FAIRTRADE AND COcoa Around 50 million people globally depend on cocoa for their livelihoods, while governments in producing countries rely on earnings from cocoa to finance economic and social development programmes. This briefing offers an overview of the cocoa industry and explores why Fairtrade is needed, and what it can achieve.

April 2016 COCOA AT A GLANCE

fairtrade facts €9.8m There are 129 Fairtrade certified Fairtrade certified producer organisations 45% of Premium was cocoa producer organisations represent 179,800 farmers. In 2014 they spent on strengthening producer in 20 countries around sold 70,600 tonnes of Fairtrade cocoa, organisations (eg warehousing, the world generating €10.8m of Fairtrade Premium transport, cocoa drying facilities and tree nurseries) £306.2m 43%

43% of Premium was spent on UK sales of Fairtrade agricultural tools and inputs, training, cocoa products were worth credit services and direct payments £306.2m in 2015 (est) to farmers

global facts

4m 4.5m $150BN

Demand is expected to exceed 4.5 million The global chocolate Around 4 million tonnes tonnes by 2020 industry is worth $150bn2 of cocoa beans are produced each year1

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 Cover: Dou Bouré Guébré, CANN, Côte d'Ivoire 2

COCOA AT A GLANCE global facts continued

£4.3bN $20.3bn

Cocoa exports were worth The UK chocolate $20.3bn in 20144 confectionery market was worth £4.3bn in 20143

9 COMPANIES

dominate world cocoa Over 90% of the world’s processing and chocolate cocoa is grown on 5-6 million manufacture small farms5

14M CLOSE TO 50M PEOPLE 14 million rural workers directly in total depend on cocoa depend on cocoa for their livelihoods6 for their livelihoods7

6%

Côte d’Ivoire and Ghana dominate world Cocoa growers receive around cocoa production but many of their 6% of the price of chocolate paid by cocoa farmers earn less than $1 a day consumers in rich countries compared and live in poverty8 with around 16% in the 1980s9

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 3 1. THE ECONOMICS

Cocoa is the essential raw commodity for the world’s chocolate industry, which was worth $150bn in 2014.10 Cocoa can only be produced in a belt 10° either side of the equator where the climate and conditions are suitable for growing cocoa trees.

On average, four million tonnes of Cocoa is a vital source of foreign cocoa beans are produced each exchange for governments of year. Production is dominated by developing countries to invest A brief history of cocoa Côte d’Ivoire (1.5 million tonnes), in economic and social Thought to have originated in the Amazon basin, cocoa was Ghana (842,000 tonnes) and development. Cocoa is Côte introduced to in the 16th century. In the late 19th Indonesia (447,000 tonnes), which d’Ivoire’s largest export, worth century the Swiss developed milk chocolate and the chocolate between them account for around $2bn in 2013, accounting for bar, and production spread to West Africa. Around 30 68 percent of the world’s output.11 17 percent of all exports. Cocoa countries now produce four million tonnes of cocoa a year is Ghana’s third most important to supply the $150bn global chocolate industry. Best known as Exports of all cocoa products – export, worth $1.4bn in 2013 and the main ingredient in chocolate, cocoa beans are processed cocoa beans, butter, paste and accounting for 11 percent of all into cocoa liquor, cocoa butter, cocoa cake and cocoa powder. powder – were worth $20.3bn exports,17 while the cocoa sector in 2014, more than double the provides a livelihood for around six value in 2005 ($8.4bn).12 million people, 30 percent of the population.18 How cocoa is grown Cocoa is an important source of The cocoa tree, Theobroma cacao, thrives where the income and employment for the Global demand for cocoa is climate is hot and humid and rainfall is ideally plentiful rural populations of developing expected to exceed 4.5 million and well-distributed. The cocoa fruit is harvested twice countries, particularly for the tonnes by 2020.19 While some a year as a main crop (October-March) and a smaller mid- five to six million small-scale predictions foresee production crop (April-September). The tree’s fruit pods contain 30-40 farmers who grow over 90 stagnating or falling, leading to a seeds which are extracted then fermented and dried, so percent of the world’s cocoa.13 global shortage of cocoa, the becoming cocoa beans. Cocoa is a delicate crop affected by A further 14 million rural workers International Cocoa Organization bad weather, while pests and diseases cause crop losses of directly depend on cocoa for (ICCO) forecast is that production 30 to 40 percent of global production.21 A cocoa tree takes their livelihoods14 and close to will broadly keep pace with around five years to produce its first beans and reaches peak 50 million people in total are demand.20 production in around 10 years. It will typically produce a large dependent on cocoa for their number of pods for a further 12 years.22 livelihoods.15 But many cocoa Additional data on the global growers, particularly in West cocoa market is available in Africa, live in poverty16 and the appendix. struggle to provide for their Making chocolate families. Several steps of processing (known as grinding) are required before cocoa can be made into chocolate. Once the beans have been roasted and shelled, the resulting nib is ground into a paste known as cocoa liquor which is then pressed to extract the cocoa butter. This also leaves a mass known as cocoa cake which is ground into cocoa powder mainly used in the baking and confectionery industries. Cocoa liquor and cocoa butter are blended with ingredients such as milk and sugar and processed into liquid chocolate, known as couverture, for the baking and confectionery industries or converted into bars for the consumer market. Cocoa butter is also used by cosmetic companies as an ingredient in products like soaps and moisturising creams.

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 4 2. THE CHALLENGES

Is chocolate facing a crisis? An internet search for ‘chocolate crisis’ will throw up numerous articles predicting ‘a devastating chocolate crisis’ as ‘the world runs out of chocolate’. Behind these sometimes frivolous stories are serious issues aff ecting the livelihoods of millions of cocoa growers.

