17th November 2016

Fairtrade cocoa price and premium review

There's an interesting short interview over on Confectionery News with Oliver Nieburg. He talks to Marina Vanin, global cocoa director at Fairtrade International, about their plans to review the pricing and strategy for Fairtrade cocoa. Fairtrade International is conducting a study in Ghana and Côte d'Ivoire to inform the review.

Oliver points out that Barry Parkin, head of procurement for Mars and chair of the World Cocoa Foundation, has said that cocoa incomes may need to quadruple to make cocoa sustainable. Marina is cautious and does not say whether the Fairtrade price and premium will rise after the review.

"We think cocoa prices should be significantly higher. However, we also think prices are one of the elements..."
- Marina Vanin, Fairtrade International

cocoasalesgraph_0.gif

Cocoa farmer incomes in West Africa remain stubbornly low, whether farmers are selling to Fairtrade markets or not. After all, the market price for cocoa has been higher than the Fairtrade minimum price for many years now.

The key extra element is the Fairtrade Premium, which is paid to farmers' organisations rather than to individual farmers. Decisions about how this is spent are in the hands of the farmers.

"We are still learning some of the dynamics and the links between the Premium and the income and how we can further leverage our Premium in order to address the living income."
- Marina Vanin, Fairtrade International

The hope is clearly that the Fairtrade Premium can be spent in ways that improve living conditions for farmers, even though they may not actually increase cocoa income much. The Fairtrade Premium can be spent on boosting farming productivity, on building on secondary incomes other than cocoa growing, or on community projects that improve living standards for everyone.

It is a challenging situation for Fairtrade at a time when it is losing ground not only to cheaper third party ethical certification schemes like Utz and Rainforest Alliance, but also to chocolate companies' own brand sustainability programmes.

Fairtrade operates within the market and has to remain competitive. While there seems to be widespread acknowledgement within the chocolate industry that cocoa farmers incomes are too low, in practice companies are increasingly signing up to cheaper certification programmes. Fairtrade cannot afford to raise the minimum price and Fairtrade Premium for cocoa too quickly or dramatically. But a rise would clearly be welcome.

Post new comment

The content of this field is kept private and will not be shown publicly.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Allowed HTML tags: <a> <em> <strong> <cite> <code> <ul> <ol> <li> <dl> <dt> <dd>
  • Lines and paragraphs break automatically.

More information about formatting options

CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.