“Today, letters and numbers are found in many children’s shoes. It is time to reflect on the origin of all these goodies”, write Susanne Boetekees and Koen Van Troos.
Today, like every year, we celebrate Sinterklaas, the high mass of our favorite sweet sin. And the chocolate sector is a big part of that. Letters, figurines of Saint Nicholas and his four-legged friend, but also ordinary chocolate bars are found in the shoes of children and many adults at that time. It’s time to reflect on where all these goodies come from and on the known problems of cocoa farmers that Fairtrade has been trying to solve for years. Convincing companies to work together for a better future for cocoa farmers through fair trade conditions is certainly not always easy. The current system therefore aims to pay farmers as little as possible. In this dramatic race to the bottom, the bottom is the problem. The bottom should go up.
Low prices, high costs. Also for cocoa producer.
The inflation we are battling around the world is causing the prices of our daily necessities to rise. This is also the case in West Africa, where many cocoa farmers already live below the poverty line. The cost of living, especially in Ivory Coast, has increased by 14% and the production costs of cocoa farming have gone absolutely crazy. Fertilizer prices, for example, have increased by 50-60%. You don’t have to be a mathematician to realize that this will only push producers further into poverty. And poverty is the main cause of child labor and deforestation.
The price, the price, the price
The problems of cocoa farmers have been worked on for years. With the help of business and other programs and projects, farmers.innen are doing their best to become more productive, produce more sustainably, combat child labor and tap into multiple sources of income. These investments are important, but they will miss their mark if corporate purchasing practices do not improve. Good purchasing practices, including a fair price, but also long-term purchasing agreements with farmers, are absolute prerequisites for a sustainable cocoa sector.
Fairtrade recently announced itsCocoa price differential‘ of Fairtrade certified cocoa from Côte d’Ivoire, to be purchased between October 1, 2022 and March 31, 2023. It is the price difference between the price set by the government and the Fairtrade minimum price that must be paid for at least allow farmers to cover the costs. “The price difference between Fairtrade and non-Fairtrade cocoa beans is now very significant,” said a cocoa trader in response. And that’s true. The price difference is even currently 41% for cocoa beans from Côte d’Ivoire. It’s a stark contrast, but it’s the reality.
Non-negotiable terms of trade for fair trade
And this is how Fairtrade distinguishes itself from other sustainability labels or programs. Focusing on non-negotiable trading terms with the Fairtrade Minimum Price (to protect farmers when the world market price drops) and the Fairtrade Additional Premium as workhorses. Other initiatives do not necessarily have these conditions in their set of requirements and allow companies to “brand” sustainably without changing their purchasing practices. None of this with Fairtrade, where minimum price conditions are a first step towards a better income.
This is why Fairtrade and Tony’s Chocolonely launched the Living Income Benchmark Price in 2019. It is a price above the Fairtrade Minimum Price and which a cocoa farmer should receive for a kilo of cocoa beans in order to earn his life. Unlike the Fairtrade Minimum Price and Premium, the payment of this reference price is voluntary and is the direct responsibility of the cocoa industry. This is an important way to achieve the promised goals for a sustainable cocoa sector, as set out in the Belgian partnership for a sustainable cocoa sector, Beyond Chocolate. In practice, however, it is not business as usual (yet).
And yet, there’s also a lot going on (thanks in part to Beyond Chocolate). We are proud of Belgian companies that have taken the first step with Fairtrade, such as Galler and recently Guylian, the iconic Belgian chocolate seafood brand that has completely switched over to Fairtrade. In addition, various brands and supermarkets (Tony’s, Oxfam Bite to Fight, Aldi Choco Changer, Lidl Way to Go, Colruyt boni tablet 72%, etc.) have now adopted the voluntary living income reference price. These precursors show that paying a fair price to cocoa producers is indeed possible and that it pays off.
Unfortunately, a large portion of businesses are still trying to get the lowest possible purchase price, which leads to environmental damage and human rights violations. In this dramatic race to the bottom, the ground is part of the real problem.
From bottom to top
It is precisely here that something fundamental must change. True sustainability looks at what the farmer needs at a minimum to earn a living income, so they can invest in a sustainable future. The bar must be raised, but so must the low. And at a minimum level that the industry will have to pay for the cocoa beans it buys.
Many companies cite the need for a “level playing field” in order to take a step towards better purchasing practices. Legal frameworks to address environmental damage and human rights violations in international chains are therefore seen as an important development. But let’s not wait for that and see what must (and can) be done now. Pioneers have already shown that no one needs to wait to take the right steps to improve the living conditions of cocoa farmers.
Susanne Boetekees is policy director at Fairtrade Netherlands.
Koen Van Troos is responsible for public relations and advocacy at Fairtrade Belgium.