With global demand growing by two percent a defi cits until 2018. But these defi cits were production practices, and climate year, fears of a chocolate shortage are based cushioned by cocoa stocks held in consuming change need to be addressed before real on forecasts that demand for cocoa will countries, currently at 1.6 million tonnes, progress can be made in ensuring growing exceed 4.5 million tonnes by 2020, fuelled by and seen as suffi cient for the next fi ve years, by cocoa provides a sustainable livelihood for the emerging economies of Eastern Europe, which time production is expected to pick up.25 farmers and their communities. China, and elsewhere. At the same time, cocoa production is likely to stagnate or fall The diffi culties in predicting the market are In recent years a number of company, industry because of the many challenges facing the illustrated by the unexpected production and government sustainability initiatives have sector – particularly the unsustainably low surplus in the 2013/14 cocoa season which been established. For example Cocoa Action, prices paid to farmers, ageing cocoa trees, saw the two leading producing countries, Côte a strategy coordinated by the World Cocoa sustained under-investment at farm level and d’Ivoire and Ghana, post record production, Federation, which states in its 2015 Progress the dwindling numbers of farmers. In 2014 with output in Côte d’Ivoire predicted to top Report that its ‘…ambition to bring together industry giants including Barry Callebaut two million tonnes in the coming years.26 the world’s leading chocolate and cocoa reiterated concerns fi rst voiced by Mars in Equally unexpected is the current 2014/15 companies represents a new level of 2012 of a one million tonne shortage of cocoa crop failure in Ghana which is predicted to see collaboration and coordination in an beans by 2020, which it attributed to output fall by more than 22 percent to 696,000 agricultural commodity to advance ‘unsustainable economic and environmental tonnes.27 This is attributed to a range of factors interventions on a non-competitive, voluntary pressures on cocoa farms’.23 including the spread of black pod fungal basis and seeks out best practices in disease and the government’s failure to promoting sustainability.’ The International Cocoa Organization (ICCO)24 supply adequate fungicides and fertilizers. is more optimistic, describing reports of a And the European Committee for threat to chocolate supplies as ‘overstated in The sector-wide objective of securing a Standardization(CEN) and the International the extreme’ and not borne out by its own long-term sustainable cocoa industry will Organization for Standardization (ISO) have set statistics. The ICCO confi rms supply defi cits in necessarily focus on improving productivity up the CEN/ISO cocoa process which aims to fi ve of the last ten years – as much as 232,000 and quality. But wider issues such as create a voluntary framework for sustainable tonnes in 2012/13 – and forecasts further remunerative farmer prices, sustainable cocoa that could help align industry eff orts and bring improved cocoa production into the mainstream.

These schemes are in addition to company schemes and commitments such as Plan Ferrero’s commitment to sustainable cocoa, Mars’ Sustainable Cocoa Initiative, Mondelez’s Cocoa Life and Nestle’s Cocoa Plan.

The ICCO is clear though that this will also require radical changes in the supply chain: ‘There is not enough value in the cocoa supply chain to support economically viable production. Consumers may have to pay more for cocoa and chocolate products, thereby allowing further investments to enhance the sustainability of the cocoa sector by all stakeholders involved, in particular with regard to child labour.’28

Industry and certifi cation schemes are working to varying degrees to enable the environment where more sustainable production of cocoa is achievable by addressing the environmental, economic and social aspects of sustainability. Fairtrade believe that for this to happen farmers and their communities must be given a seat at the table. Sustainability initiatives must be created with and preferably by farmers and their communities rather than imposed on them. Cocoa farmers with their harvest, COOPROAGRO, Dominican Republic

Commodity briefi ng: Cocoa | Fairtrade Foundation April 2016 5 2. THE CHALLENGES CONTINUED

Industry challenges Weather, politics and cocoa prices Volatile international Shorter-term influences on prices cocoa prices include: favourable/adverse weather conditions, pests and As the world’s largest cocoa producer, Côte d’Ivoire’s Historically cocoa is a highly disease, the cost and availability/ weather patterns and volatile domestic politics can volatile commodity, with many lack of pesticides and fertilizers, have a huge impact on the world cocoa industry. factors contributing to the producers withholding stocks in Favourable weather conditions in 2000 contributed to unstable prices and boom-bust the expectation of higher prices, plentiful supplies and high global stocks which saw cycles which have significant political instability in producing international prices slump to a 27-year low of $714 a consequences for those who countries, and speculative trading tonne. Two years later, a failed coup to oust President depend on it for their livelihood. on futures markets. Lauren Gbagbo led to civil war. The resulting concerns about disruption to cocoa supplies saw New York and London cocoa prices more than treble to a 16-year high of $2,335. 29 Longer-term price trends are futures contracts are the affected by changes in global international benchmarks for cocoa supply and demand and In 2010, President Gbagbo’s refusal to relinquish prices. Figure 1 illustrates how the concentration in the supply chain power to rival Alassane Ouattara following the volatility of New York cocoa prices (eg corporate acquisition and disputed November election pushed the country is affected by imbalances in global in the cocoa trade once again into a civil war that cost thousands of lives supply as well as by political and processing industry). and left the economy in ruins. Concerns about cocoa events. supplies were exacerbated by a ban on exports that saw nearly half a million tonnes of cocoa held up at the country’s ports. This pushed cocoa prices to a 32-year high of $3,775 a tonne before Gbagbo’s arrest ended the conflict in April 2011.

Figure 1: The Cocoa Market 1994 – 2016: New York Cocoa Futures Prices.

4000 March 2011: 32-year high of $3,775 – fears of supply 2014 price increases deficit and political crisis in Côte d’Ivoire related to Ebola outbreak 3500

October 2002: 16-year high 3000 of $2,335 – political crisis in July 2008: 28-year high Côte d’Ivoire, the biggest of $3,275 – steady growth cocoa producer in demand and tightness 2500 of supply

2000 US$ per tonne March – December 2011: cocoa falls 42% bumper 1500 W African crop and lower European demand

1000 Autumn 2008: cocoa falls 30% – commodity prices depressed by global financial crisis

500 November 2000: 27-year low of $714-high global stocks and good crop forecast 0 Feb 1994 Nov 2000 Jun 2006 Mar 2011 Mar 2016

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 6 2. THE CHALLENGES CONTINUED

Europe dominates cocoa grindings African countries produce 73 percent of the world’s cocoa but only process 20.1 percent of it.30 Seventy-five percent of Africa’s cocoa is shipped to Europe and Asia to become chocolate and other cocoa products.

The Netherlands is the centre of Europe’s chocolate industry and traditionally the world’s leading cocoa grinder. It is also the largest exporter of cocoa paste (27 percent of the total), cocoa butter (26 percent) and cocoa powder (25 percent).31 So the economies of importing countries benefit from the value added by processing cocoa and manufacturing chocolate products rather than the countries who grow the raw commodity.

But this is changing as foreign-owned companies including Barry Callebaut, Cargill and Olam are investing heavily in processing facilities in producer countries such as Côte d’Ivoire to reduce costs and ensure consistent supplies of cocoa.

With grindings estimated at 560,000 tonnes in 2014/15, Côte d’Ivoire has for the first time overtaken the Netherlands (516,000 tonnes) as the world’s largest cocoa grinder.32 While this is positive for job creation and infrastructure, most of the profits still accrue to foreign-owned companies.

An innovative move in May 2015 saw French company Cémoi open a $6.7m processing plant – Côte d’Ivoire’s first industrial-scale chocolate factory – which will market products locally and regionally, making chocolate available and affordable to West Africans for the first time.

