16 October, 2018

Cheap cocoa is costing farmers dear

Cocoa beans
by Darío Soto-Abril, Fairtrade International CEO

Shock, frustration and anger. Those were my feelings after seeing a Fairtrade study in Côte d’Ivoire showing that only 12% of cocoa households earn a living income.

Cocoa lovers around the world might be as shocked as I was to learn that the median income in Ivorian cocoa households is US$2,600, when our estimates tell us a decent, living income should be US$6,133 a year. I am frustrated, because this refers to Fairtrade-certified farmers, who benefit from a minimum-price safety net and receive a premium for their crop. I am angry, because the situation for most cocoa farmers could even be more precarious.

Cocoa farmers earn 40 percent of a living income

World cocoa prices plunged by more than a third last year. The latest cocoa barometer report from a global group of NGOs points to a systemic failure in the global cocoa trade. Cocoa farmers bear all the risk from price volatility, putting an unbearable strain on their fragile incomes, while other actors in the cocoa chain adapt or even make windfall gains and consumers continue to enjoy their chocolate.

This is still happening despite considerable investment in the industry to build a sustainable cocoa sector. The focus has been on raising productivity and diversifying crops. Those are important ingredients in the income mix. The average cocoa farm in Côte d’Ivoire yields only half or less of what could be achieved with training and resources such as fertilizers, equipment and replanting. If farmers diversify into other crops, livestock or non-farm activities, they lower the risk of fluctuating world cocoa prices.

Cocoa farmersWe must pay cocoa farmers more

But even tripling yields would not provide the average cocoa farmer with a living income. And diversification alone will not necessarily make farms more profitable. If we want farmers to earn a living income, we must also be willing to pay farmers more. There is no way around it.

Until recently, price was a taboo subject when talking about farmers’ income. Now that conversation is opening up. Nearly 1,500 participants at this year’s World Cocoa Conference, including NGOs, governments and industry players, issued a declaration calling for more decisive action to make living income a reality.

At Fairtrade, we are rolling out a new cocoa strategy to deliver living incomes through a holistic approach that includes productivity, cost efficiency, and higher sales on Fairtrade terms. We will go beyond revamping our minimum price and premium for cocoa. We are committed to pushing for a new sustainable pricing model based on a ‘living income reference price’.

We can’t do it alone. We see the reference price as the basis for income interventions with willing commercial partners, and as a revolutionary way to define living income and pricing targets against which industry players can measure themselves and communicate their footprint.

Shoppers need to be able to differentiate living income products from those that are not farmer-centric

Living income reference prices in cocoa will also give consumers an opportunity to connect with farmers and make the right choices, by allowing shoppers to differentiate between living income cocoa and other, less farmer-centred options.

We, the cocoa lovers of the world, can transform our shock, frustration and anger into action to ensure farmers get a living income. The skewed playing field faced by cocoa growers in Côte d’Ivoire and elsewhere can be levelled if we address farmer income together, decisively, as both a moral imperative and a practical path forward.

Adding price to the mix is the right thing to do.

Originally published at www.globalcause.co.uk.

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