFairtradechocolatecompanysetupbyKuapaKokoo,aco-operativeofcocoafarmersinGhana,sothattheycouldaccessagreatershareofthevalueofthechocolatemadefromtheircocoa.Whilemostcocoafarmersdependonanincomefromsellingrawcocoa,whichisworthafractionofthevalueofchocolate,theKuapaKokoofarmersbenefitnotonlyfromtheFairtradepremiumwhentheyselltheircocoa,butalsofromtheir45percentshareofthedistributablecompanyprofitsandhavingapowerfulvoiceinthebrand’soverallstrategy.Byhavingfarmerscentraltoitsproposition,DivinehasmadeKuapaKokoofamousandcompanyownershiphasmeanttheco-operativehasbecomearealplayerintheGhanaiancocoaindustry.
Divine’ssuccessinmainstreamchannelshasbuiltconsumerdemandforFairtradechocolate
andinfluencedbigbrandsandretailerstocertifysomeoftheirproductsasFairtrade.Thenextstepistoencourageothermanufacturerstoempowerproducersbycommittingtofairtermsoftradeinthelongterm,andgivingthemashareinthewealththey’vehelpedcreate.
Own-label market opens up
TheCo-operativeswitchedallitsown-labelchocolatetoFairtradein2002andlaunchedtheUK’sfirstown-brandFairtradeproductin2005.Marks&Spencer,Sainsbury’sandWaitrosenowalsohaveextensiverangesofown-brandFairtradechocolateproducts.
Big brands come on board
InJuly2009,CadburyDairyMilkbecame100percentFairtradeintheUKandIreland,49thefirstmassmarketchocolatebartogainFairtradecertification.ThiswassubsequentlyextendedtoincludeCanada,NewZealand,Australia,andJapan–acombinedmovethatquadrupledtheamountofcocoasoldunderFairtradetermsforcocoafarmersinGhana.AndinabreakthroughforFairtradeinAfrica,top-sellingCadburyDairyMilkbarsinSouthAfricawillbeconvertedtoFairtradebytheendof2011–thefirst-everFairtradechocolatebarsourced,manufacturedandsoldentirelyinAfrica.
January2010sawNestléswitchfour-fingerbarsofKitKattoFairtrade,workingwithfarmersinCôted’Ivoire.Meanwhile,Green&Black’s–whoseMayaGoldchocolatebarwasthefirstproducttocarrytheFAIRTRADEMarkin1994–announceditwillswitchitsentirerangeofchocolatebarandbeverageproductsto100percentorganicandFairtradein30countriesbytheendof2011.ThesecommitmentswillinitiallyimprovelivelihoodsofthousandsofcocoafarmersinCôted’IvoireandDominicanRepublic.
47 This category includes chocolate bars, boxes of chocolates and Easter eggs but not composite products such as ice cream and biscuits48 The Grocer, Top Product Survey 2010, 18 December 2010 49 Fairtrade Foundation, ‘UK first as Cadbury Dairy Milk takes Fairtrade further into the mainstream’, 22 July 2009, www.fairtrade.org.uk50 Fairtrade Foundation, ‘Facts and figures on Fairtrade’, www.fairtrade.org.uk/what_is_fairtrade/facts_and_figures.aspx
Figure 8: How UK sales of Fairtrade chocolate confec8onery have grown (£ million)
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14Fairtrade and cocoa
Fairtrade benefits in Ghana
TheKuapaKokoococoaco-operativeinGhanarepresents63,000small-scalegrowersin1,400villagesocietiesandhasbeenFairtradecertifiedsince1995;itistheonlyfarmer-ownedorganisationamongtheprivatecompaniesinGhanagrantedlicencestotradecocoa–mostfarmershavetoselltheircropindividuallytolicensedbuyingcompanies.Kuapa’smembersproduced35,000tonnesofcocoain2009,ofwhich27percentwassoldasFairtrade,tobeusedinhundredsofproducts,notablyDivinechocolate.KuapaarealsonowsupplyingcocoatoCadburyaspartofthecompany’sconversionofDairyMilktoFairtrade.