A member of Adelberts Cooperative Society, Papua New Guinea

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 7 2. THE CHALLENGES CONTINUED

Child labour in cocoa production

Child labour refers to work that is harmful to And a new survey published by Tulane children’s physical and mental health and University38 found that the number of child wellbeing, and/or interferes with their labourers working in cocoa production in Côte Despite myriad projects education, leisure and development. It includes d’Ivoire and Ghana had actually increased over aimed at improving carrying heavy loads, using hazardous the last five years: there are now 2.12 million education, increasing chemicals and working with dangerous child labourers, with 2.03 million working in implements such as machetes. Child labour hazardous conditions – increases of 360,000 productivity, and does not refer to children or adolescents and 310,000 respectively. implementing cocoa helping on the family farm outside of school certification, the collective hours and during school holidays provided that Another recent report on child labour in the the work is appropriate to their level of cocoa industry39 welcomes industry initiatives impact has been limited development.33 and investment in improving productivity and and the industry has been social infrastructure but also calls on chocolate unable to solve the root Under pressure from campaigners and companies to play a more effective role in cause of the [child labour] consumers, major players in the industry ensuring decent conditions in cocoa backed the 2001 Harkin-Engel protocol – a production. It clearly states that ‘the root cause problem: the very low commitment to implement voluntary standards of the problem is the very low prices paid to prices paid to farmers. to help eliminate the worst forms of child cocoa farmers’ and says traders should play a 34 role in ensuring farmers receive a guaranteed labour (WFCL) in cocoa production. The The Fairness Gap, International percentage of the international commodity widespread use of child labour in cocoa Labor Rights Forum, December 2014 production was confirmed by US Department price, while consumers are encouraged to of State estimates35 that 109,000 children in pressure companies to ensure farmers are Côte d’Ivoire’s cocoa industry worked in paid a higher price. hazardous conditions on cocoa farms (described as WFCL), mainly on family farms, and up to 10,000 children were victims of human trafficking.

More than a decade later and child labour remains rife in the cocoa sector, despite the Harkin-Engel protocol and a raft of certification schemes and industry programmes including the International Cocoa Initiative. Children in Côte d’Ivoire continue to work on cocoa farms under hazardous conditions, including risk of injury from machetes, physical strain from carrying heavy loads, and exposure to harmful chemicals,36 while boys from Ghana, Mali, Burkina Faso, Benin, and Togo are found in forced agricultural labour on cocoa in Côte d’Ivoire.37

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 8 2. THE CHALLENGES CONTINUED

challenges for Increased concentration cocoa farmers in the supply chain

Small farms, low yields Multinationals increase power In typical West African cocoa supply chains and influence (Figure 2 overleaf) farmers sell their cocoa Around 70 percent of the world’s cocoa is beans directly to co-operatives or local traders grown in West Africa, particularly Côte d’Ivoire The globalisation of markets since the 1980s who sell them on to exporters, often foreign- and Ghana, where cocoa growers are typically has drastically changed how supply chains owned companies. Processors then produce a subsistence farmers. A typical farm there of operate. Farmers no longer produce a crop range of cocoa and liquid chocolate products41 two to four hectares with yields of 300 to 400 then look for a market. Instead, manufacturers for the baking, confectionery and speciality kilogrammes per hectare can barely provide and retailers who control supply chains decide chocolate industries, as well as block an income for the average household of six what they believe clients or consumers need chocolate for private brands and chocolate people. Farmers grow staple foods such then design the supply chains required to manufactures who supply supermarket as yam, plantains and cassava and perhaps deliver those products. This has resulted in own-label products. sell small amounts of fruit or vegetables to restructuring of the chains, favouring the larger the local market. Cocoa is grown alongside producers, exporters, manufacturers and input The global chocolate market is worth $150bn42 these food crops and provides the main cash providers that can more easily meet their and mergers and takeovers have resulted in income that farmers rely on to pay school demands. The power in modern agricultural just nine companies controlling cocoa fees, medical bills and to purchase other supply chains is concentrated on input processing and chocolate manufacture, with necessities. With one main harvest a year, suppliers (chemical and seed companies), global companies like Barry Callebaut and farmers have to budget carefully throughout traders, processors and brands, and retailers, Cargill a major presence across the supply the rest of the year and often need to take out whose buyer power gives them a huge chain. Recent examples include ADM’s sale of expensive loans. It is impossible to save capacity to influence and set the prices of 40 its chocolate arm to Cargill and its cocoa money and by the time the next harvest begins the agricultural products they buy. business to Olam. Mondelez acquired farmers are desperate to sell their cocoa beans Cadbury, Ecom bought Armajaro’s and to get cash. cocoa trading arm, and Barry Callebaut bought Petra Food’s cocoa ingredients business.43 Olam is now the third largest cocoa processor, with a 16 percent share,44 after Cargill and leader Barry Callebaut.

•  Barry Callebaut (Switzerland), Cargill (US) and Olam (Singapore) account for about 60 percent of world cocoa processing (also known as grinding).45

•  The biggest chocolate brand manufacturers, Mars (US), Nestlé (Switzerland), Mondelez (US), Hershey’s (US), Ferrero (Italy) and Lindt (Switzerland) account for 40 percent of the market.46

Traders and manufacturers capture a significant share of the value and power in the cocoa supply chain. And, as emphasised by Cocoa Barometer 2015,47 the role of retailers as setters of the final consumer price cannot be overstated – in the UK the top four retailers control a 73 percent share of the grocery market.48

Farmer Justino Peck harvests cocoa pods in San José, Belize

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 9 2. THE CHALLENGES CONTINUED

53 Farmers pay the price Figure 2: West African cocoa supply chains At the other end of the supply chain the cocoa growers’ share continues to shrink while traders, brands and retailers take a bigger cut than ever. When cocoa prices were high in the Côte d’Ivoire 1970s, cocoa accounted for up to 50 percent Ghana of the value of a chocolate bar. This fell to 16 percent in the 1980s and today, farmers Cocoa farmers Co-operatives Cocoa farmers Co-operatives receive around six percent of the value.49 By comparison, it’s estimated that branded Licensed buying companies manufacturers capture a 40 per cent share Local traders and retailers 35 per cent.50 And a study by COCOBOD (industry regulator) the ICCO puts the farmers' share even lower at between three and five percent of the value Local grinders Local market Local grinders* Local market of a chocolate bar.51 The lack of influence and weak position of cocoa farmers in the supply chain undermines their ability to negotiate higher prices and is a major factor in the conditions of poverty many of them live in. Exporters and international traders of cocoa beans, semi-processed products Despite all the efforts in cocoa, at the moment, the core of the problem is still not being addressed: the Grinders: processing Chocolate companies: cocoa into cocoa powder, manufacturing chocolate extreme poverty of cocoa cocoa butter and industrial for consumers***

farmers, and their lack of chocolate** Mars, Mondelez, Nestlé, Ferrero, Hershey’s, Lindt and others a voice in the debate. Barry Callebaut, Cargill, Olam and others

