Fair Trade USA, the leading third-party certifier of fair trade products in North America, has announced it will increase its minimum price and premium for cocoa by 20% from October 1, 2019.
The move follows a similar announcement by Fairtrade International in December 2018 and is aimed at moving farmers closer to a living income and reduce the extreme poverty and child labor that is prevalent in West Africa’s cocoa fields.
Fair Trade USA’s minimum price will increase from $2,000 per metric ton (MT) to $2,400 per MT and the 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.
Sustainable production
The organization said the decision follows a lengthy consultation and evaluation process that deemed such changes necessary to help farmers cover the costs of sustainable production while investing in the long-term viability of cocoa farming communities.
Cocoa prices plummeted by more than 30% in 2017/18, and cocoa communities in West Africa have been hit hard. In Cote d’Ivoire, 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 country were still earning well below a living income.
“The current fair trade minimum price and premium for cocoa beans are 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.”
Next harvest
When a company buys cocoa on Fair Trade terms, they pay at least the 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 the minimum price will come into effect with the next harvest and additional money will be generated for fair trade farmers. The differential between the market price and the fair trade minimum price will be additional income to support their own families and operations, said Fair Trade USA in a statement.
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.
Fair Trade USA said that, in 2018 alone, $4.4m in premium was generated from the 48.8m pounds of cocoa beans sold by Fair Trade Certified cocoa farmers.
The move has already received support from the industry. TCHO is a chocolate maker based in Berkeley, California that works with farmers’ cooperatives in Africa.
“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.”
While Mike Forbes, CEO of Alter Eco Foods, said: “It’s critical that the farmers that nourish us receive enough compensation for their hard work to nourish themselves and their families.
“This price increase is an important first step in the right direction. Alter Eco and its employees wholeheartedly support this move.”
About Fair Trade USA
Fair Trade USA is a nonprofit organization and the leading certifier of fair trade products in North America. Its trusted Fair Trade Certified seal on a product signifies it was made according to rigorous fair trade standards that promote sustainable livelihoods and safe working conditions, protection of the environment, and strong, transparent supply chains. Rather than creating dependency on aid, Fair Trade USA’s model empowers farmers, workers, and fishermen to fight poverty and earn additional money to improve their communities.