MostKuapafarmersgrowcocoaalongsidefoodon3-4hectaresofland,withcocoasalesprovidingalmostalltheirincome.Fewhaveaccesstoadequatehealthcare,cleandrinkingwaterorelectricity,andchildrenaretaughtinonlybasicschools.TheextraincomefromtheFairtradepremiumhashelpedbuildhundredsofwaterboreholes,publictoilets,andtwoday-carecentresaswellashelpingtofundamobilehealthprogrammewhichvisitsthevillages.WarehousinghasbeenconstructedatTemaport,farmershavebeenpaidendofyearbonusesanddevelopmentofficershavebeenemployedtoadviseongoodagriculturalpractices,setuptrainingprogrammesinmanagementandleadershipskills,andorganiseHIV/AIDSworkshops.
AnassessmentoftheimpactofFairtradeatKuapafoundwomen’sparticipationinKuapahasbeenactivelypromoted;eachco-operativesocietyelectsaseven-strongManagementCommitteeofwhichtwomustbewomen.51Alternativeincomegeneratingschemesfortheempowermentofwomenhavebeensetup:tie-dyetextiles,soapmaking,palmnutproductionandpalmoilextraction,cornmillingandsnailfarmingforlocalandexportmarkets.
ThepremiumwasfoundtohavehadanimpactbeyondKuapamembers–over100,000peopleinthecommunityhavebenefittedfromfreemedicalattentionandprescriptionsandtheconstructionofaschoolbuilding.
Interviewsin2002withparents,childrenandteachersindicatedthattheschoolbuildingprojecthad‘emphatically’improvedschoolattendance,healthandthequalityofeducation.Anincreasedentrepreneurialspirithasalsoemergedamongstwomensupportedtoengageinincome-generatingactivities,withindicationsofincreasedwellbeingamongstwomen,despiteincreasesintheirworkload.ParticipationinKuapaKokooandtheestablishmentoftheDivinechocolatecompanyinwhichtheproducershaveasignificantownershipstakehasalsoprovidedmemberfarmerswithanincreasedsenseofcontrol.52
51 Fairtrade Foundation, ‘Kuapa Kokoo Union’, www.fairtrade.org.uk/producers/cacao/kuapa_kokoo_union.aspx52 L.Ronchi, Monitoring impact of Fairtrade initiatives: A case study of Kuapa Kokoo and the Day Chocolate Company, 2002
‘With Fairtrade income we were able to implement a fermentation programme to improve the quality of our cocoa and convert our production to certified organic. This improved our position in the export market. The Fairtrade market is a very important market for the survival of our members.’ IsidorodelaRosa,ExecutiveDirector,ConacadoCo-operative,DominicanRepublic
Fairtrade impact is growing
Therearenow62Fairtradecertifiedproducerorganisationsrepresentingmorethan120,000farmersacross18countries–Belize,Bolivia,Cameroon,Colombia,CostaRica,Côted’Ivoire,DominicanRepublic,Ecuador,Ghana,Haiti,India,Nicaragua,Panama,PapuaNewGuinea,Peru,SãoTomé,SierraLeoneandSriLanka.In2010Fairtradecocoagenerated$5.1minFairtradepremiums,mainlyinWestAfrica.
4. How Fairtrade benefits farmers and their families
15Fairtrade and cocoa
Fairtrade benefits in Côte d’Ivoire
MembershipofKavokivaco-operativehasgrowntomorethan3,400farmersintheDaloadepartmentofsoutheastCôted’Ivoire,wheremorethan40percentofthecountry’scocoaisproduced.Adecade-longperiodofpoliticalcrisis,includingcivilwar,sawpovertylevelsinthecountryclimbtonearly50percentin2008alongwithaslowdeteriorationofbasicsocialandeconomicinfrastructuresuchashealthandeducation.
ManyofthevillagesinwhichKavokivamemberslivehavenoelectricity,withdrinkingwateronlyavailablefromthevillagewell.Accesstohealthcareisinadequateandthenearestclinicorhospitalcanbemorethan10kmaway.Theilliteracyrateamongagriculturalcommunitiesisashighas95percent,withmanyschoolspoorlyequippedandtoofarawayforchildrentoattendeachday.
Fairtradecertifiedin2004andwithincreasedsalesfollowingtheconversionofNestlé’sfour-fingerKitKattoFairtrade,KavokivaisusingtheFairtradepremiumtoincreaseproductionandhelpmeetthesocialneedsofmembersandtheircommunities.