Antonie Fountain, co-author Cocoa Barometer 2015, Advocacy Office Newsletter, March 2015 Distributors Retailers Caterers Specialised markets Lack of of the costs of processing cocoa, manufacturing chocolate and retailing obscures understanding of the value chain and how the situation of farmers can be improved. Farmers warn that market concentration could reduce their market Consumers options and bargaining power and cut their incomes further. Edmond Konan is Executive Secretary of the World Cocoa Producer Association, which was recently formed to lobby for the interests of growers and give * Local grinding in Ghana is very limited them a voice in the industry: ‘We could face a ** These companies are not just involved in grinding stage of the supply chain: sort of monopolistic situation that would have Barry Callebaut and Cargill sell small amounts of individual chocolate an impact on the farm gate price.’ He also said Blommer and Barry Callebaut manufacture chocolate for consumers companies need to ensure farmers benefit *** Some chocolate companies also have their own grinding capacity, but this is limited from the industry ‘…because if farmers are not making money they will do something else. They will cut down their cocoa trees and plant other commodities.’52

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 10 2. THE CHALLENGES CONTINUED

Low incomes Falling incomes in real terms Lack of organisation Many West African cocoa farmers earn less In real terms – adjusted for inflation – the Many small-scale cocoa farmers work than the globally defined poverty level of $2 market price of cocoa fell almost every year independently and sell their crop to local a day. In Côte d’Ivoire farmers would need to between the late 1970s and 2000. Falling traders for whatever price they are offered. earn four times their current income to reach cocoa farmer incomes in real terms have By establishing co-operatives or other farmers’ that level.54 restrained economic development and organisations farmers can pool their resources exacerbated poverty in vulnerable to reduce costs and benefit from economies of A family of six in Ghana and Côte d’Ivoire with communities. Despite the current upward scale. There are also non-financial benefits two hectares of land subsist on 34 and 45 trend in international cocoa prices, farmers such as social cohesion and group dynamics cents per person per day respectively.55 still do not receive an adequate, sustainable that promote community development. This forces many farmers into debt as they income that allows them to provide a decent have to borrow money to buy farm inputs standard of living for their families. and pre-sell their crop to finance its harvest and transport.

Figure 3: Cocoa prices in real terms 1960-2014 ( ICCO/World Bank: annual prices in real 2010 US$/kg)

7

6

5

4

3

2

1

0 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 11 2. THE CHALLENGES CONTINUED

Lack of technical support and rising Lack of market information farm costs Small-scale cocoa farmers generally lack While the global area of cocoa harvested more information on market quality requirements than doubled from 4.7m hectares to 10m and local price movements and are frequently hectares between 1980 and 2013, yields paid less than market prices by traders. barely improved in the same period, from Traders often use tampered scales to falsely 350kg/ha to 460 kg/ha.56 weigh farmers’ produce and underpay them for their crop. In Ghana and Côte d’Ivoire farmers harvest an average of 300-400kg/ha of cocoa beans Inadequate community infrastructure – up to 50 percent below their potential The lack of investment in rural infrastructure productivity.57 This is due to outdated farming means villages in cocoa growing areas typically methods, lack of access to inputs, technology have poor education and healthcare services and fi nance and lack of fi nancial incentives to and lack electricity and decent sanitation, with improve depleted soil fertility or replace ageing water only available from communal wells. trees, many of them more than 25 years old Access is via poorly maintained roads, often …so chocolate really and past peak productivity. impassable in the rainy season, with villages in Ghana typically 10km from the nearest paved is facing a crisis With limited access to credit, farmers struggle road. This is increased to 15km in Côte to aff ord fertilizers to increase yields, pesticides d’Ivoire, where the closest hospital can The consequence of decades to combat pests and disease and pay fuel and be as far as 35km away. of uncertain or low prices is that many transport bills, while lack of training support farmers have neither the incentive nor and poor fermenting and drying techniques Poor access to education resources to invest in replanting ageing reduce the quality of the crop. Productivity and Côte d’Ivoire has an adult literacy rate of 41 trees or purchasing expensive inputs quality in West Africa are hampered by the fact percent according to the World Bank, while the necessary to produce a high quality that fewer than 10 percent of cocoa farmers Education Policy and Data Center reports that crop. Younger generations who see no can aff ord to use fertilizer.58 36 percent of youths (ages 15-24) have no future in cocoa are switching to more formal education and 62 percent of youths profi table rubber production or heading Climate change have not completed primary education. for the cities in the hope of fi nding a Climate change provides the additional threat more dependable livelihood, but often of crop failure caused by rising temperatures, School attendance is low – because schools ending up with an equally uncertain unpredictable and reduced rainfall patterns are simply too far away, or because parents existence on the streets. As a result, and more frequent and longer dry periods can’t aff ord school fees, books and other the average age of cocoa farmers in 62 which, in turn, are predicted to increase the costs – and is a major factor behind child West Africa is now 51. These factors number and spread of pests and disease. labour on cocoa farms. add up to serious concerns across the industry about the long-term Some areas of Côte d’Ivoire and Ghana are Food insecurity sustainability of the supply chain: likely to become unsuitable for growing cocoa Farmers now also face higher food costs and, no cocoa farmers = no chocolate. by 2050 and production is likely to be reduced increasingly, food insecurity. The record high in Indonesia. However, climate change could prices following the 2008 global fi nancial also mean cocoa production will become crisis were topped in February 2011 when possible in other areas but farmers would agricultural production was disrupted by need help to adapt.59 severe weather.60 A further spike in the FAO Food Price Index in 2014 underlines the volatility of global food prices.61

Commodity briefi ng: Cocoa | Fairtrade Foundation April 2016 12 3. HOW FAIRTRADE WORKS IN COCOA

