Fairtrade USA confirms move to increase cocoa payments

Fair Trade USA has set out a policy of increasing its minimum price and Community Development Premium for cocoa by 20 per cent as of October 2019.

The organisation said the move would help farmers in a bid to become closer to earning a living income, and assist in reduce the poverty and child labor that is prevalent in West Africa’s cocoa fields.

The decision follows a lengthy consultation and evaluation process which deemed such changes necessary to help farmers cover the costs of sustainable production while investing in the long-term viability of cocoa farming communities.

The Fair Trade Minimum Price will increase from $2,000 per metric ton (MT) to $2,400 per MT and the Fair Trade Premium from $200 per MT to $240 per MT for conventional cocoa.

For organic cocoa, the fair trade price will be $300 above the market price or the fair trade minimum price, whichever is higher at the time of sale, and the premium will increase from $200 per MT to $240 per MT. Fairtrade International has also announced the same increases in cocoa minimum price and premium.

Cocoa prices plummeted by more than 30 percent in 2017/18, and cocoa communities in West Africa have been hit hard. In the Ivory Coast, with a current market price of $2,124 per MT for cocoa beans, cocoa farmers are making less than $1 per day. And while fair trade is the only certification to require a mandatory minimum price and premium, research found that more than half of certified cocoa farmers in the Ivory Coast were still earning well below a living income.

“The Fair Trade Minimum Price and premium for cocoa beans were simply not sufficient for farmers to maintain a safety net that protects them from volatile cocoa market prices and extreme poverty, much less to tackle the other issues that our program strives to address – child labor, slavery, and environmental degradation,” said Thibault de Chatellus, Vice President, Consumer Packaged Goods at Fair Trade USA. “The new minimum price and premium will get farmers one step closer to a living income and sustainable livelihoods as cocoa producers.”

To earn fair trade certification, cocoa producers are audited against rigorous fair trade standards which cover four main pillars of sustainable development: income sustainability, empowerment, well-being, and environmental sustainability. When a company buys cocoa on fair trade terms, they pay at least the Fair Trade Minimum Price and an additional Community Development Premium in addition to complying with the ethical trading practices that fair trade standards require.

With this change, it is very likely that the minimum price will come into effect with the next harvest and additional money will be generated for fair trade farmers. The difference between the market price and the Fair Trade Minimum Price will be additional income to support their own families and operations.

The $240 per MT premium is directly paid into the Fair Trade Community Development Fund for farmers to collectively invest in the projects they need most – from wells for clean drinking water and health clinics to scholarships and school supplies. In 2018 alone, $4.4 million in Fair Trade Premium was generated from the 48.8 million pounds of cocoa beans sold by its cocoa farmers under its certification scheme.

“TCHO supports Fair Trade USA’s decision to increase the Fair Trade Minimum Price and Premium for cocoa,” said Laura Ann Sweitzer, TCHO Source Director.

“The higher minimum price will move the fair trade cocoa value chain in the right direction. While not a complete solution to cocoa sustainability, it gives us a chance to get it right.”

“It’s critical that the farmers that nourish us receive enough compensation for their hard work to nourish themselves and their families,” said Mike Forbes, CEO of Alter Eco Foods. “This price increase is an important first step in the right direction. Alter Eco and its employees wholeheartedly support this move.”

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