Aqualifiedagronomisthasbeenhiredtoimprovefarmingtechniquesandboostyields.Cleanwaterandhealthcarearepriorities–farmerscan’tworkontheirfarmsiftheyaresick–andthreenewwellswithpumpshavebeenconstructed.Amajorachievementhasbeentheconstructionofahealthcentrewithadoctor,midwife,andtwonurses.Anambulancehasbeenpurchasedtocollectpatientsandafreehealthinsuranceschemewithaffordablemedicinesisavailabletoallmembers.
Withaccesstoeducationaprioritybutproblematic,Kavokivadistributesscholarshipstomemberstopaytheirchildren’sschoolfees.Andwheregovernmentschoolsaretoofarforchildrentoattend,thepremiumhashelpedtobuildvillageschools,withtheirparents’feescontributingtoteachers’salaries.
Fairtrade benefits in Dominican Republic
TheDominicanRepublicisthesecondpoorestcountryintheCaribbeanafterHaiti,withforty-twopercentofitspopulationof9.6millionlivingbelowthepovertyline.Cocoaisgrownbyaround40,000small-scalecocoagrowers.Oneofthemainagriculturalexports,itiswortharound$60mayeartotheeconomy.
CONACADOismadeupof182small-scaleproducerassociationswithatotalmembershipof10,000cocoafarmers.Theaveragefarmis4.3hectares(10.6acres).Cocoaisgrownundertheshadecanopyoftallnativetreesandsmallerbanana,citrus,andavocadotreeswhosefruitissoldatthelocalmarket.Vegetablesaregrownforhomeconsumption.
Almosthalfofmembers’productionisnowsoldtotheFairtrademarket.Theadditionalincomehasbeeninvestedinprocessingandwarehousefacilitiestoimprovethequalityoftheircocoa,30extensionofficershavebeenemployedtoprovidetechnicaltrainingtoimproveyields,converttoorganicproductionandplantnewtrees.Schoolshavebeenbuiltandrepaired,withscholarshipsandequipmentprovidedtostudentsfrompoorerfamilies.ThenewITcentrehelpschildrenwithschoolworkandbringstheinternettothecommunity.Aclinic,freemedicalchecks,andcleanwaterprojectsareimprovinghealth.
16Fairtrade and cocoa
53 ICCO Press Release, Uncoordinated projects could make cocoa’s boom and bust cycle worse, the ICCO’s Executive Director says, www.icco.org, July 2011
RamigiaMoyaisa68-year-oldwidowandcocoafarmerwhosedaughterandson-in-lawhelponherfarm.Shenowhasatapoutsideherhomeprovidingpipedspringwaterforwashingandotherhouseholdchores.
MarianoManzuela,a64-year-oldcocoafarmerwithawifeand11children,isoneofthepoorestfarmersinhiscommunity.Fairtradepremiumprojectshavebenefittedhisfamilyinseveralways.Hehastakenoutaloantoextendandrepairhishouse,hischildrenhavereceivedscholarshipstopayforschoolexpensesandexamfees,andanewclassroomisbeingbuiltattheprimaryschoolhisyoungestsonattends.Fourofhischildrenarestillinschoolandhehopestheywillbeabletofinishtheireducation,unlikeoneofhisdaughterswhohadtogiveupheruniversityplaceastheexpensesweretoohigh.
ReadmoreonourCocoaProducerspagewww.fairtrade.org.uk/producers
5. Conclusion
Cocoagrowerscontinuetofacechallengesonmanyfronts:fluctuatingprices,ageingandunproductivecocoatrees,depletedsoilfertility,theuncertaintiesofclimatechange,therisingcostsoffarminputs,fuelandtransport,lackofaccesstocredit,andlackofnegotiatingpowerinthesupplychain.
Intheirdailylives,farmerscontendwithrisingfoodprices,poorlocalinfrastructure,inadequatehealthcare,limitededucationalopportunities fortheirchildrenand,insomecases,politicalinstability.
FormanyyearsUNagencytheInternationalCocoaOrganization(ICCO)hassupportedprojectstodevelopcocoaproductionandtradeandimprovetheincomesofsmallholdercocoafarmers.InJune2010,undertheauspicesoftheUnitedNationsConferenceonTradeandDevelopment(UNCTAD),majorcocoaexportingandimportingcountriessignedanewInternationalCocoaAgreementwiththeobjectiveofdevelopingasustainablecocoatradewithincreasedbenefitstoallstakeholders,inparticularforthesmallholderproducers.