What differentiates Fairtrade from is unique in its Fairtrade in brief other certification schemes? approach to tackling poverty through better • Fairtrade Premium for strategic terms of trade, a fixed Fairtrade Premium Most major chocolate manufacturers have investment (fertilizers, pesticides, for investment and empowering farmers committed to using 100 percent sustainable fuel, yield and quality) in their trading relationships. and/or certified cocoa by 2020, and Cocoa Barometer 2015 reports that certified chocolate • Fairtrade Premium for community Fairtrade requires farmers to organise into production continues to increase globally, from investment in essential infrastructure democratic organisations and create a two percent in 2009, to almost 16 percent of (healthcare, education, clean water) 63 Fairtrade Development Plan, financed through global chocolate sales in 2013. While there is the Fairtrade Premiums they receive, to no universally agreed definition of a sustainable • Facilitates access to export markets address the challenges they face. Fairtrade cocoa economy and the various initiatives have seeks to enable the creation of strong and different frameworks and emphasis, there is viable producer organisations. • Supports strong, entrepreneurial and broad agreement that the objectives cover social representative farmer organisations responsibility, environmental stewardship and economic viability. Many certification schemes • Access to training and capacity building focus on improving productivity to ensure the The cocoa sector cannot industry has sufficient supplies, with farmers be seen as sustainable as • Environmentally friendly and long-term potentially benefiting from improved incomes long as farmers do not get sustainable practices and philanthropic community projects.This a decent livelihood from approach needs to balance supply and demand for cocoa, so that any increase in cocoa farming. production would not result in a decline in prices and a return to the boom and bust Report on the World Cocoa situation that has occurred in the past.64 Conference, 2014, p.2, ICCO June 2014 Sustainability strategies for chocolate companies include certified cocoa schemes operated by Small-scale cocoa farmers have limited standards bodies (Fairtrade, UTZ Certified, options for improving their economic and ), industry and/or government social situation within conventional supply strategies (CocoaAction, IDH), company own chains. With Fairtrade, farmers are supported schemes, and a combination of these to build accountable organisations with strong approaches. governance and business structures to increase their bargaining power, play a more active role Most recently, in May 2014, the World Cocoa in global supply chains and also invest in social Foundation and 11 leading cocoa and development projects. Economies of scale chocolate companies formed CocoaAction, enable them to provide members with a a strategy for a sustainable cocoa industry range of services including cocoa marketing, working with governments and farmers in subsidised inputs, distribution of more Côte d’Ivoire and Ghana. This important productive cocoa trees to rehabilitate farms, collaboration between companies focuses and agricultural training programmes to on farmer training, access to inputs and increase quality, yields and productivity. community empowerment but does not explicitly seek to address the terms on which cocoa is traded.

Albert Guébré, member of CANN co-operative, Côte d’Ivoire

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 13 3. HOW FAIRTRADE WORKS IN COCOA CONTINUED

Fairtrade Standards for cocoa • Producer organisations are paid an Fairtrade producer organisations are audited additional Premium of $200 a tonne to against Fairtrade Standards, which provide invest in business or farm development a framework for a sustainable approach to and community and environmental projects production that can have long-term economic, which are selected collectively by the social and environmental benefits for farmers General Assembly of members and and their communities. The Standards are managed by an elected committee. based on a six-year development programme and include a Fairtrade Minimum Price for • Producer organisations are encouraged cocoa and the additional Fairtrade Premium to invest 25 percent of the Premium in to invest in infrastructure, training, farm productivity and quality improvement. equipment and business improvements as well as projects such as healthcare, clean water • Trader Standards aim to encourage fairer and education that contribute to flourishing negotiations and include signing contracts communities. that allow for long-term planning and sustainable production practices. The main provisions and objectives of Standards are as follows: • Producer organisations can request pre-finance of up to 60 percent of the Fairtrade Minimum Price and Premium negotiated contract value. • The Fairtrade Minimum Price (FMP) is the minimum price that can be paid for Fairtrade Organisational development and ‘One of the first benefits of Fairtrade certified produce. It aims to cover farmers’ strengthening certification is that they provide a set costs of sustainable production and is • Fairtrade certified cocoa is open to of Standards which are used as a intended as a safety net for periods of low small producer organisations that are framework for the relationship between world market prices. For cocoa, the FMP is owned and governed by their members. the buyer and the grower. These set at Free on Board (FOB) level (the price Standards focus on the wellbeing of paid at export). In Ghana and Côte d’Ivoire, • A democratic decision-making process growers, including ensuring that their the government regulates the cocoa sector, must be in place, with all members having organisations are democratic and that and both governments set internal prices for an equal right to vote on key issues. they adopt sustainable agricultural cocoa with the aim to stabilise income for practices. We have some very farmers during market fluctuations, so the • Producer organisations are supported at no important projects to invest in to meet Fairtrade Minimum Price is a less relevant cost by a Fairtrade Liaison Officer employed the needs of our members and their intervention in this context. by local Fairtrade Producer Networks. communities: schools, drinking water, access to healthcare, a warehouse, During 2016 Fairtrade will conduct a study Targeted programme in West Africa trucks to transport cocoa, replacement to understand the factors that contribute to At the beginning of 2015 Fairtrade successfully of cocoa plants etc. We have never farmer income in Côte d’Ivoire and the most began a new organisational strengthening been able to sell all the certified cocoa effective way for Fairtrade to raise farmers’ programme for producer organisations in Côte of our members since we began incomes in West Africa within the current d’Ivoire. The programme is being rolled out in a certification – at most, we’ve managed context. phased approach in Côte d’Ivoire and Ghana to sell 30 to 40 per cent of our annual and consists of the following steps: production. We’d be delighted to • The Fairtrade Minimum Price for cocoa benefit from the Fairtrade Premium beans is $2,000 a tonne ($2,300 for Step one on 100 per cent of our volumes!’ organic cocoa). Training in strategic planning Participatory consultation and self-assessment Mamadou Savone, in charge of • When the market price is higher than the tools. The results are used to inform Fairtrade sustainable development and certification, Fairtrade Minimum Price, the buyer must training plans and Fairtrade development plans ECOOKIM cocoa co-operative, pay the higher price. Producers and traders Côte d’Ivoire can also negotiate higher prices on the Step two basis of quality and other attributes. Based on the outcomes of Step one, producer organisations select two to three training modules from three thematic areas:

• Farmer outreach; community development; management and governance

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 14 3. HOW FAIRTRADE WORKS IN COCOA CONTINUED

Ernest Kouadou Konan, cocoa producer and ‘relais producteur’ (Producer Liaison Offi cer) in Woroyiri, Côte d’Ivoire

