Fairtrade research finds living income payments deliver results for cocoa communities

Research from Fairtrade International has found cocoa farmers who were paid a living income reference price under its schemes alongside Tony’s Chocolonely and Ben & Jerry’s, earned around 15 percent more compared to government regulated farmgate prices, reports Neill Barston.

The global movement, which was among keynote speakers at our last World Confectionery Conference, which returns again to Brussels on 12 September, has analysed its performance on the major issue of helping ensure a living income for agricultural workers in the sector.

According to its latest Fairtrade Living Income Progress Report 2023, it examined the results of two years of specifically targeting how to improve financial conditions for farmers.

As the organisation noted, its partners – Tony’s Open Chain, Ben & Jerry’s, and six Fairtrade certified cocoa cooperatives – worked together to improve farm profitability towards target values for cocoa yields, crop diversification, and cost efficiency, alongside the two companies paying the Living Income Reference Price for the cocoa they sourced from these cooperatives.

Furthermore, Fairtrade added that the findings in the report showed that after the first year, 21 percent of farmer households reached a living income with an average of $4,735. The number fell to 18 percent in the second year with an average of $4,220, but severe droughts and lower farmgate prices set by government were partially responsible.

Overall, though, the report noted that with an average of 48 percent of total production volumes sold at the reference price, farmers earned an average 15 percent more for their cocoa sold. Moreover, the cooperatives that sold an even larger share of their volumes at the reference price earned up to 47 percent higher cocoa revenues.

As the report revealed, Fairtrade has been among many movements and industry organisations that have backed the upcoming EU legislation on due diligence. While this is not anticipated to be a complete solution to relieving financial pressure on farmers, its core objective of demanding greater supply chain transparency is expected by many observers to have a positive impact indirectly on overall conditions for those within core confectionery supply chain communitie

Speaking on the issue within its report, Fairtrade noted that the landmark legislation will define rules for companies that sell products in the European market, requiring them to address adverse impacts in their value chains inside and outside

As such, it reaffirmed that it is continuing to press for the directive to recognise the importance of living incomes as a precondition in order to protect human rights and to foster meaningful dialogue between farmers, workers, and European companies.

“We are happy with these early results from our pilot projects confirming a significant direct impact of the Living Income Reference Price on farmers’ incomes,” says Carla Veldhuyzen van Zanten, Fairtrade International’s Senior Advisor Sustainable Livelihoods. “We are still in the process of unravelling the indirect effects of a secured higher price, but we already see strong indications that farmers invest more in their farms and improve yields as well.”

Positive outcomes

Kouadio Yao Emmanuel, a farmer from Kapatchiva in Ivory Coast, believed that the industry initiative was having a positive benefit: “Before the project we spent without calculations or planning. We had no control over our expenses. Now I know how to keep records and plan my business. I know how to define clear, realistic and achievable financial objectives and I am able to find out if my farm makes a profit.”

The progress report outlines the wide range of activities and developments by Fairtrade and its partners. The Living Income Learning Project implements Fairtrade International’s holistic Living Income strategy that encompasses three interconnected building blocks: sustainable production, responsible procurement, and enabling environment.

The first block sustainable production works to optimise farm yields, efficiency, and resilience in harmony with the environment. The report highlighted several cocoa cooperatives in West Africa that organised and employed “labour brigades” that travel to members’ farms and take-care of productivity-improving practices, such as tree-pruning. This high-quality labour is a form of contribution to farmers’ incomes and increases their yields.

The second block responsible procurement enables farmers and their organisations to plan their business and secure a decent return on their investment by establishing long-term sourcing partnerships and paying living income-based prices. In this area, the report reveals two new living income reference prices for coffee from Peru (organic) and Nicaragua (organic and conventional), bringing the total to seven coffee reference prices, in addition to prices for cocoa, vanilla and coconuts. Details of all calculations can be found on our Living Income Reference Prices dedicated page.

The third block enabling environment seeks to create the conditions for farmers to produce sustainably and helps to drive collective action by putting in place policies that level the playing field for the entire industry. The report highlights the outcome of a Fairtrade-convened cocoa producer-led summit in Abidjan, which resulted in a joint declaration calling on companies to engage in long-term sourcing partnerships and pay fair prices, as well as on policymakers to enact legislation that recognizes a living income as a human right, among other things.



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