Last week, Fairtrade International announced it would raise its minimum price for conventional cocoa from $2,000 to $2,400 per metric tonne at the point of export (FOB), equivalent to a 20% increase,
The Foundation also said it would increase its Fairtrade premium (an additional payment made directly to a communal fund for workers and farmers) from $200 to $240 per metric tonne.
This makes it the highest fixed premium of any certification scheme.
But for Fernando Morales-de la Cruz, founder of non-profit organisations Café for Change, Cacao for Change and Chai for Change, which campaign to eradicate child labour and poverty in coffee, cacao and tea-growing regions, these price increases are not enough.
“As a business model, Fairtrade was never designed to be fair to farmers or farm workers because the payment made to them has always been unfair, even today with the new minimum price,” he told FoodNavigator.
Fairtrade: 'A balance between the market & farmer'
In 2015, then CEO of Fairtrade Harriet Lamb said that chocolate makers needed to pay double the market price in order for cocoa farmers to receive a living income. “Chocolate is simply too cheap in our shops,” she said.
Its current CEO, Darío Soto Abril, recognises this is still a problem.
“It’s a sad truth that most cocoa farmers in West Africa are living in poverty,” he said last week, as the new minimum pricing was announced. "The price that farmers are paid is a critical aspect that needs to increase so that cocoa farmers can afford a decent standard of living for their families."
According to Guatemala-born, Strasbourg-based Morales-de la Cruz, however, it is unacceptable that Fairtrade generates $9 billion in sales per year (the global sales value of Fairtrade-labelled products annually) while farmers live in poverty.
Fairtrade International says that, while increasing the Fairtrade minimum price by 20% is an important step for cocoa farmer organisations, it will not in itself enable the average cocoa farmer to earn a living income.
"When setting the price, Fairtrade needs to balance market circumstances and farmer needs, in order to not set prices so high that farmers lose overall Fairtrade sales. In the current market situation, the increase would enable average Fairtrade farmers in the biggest Fairtrade cocoa origin, Côte d’Ivoire, to move out of extreme poverty if they sell a certain percentage of their crop on Fairtrade terms and the rest at market price level."
The Foundation has also established a target reference price for buyers that could enable cocoa farmers to earn a living income "if implemented as part of a holistic strategy". This price is set at $2,668 per metric tonne at farm gate level in Côte d’Ivoire and $2,300 in Ghana although, unlike the minimum price, it is not mandatory.
Ten cents more
Cacao for Change and its sister groups have a long-term campaign that they say could end poverty in the various sectors: “The solution is 10 cents more per candy bar or cup of coffee or tea. With this, we could eradicate child labour, fast-track rural development and make these children our future consumers.”
If retailers to charge consumers $0.10 more for every ‘cup’ of coffee, tea or chocolate, this money would be collected by WeShare, a platform of member companies, administered by an independent board with an audit system. WeShare would then distribute funds to farmers through farmer associations and cooperatives.
Creating the next generation of consumers
Asked if he thought consumers would be willing to pay a higher price for chocolate, Morales-de la Cruz said: “I have been told that Abraham Lincoln was asked exactly the same question when he wanted to end slavery. Do you think the consumers are willing to pay the salaries of slaves and higher prices for cotton? The answer was ‘They will have to’.”
Industry also has a vested interest in paying farmers higher wages, he argues. In doing so, it would create a generation of future consumers.
“In 1914, Henry Ford had a big fight with the managers in his company because he wanted to double wages of everyone in the company. His argument was if we increase the wages of workers, not only will they be the best mechanics, painters etc. but they will also buy our cars. Henry Ford created the middle class.”
According to Morales-de la Cruz, European policymakers have a particular duty to end child labour and extreme poverty in the cocoa sector as Europe is one of the largest financial beneficiaries of the cheap cocoa that result.
“Countries and regions like the EU, which imports half of all cocoa products worldwide with Switzerland the trading hub for one third, have a special responsibility because they are allowing this to happen […] by ensuring artificially low prices.”
In April this year, the Commission responded but, according to Morales-de la Cruz, has not followed up with concrete action.