Environmental and social standards • Effi cient and sustainable use of Fairtrade Standards include core requirements water resources. which are obligatory (eg training in handling Environmental standards promote best pesticides) and development requirements agricultural practices that are more sustainable, • Maintain buff er zones around bodies which are a process for making continuous minimise risks and protect biodiversity: of water and conservation areas where improvements within realistic timeframes pesticides and hazardous chemicals (eg training in integrated pest management). • Minimised use and safe handling and must not be used. provides training and storage of pesticides, herbicides and guidance in meeting standards, supported by hazardous chemicals. • Re-use of organic waste for training manuals and in-country liaison offi cers. composting, mulching and manure. • No use of chemicals included in the Fairtrade certifi cation includes regular Fairtrade Prohibited Materials list. • Protect and enhance biodiversity by by FLOCERT (www.fl o-cert.net), a global identifying and protecting natural certifi cation and verifi cation body with the • Integrated pest management including ecosystems, protected areas and main role of independently certifying Fairtrade non-chemical pesticides and biological conservation areas. products. Producer organisations and traders pest controls. pay a certifi cation fee which contributes to the • Work towards effi cient energy use and cost of the service and which is compulsory for • Appropriate and safe use, storage and reduction in greenhouse gas emissions. ISO65 accreditation.65 Producer organisations disposal of hazardous waste. that lack suffi cient fi nancial resources to pay • Forced labour and child labour the full Fairtrade certifi cation or renewal fee • No use of genetically modifi ed organisms. are prohibited. can apply for a grant of up to 75 percent of the fee. Certifi cation provides the scrutiny that • Improve soil fertility, reduce and prevent • No discrimination of members or motivates producer organisations and traders soil erosion. workers on the basis of race, colour, to actively and eff ectively ensure compliance religion, gender, sexual orientation, with Fairtrade Standards. It also helps age, marital status, disability, HIV/AIDS producers to progressively strengthen their status, nationality or social origin, political organisations by developing and adapting opinion, membership. internal systems and processes.

Commodity briefi ng: Cocoa | Fairtrade Foundation April 2016 15 2. HOW FAIRTRADE WORKS IN COCOA CONTINUED

Fairtrade and child and forced labour How child labour is addressed in the Failure to have adequate systems in place Fairtrade Standards leads to suspension and then decertification if Fairtrade recognises that child labour and Fairtrade prohibits child labour as defined by the producer organisation does not address forced labour remain problems in many parts the International Labour Organisation (ILO) the problem. Fairtrade has chosen to work in of the world where it operates. Fairtrade conventions on Minimum Age and the Worst products and regions with known risk of child certified producer organisations and traders Forms of Child Labour. labour because this is where Fairtrade is most must prevent and effectively eliminate all forms needed. of child labour, forced labour and human Specific criteria in the Fairtrade Standards trafficking in their operations to comply with that apply directly to child labour include: Read more about Fairtrade International’s Fairtrade Standards for Small Producer Child and Forced Labour Programme here. Organizations, Hired Labour, and Contract • Children below the age of 15 cannot be Production, including Trader Standards. employed by Fairtrade organisations either directly or indirectly. In recent years, Fairtrade International has producer ownership dedicated considerable resources to • Children below the age of 18 cannot strengthening its work to protect children and undertake work that jeopardises their of Fairtrade vulnerable adults. Child labour and forced schooling or their social, moral or physical labour are not only problems perpetuated by development. Fairtrade International co-ordinates the poverty and unfair terms of trade, they are also Fairtrade system at the international level. a result of exploitation, lack of access to social • Children are only allowed to help on family It sets international Fairtrade Standards, protection and discrimination, among others. farms under strict conditions. The work must organises support for producers around be age appropriate and take place outside the world, develops global Fairtrade strategy The Fairtrade rights-based approach to of school hours or during holidays. and promotes internationally. child labour elimination Fairtrade farmers and workers are joint Fairtrade is committed to fighting the root • If a small producer organisation is in an area shareholders in Fairtrade International causes of child labour and proactively with a high likelihood of child labour, they through their three regional producer preventing the abuse and exploitation of are encouraged to include a mitigation networks. children. Fairtrade seeks advice and guidance and elimination plan in their Fairtrade This means they share decision-making from expert international non-governmental Development Plan. responsibilities in the general assembly, organisations to ensure that the rights of on the board of directors and in children are upheld, including their right to • If an organisation has identified child various committees – including setting live in a safe and protective environment. labour as a risk, it must implement a Fairtrade Standards and developing policy and procedures to prevent children global strategies. Fairtrade works with producer communities to from being employed. encourage them to establish a Youth-Inclusive, At the regional level, Fairtrade producer Community-Based Monitoring and No product certification system can guarantee networks are beginning to take over the Remediation (YICBMR) System on Child that a product is free of child labour. What producer services function from Fairtrade Labour in partnership with child rights NGOs Fairtrade guarantees is that if any breaches International, giving producers a greater so that boys and girls in producer communities of child labour provisions are found, then say in the type of services and support they can enjoy increased well-being. immediate action is taken to protect the child receive. Fairtrade Africa now handles or children concerned. producer services in Africa and the Middle A child-centred approach East, while the producer networks in Fairtrade believes that children and young Fairtrade works with national child protection Latin America and Asia are moving in people in Fairtrade communities, where agencies and/or child rights organisations a similar direction. possible, should play a central role in when possible to ensure duty bearers engage empowering themselves and their communities in safe remediation and secure the long-term to combat poverty, strengthen their position wellbeing of children. Fairtrade then works and take more control over their lives. This with the producer organisation to help them child-inclusive approach builds on the capacity strengthen their programmes and systems of those children and young people to to detect and prevent child labour. contribute to self-monitoring, managing and tackling child labour within their own lives on an ongoing, sustainable basis so they become agents of active change in building prosperous lives in agriculture.

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 16 4. THE DIFFERENCE FAIRTRADE MAKES TO FARMERS AND THEIR COMMUNITIES

There are now 129 Fairtrade certified cocoa producer organisations across 20 countries in Africa, Latin America, Asia and Oceania. They represent 179,800 farmers, of which 140,000 (78 percent) are in West Africa.

Fairtrade Premium Figure 4: Fairtrade cocoa – Fairtrade In 2014, producer organisations sold 70,600 Premium use 2013-14 tonnes of Fairtrade cocoa, generating €10.8m 31% Payments 0.4% Other in Fairtrade Premium. to farmers services to farmers Overall, 45 percent of the Premium was 2% Healthcare for farmers and invested in strengthening producer their families organisations. This included 27 percent 27% Facilities dedicated to shared facilities and infrastructure, and infrastructure particularly building warehouse facilities for the cocoa crop and storage for inputs; purchasing shared vehicles for crop collection and transport; developing improved facilities for cocoa drying; and establishing tree nurseries for new cocoa trees.