Withdemandoutstrippingsupplyinthreeofthelastfouryearsandstronggrowthindemandpredictedinemergingeconomies,multinationalcompaniesthatprocess,manufactureandmarketchocolateproductsareincreasinglyconcernedaboutsecuringreliablesuppliesofgoodqualitycocoaforthefuture.Inrecentyearsmajorcompaniesandindustrybodies,backed
byproducingcountrygovernments,have setupmorethan60ongoingcocoaprojectsdesignedtoaddresstheissueofsustainabilityandimprovethelivelihoodsofcocoafarmers,largelybyfocusingontrainingfarmers toimprovequalityandincreaseproduction andproductivity.
Whiletheseinitiativesaretobewelcomed,theywillnotnecessarilyredressthelong-termtrendoflowandunstablepriceswhich,asdescribedearlier,areamajorfactorbehindthelackofinvestmentinqualitycontrolorreplacingageingtreesandtheconsequentfallorstagnationincocoaproduction.And,accordingtotheICCO53,theseuncoordinatedprojectscouldhavetheoppositeeffect:worldproductioncouldjumpbyupto50percentto6milliontonnes,floodingthemarketandcausingapricecollapse,ashappenedinNovember2000whenthemarketslumpedtojust$774pertonne.
Ultimatelysustainabilitycanonlybeachievedinthecocoasectorwhensmallholderfarmersareabletomakeadecentlivingandtheirchildrencanseeaviablelongtermfutureintheindustry.Thismeansmorethanjustincreasingproduction,italsomeansensuringthatfarmersareabletocaptureagreatershareofthevalueoftheindustryoverall.
Fairtradestandardsareaframeworkfor thesustainableproductionofcocoawithineconomicallysustainableagriculturalcommunities.Thestandardsincludea
guaranteedminimumpricewhichhelps farmersplantheirfarmandhousehold budgetsforthecomingyear.TheyalsoincludeanadditionalFairtradepremiumforfarmers andtheirorganisationstoinvestinbusinessimprovements,communityprojectsandenvironmentalprotection.
Inthelonger-term,Fairtradehelpsproducerorganisationsandfarmersweatherlowandunstablemarketsbyencouraginggreater
accesstofinancing,relationshipbuildingbetweenbuyersandsellers,andimprovedcontractterms.
Manyfarmers’organisationsarecurrentlyapplyingforFairtradecertification.Wearethereforeworkingtoincreasecompanyengagementtowardsgreatersustainabilityandmoreequitabletradingpractices,recognisingthecontinuingchallengesfacedbymillionsofsmall-scalecocoafarmersaroundtheworld.
What you can do
• SwitchtoFairtradechocolateorkeepenjoyingFairtradechocolateifyoualreadydo.
• CheckoutthehugeselectionofFairtradecocoaproductsfromcakesandbiscuitstoicecreamandchocolatespreadatwww.fairtrade.org.uk/products.
• Lookforbeautyproductslikecocoabutterbodywash,lipbalmandbathcream,whichcreatenewsalesopportunitiesforcocoagrowers.
• SupportbrandsfromdedicatedFairTradecompanieslikeDivineandTraidcraft.
• AskyoursupermarkettostockmorechocolateandcocoaproductscarryingtheFAIRTRADEMarkandtoswitchtheirownlabelchocolateandcocoatoFairtradeifithasn’talready.
• WriteandaskyourfavouritechocolatecompanytoswitchtoFairtrade.
• AskyourlocalshopsandcafestoofferFairtradechocolate,hotchocolate,cakes,biscuitsoricecream.Useour‘DearShopManager’postcardstomakethiseveneasier.
• Askyourworkplace,localauthority,collegesandschoolstosupportFairtradewherevertheycan.Askyourfriendsandfamilytodothesame.
• CheckoutWDM’scampaigntoendtheopportunisticspeculationincommoditymarketsthatcausesdramaticrisesandfallsinthepricesofstaplefoods–seewww.wdm.org.uk.
FairtradeFoundation,3rdFloor,IbexHouse,42-47Minories,LondonEC3N1DYT:+44(0)2074055942F:+44(0)2079770101W:www.fairtrade.org.ukTheFairtradeFoundationRegisteredCharityNumber:1043886.VATRegNo:672545323.CompanyReg.inEngland&WalesNo.2733136