These investments support the proper management, storage, and processing of the cocoa, which are key to ensuring quality and reducing wastage – and so ultimately to increasing sales and income. These shared 45% Investing in facilities and services are an essential and producer organisations much-appreciated support for farmers, who 12% Services for could not make these investments individually. communities 43% Services for Forty-three percent of the Premium was used farmers to deliver direct services to farmer members, including agricultural tools and inputs, training, credit services, and direct payments to farmers. The tools and inputs provided to farmers most commonly included machetes for harvesting the cocoa; pesticides and sprayers; wellington boots; and pruners to support better tree management. Training included farmer extension services and the implementation of better agricultural practices at farm level. Farmers received training on productivity and quality improvement; sustainable tree 1% Training and management; pest management; child capacity building 1% Credit and of staff and board protection; and environmental protection. finance services members

Producer organisations are encouraged to use 3% Provision of agricultural tools 2% Education at least 25 percent of their Premium payments and inputs 5% Farmer 2% to improve cocoa productivity and quality. training in Healthcare 1% Implementation agricultural or 1% Education 7% 17% Human Within the various projects and programmes of on-farm good business and health Community resources and above, it is estimated that 46 percent of the practices practices services infastructure administration Premium was actually invested in this way.

Direct cash payments to farmers accounted for 31 percent of Premium use, which reflects the high levels of poverty among West African cocoa farmers.66

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 17 FAIRTRADE AND COCOA IN CÔTE D’IVOIRE A. CANN CO-OPERATIVE

‘One of the most important aspects of participation in Fairtrade is a change in behaviour. Fairtrade asks our farmers to think systematically about their work—this has been a major shift in approach.’ Fortin Bley, Secretary General, CANN co-operative, Côte d’Ivoire

Cocoa farmers set up CANN (Coopérative Agricole N’Zrama de N’Douci) in 2005 to bring fair buying practices and better prices to its members and since then its membership has doubled to nearly 600 farmers. Fortin Bley (right), the co-operative’s Secretary General, says it is the additional services off ered to members such as access to training programmes and credit facilities which are the key to its growth – services which have been signifi cantly enhanced since Fairtrade certifi cation in 2010.

‘Fairtrade allows our co-operative to deliver on its mission and goals…Fairtrade has meant deeper and more regular contact with the members and stronger management and Fortin Bley, President of the Fairtrade Africa Cocoa governance of the co-operative. This has had Network and Secretary General of CANN cocoa co-operative, Côte d’Ivoire a signifi cant impact on the quality of the co-operative’s services,’ Bley explains. The Premium has also been used to rebuild Fairtrade has enabled us to two local primary schools (left). Both had renovate our school and set been in ruins, one in the village of Tiemokokro had survived with a single up a school canteen. More volunteer teacher. Now, after lobbying the Fairtrade sales would enable school inspector for support, the rebuilt us to carry out more projects school has a principal, two teachers and three volunteers teaching 200 students. – the village doesn’t have And approximately seven out of ten eligible electricity and access to members have taken advantage of CANN’s drinking water is difficult. We scheme to provide advance payments to also need tables and benches help with school fees. The farmers have their share of diffi culties. CANN’s members struggle to increase the for the school and teaching CANN has also run training for community productivity of their cocoa farms because of materials, books and pencils. members on child labour, evaluated ageing cocoa trees, soil degradation and We’d like to recruit more community-level risks and established a child outdated agricultural methods. Poverty levels labour remediation fund. ‘Building schools is among farmers mean they lack the fi nance trained teachers because at one thing, but if parents are not educated on to make improvements. the moment, out of six the real dangers for their children, the risks teachers only two have are still there,’ explains Bley. The co-operative’s response has been to qualifications. invest a share of the Fairtrade Premium in CANN still faces challenges to member programmes that address these issues. loyalty when conventional buyers have Around 60 percent of members have been Ehui OI Ehui Bruno, member of greater access to fi nancing, off ering able to access training on good agricultural CANN, 45 years old and married members cash on delivery when the practices and 25 percent have purchased with eight children co-operative may have to off er payment subsidised pesticides. The co-operative has terms. Yet the quality of services provided handed out kits which include machetes by the co-operative has been attractive for and wellington boots to ease the work of local famers and the growth in membership the farmers. Sixty thousand new cocoa provides clear evidence of this. seedlings have been distributed to members: the seedlings and plant nurseries were Source: Fairtrade Africa funded by the Nestlé Cocoa Plan while the costs of distribution were funded by the Premium.

Commodity briefi ng: Cocoa | Fairtrade Foundation April 2016 18 FAIRTRADE AND COCOA IN CÔTE D’IVOIRE B. ECOOKIM CO-OPERATIVE

Larissa Kouame Amenan, ECOOKIM, collects water

agro-engineer and in charge of training programmes on child labour, Fairtrade Standards and gender issues. ‘It’s so positive when someone approaches me and says, “I’ve boosted my yield and volume’’. Little by little we see a diff erence in the quality of life here. A woman said to me recently, “Now I have a bedˮ. Before this she slept on a woven mat.’

‘More and more, people of the community have begun to understand that they need to send their children to school,’ explains Bamba. ‘We tell the members, “If you send ECOOKIM warehouses built using the Fairtrade Premium your children to school, they can come back to the farm when they have fi nished their ECOOKIM cocoa co-operative operates in a training programmes established to improve education and help you increase the country that experienced tremendous chaos farming techniques and fermentation practices. revenue on your farm through better and unrest during elections in 2010 which The organisation is investing in inputs, fertilizers, planning and business management.’’’ disrupted cocoa exports and pushed new plants and plant nurseries. An agricultural international cocoa prices to a 32-year high. technician has been hired to advise the farmers Bamba says that Fairtrade requirements By contrast, ECOOKIM’s strong, democratic and train leaders who support the other farmers have clear advantages beyond just price structure and clear sense of direction have in their community. and Premium. ‘We set out a development been central to its growth and popularity plan at our General Assembly, which is which have seen its member co-operatives These changes have led to quality made up of one delegate for every ten increase from eight to 23 in the past year. It improvement, greater sales, increased income co-operative members. All the decisions are now represents 12,000 small-scale farmers and more hope for the future. One visible sign made together on how to use the Premium. and believes that its professionalism and the of the increased revenue which has come with Each co-operative decides how they want it demonstrates in its decision- Fairtrade are the motorcycles bought by some the Premium to be spent. All members have making have helped attract new members. farmers – farms can be up to 6km from been part of the discussion.’ farmers’ homes, and bicycles and motorbikes By ensuring everyone has their say, the have been purchased to make the journey This, says Bamba, is the strength of the additional services that come from Fairtrade quicker and easier, allowing more time to work. system. ‘Fairtrade is about transparency and investment of the Fairtrade Premium go and the way we make decisions together.’ precisely where the farmers and communities Productivity has increased from 250kg/ha say they are needed. Warehouses (above) to up to 650kg. Aminata Bamba is the have been built for storing cocoa, and co-operative’s Head of Sustainability, a trained Source: Fairtrade International

Commodity briefi ng: Cocoa | Fairtrade Foundation April 2016 19 5. WHY WORK WITH FAIRTRADE? A SUSTAINABILITY OPTION FOR COCOA SOURCING COMPANIES

Forward-looking businesses understand that investing in long-term sustainable practices and more resilient producer communities is a sound business strategy, especially in commodity markets such as cocoa where prices and yields can fl uctuate greatly. And consumers are increasingly demanding sustainability and transparency in the sourcing of their food and other products.

Siverin Broukovaci, member of ECOOKIM, fermenting cocoa beans Members of ECOOKIM, Côte d’Ivoire, collecting water

By putting the FAIRTRADE Mark on their Fairtrade offers the flexibility of two models: products, stocking or serving Fairtrade goods, companies can show their ethical commitment, The familiar FAIRTRADE Globally, more and more businesses are have a positive impact on producers and get Mark has been available on committing to buying sustainable cocoa, sugar closer to their supply chain. products in the UK for 20 and cotton, for use across complete product years and certifi es that a ranges, or even their entire business. Fairtrade With UK Fairtrade sales hitting £1.6bn in product meets international Sourcing Programs enable companies who are 2015, sourcing Fairtrade can have a signifi cant Fairtrade Standards. focused on one or two key commodities, business benefi t – 93 percent of UK consumers rather than certifying end consumer products, are familiar with the FAIRTRADE Mark, more For a product to carry the FAIRTRADE Mark, all to source them from Fairtrade farmers. It’s a than 80 percent trust the Mark and more than ingredients that can be sourced as Fairtrade great way to increase the positive impact of half of UK consumers say they purchased a must be Fairtrade. For a chocolate bar this Fairtrade. If they source 100 percent of that Fairtrade certifi ed product in the last six means the cocoa and sugar must be Fairtrade specifi c Fairtrade ingredient the product months.67 as well as ingredients like vanilla, nuts and raisins packaging can carry the product specifi c that are available as Fairtrade. FSP logo: And Fairtrade has the grassroots support of Cadbury Dairy Milk was the fi rst mainstream more than 10,000 UK groups – Fairtrade chocolate bar to carry the FAIRTRADE Mark and Towns, Schools, Universities and Faith Groups today Mondelez International is the largest buyer – who run campaigns locally to boost of Fairtrade certifi ed cocoa, buying from awareness and understanding of trade issues, co-operatives in Ghana and the Dominican and promote purchasing Fairtrade products as Republic for their Cadbury Dairy Milk and Green a way to make a diff erence to the lives of & Black’s brands respectively. farmers and workers. The new Fairtrade Sourcing Programs are an additional way for businesses to source Mars committed to sourcing 100 percent Fairtrade, and run in parallel to the existing Fairtrade cocoa for its UK Mars bars in FAIRTRADE Mark. They create a huge October 2015, a move that will see Fairtrade opportunity for cocoa, sugar and cotton cocoa co-operatives in West Africa benefi t farmers to sell more of their crops on Fairtrade from Fairtrade Premium of more than $2m terms, meaning more Fairtrade benefi ts for a year from 2016. A total of 18 companies, their farms and communities. including Italian giant Ferrero and German company Riegelein, have begun to source Fairtrade cocoa through the new program.

Commodity briefi ng: Cocoa | Fairtrade Foundation April 2016 20 6. THE DATA

Cocoa producer organisations There are now 129 Fairtrade certified cocoa Global Fairtrade cocoa sales producer organisations across 20 countries – Global retail sales of Fairtrade cocoa have Belize, Bolivia, Cameroon, Colombia, Costa more than quadrupled from 14,000 tonnes in Rica, Côte d’Ivoire, Dominican Republic, 2009 to 65,500 tonnes in 2014, mainly due Ecuador, Ghana, Haiti, Honduras, India, to growth in the UK market. However, Fairtrade Nicaragua, Panama, Papua New Guinea, Peru, only accounts for around 0.5 percent of the São Tomé, Sierra Leone, Sri Lanka and Togo. world cocoa market.68 They represent 179,800 farmers, of which 140,000 (78 percent) are from West Africa. UK Fairtrade cocoa sales Fairtrade cocoa farmers have an average plot UK retail sales of Fairtrade cocoa products of 2.6 hectares (6.4 acres). They produce were worth an estimated £306m in 2015, a 218,000 tonnes of Fairtrade certified cocoa, 88 percent growth on sales of £162m in 2010. of which nearly 43,500 tonnes are also certified organic. On average, certified And with a retail sales value of £159m, cocoa producer organisations sell 33 percent Fairtrade had a 36 percent share of the of their production as Fairtrade. In 2014, £447m moulded milk and plain chocolate this amounted to 70,600 tonnes of Fairtrade bar market.69 cocoa, generating €10.8m in Fairtrade Premium.

Figure 5: How global sales of Fairtrade cocoa have grown (tonnes)70

70,000

60,000

50,000

40,000

30,000

20,000

10,000

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1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Commodity briefing: Cocoa | Fairtrade Foundation April 2016 21 7. CONCLUSION

The $150bn global chocolate market is growing year on year as rising incomes mean more people around the world can aff ord to indulge their taste for chocolate, whether it’s milk or plain chocolate bars or as an ingredient in ice cream, biscuits and thousands of other composite products. But millions of cocoa farmers who supply the raw commodity still live in poverty and struggle to provide the basic necessities for their families.

The low incomes of cocoa farmers are responsible for impoverished farming communities, blighted by child labour, which lack the essential services such as clean water, electricity, adequate healthcare and education that most of us take for granted. And farmers’ children are turning their backs on cocoa to fi nd more rewarding employment elsewhere, putting the future of the chocolate industry in jeopardy.

In recent years, global companies have increased investment in strategies to improve productivity and ensure their supply of cocoa, as well as in sustainability issues related to child labour, youth protection and climate change. But unless farmers’ incomes are raised and they are enabled to move to more sustainable production that addresses economic, social and environmental challenges, then the chocolate industry as we know it will not be viable.

Fairtrade Standards provide a framework for cocoa farmers to increase their incomes an