Assessing the Poverty Impact of Sustainability Standards: Ecuadorian Cocoa Dario Cepeda, Barry Pound, Valerie Nelson, Gaspard Kajman, Diana Cabascango, Adrienne Martin, Maritza Chile, Helena Posthumus, Gabriela Caza, Isabel Mejia, Freddy Montenegro, Laura Ruup, Gabriela Ana Velastegui, Yesenia Tiaguaro; Mercedes Valverde; Andrea Ojeda. June 2013 0 Citation: Dario Cepeda, Barry Pound, Gaspard Kajman, Valerie Nelson, Diana Cabascango, Adrienne Martin, Maritza Chile, Helena Posthumus, Gabriela Caza, Isabel Mejia, Freddy Montenegro, Laura Ruup, Gabriela Ana Velastegui, Yesenia Tiaguaro; Mercedes Valverde; Andrea Ojeda (2013) ‘Assessing the poverty impact of sustainability standards: Ecuadorian cocoa’ Acknowledgements We extend our thanks to all the cocoa farmers that so generously gave their time to participate in the study. In particular we thank the representatives of each of the producer organisations that collaborated with us, giving us time and sharing information. We would also like to thank Fairtrade International and Fairtrade organisations and staff for their support in conducting this study and their willingness to allow the team to assess their impact and to learn from the findings. Similarly, we would like to thank Rainforest Alliance for their willingness to collaborate with us and for their support. Disclaimer This material has been funded by the Department for International Development. The views expressed do not necessarily reflect the views of the Department for International Development. 1 Acronyms AECID Spanish Agency for International Development Cooperation ANECACAO Nacional Association of Cocoa Exporters AVSF Agronomists & Veterinarians without Borders BCI Better Cotton Initiative BMP Better Management Practices C&D Conservation & Development CADERS Agricultural Competitiveness and Sustainable Rural Development CCN51 (Cocoa) clone 51 from the Castro Naranjo Collection CEFODI Corporacion Financiera para la Formacion y el Desarrollo Integral CLAC Latin American & Caribbean Coordinator for Smallholder Fair Trade EFTA European Fair Trade Association ESPAC Survey of agricultural area and production ESR Equality, Solidarity and Responsibility FAO Food & Agriculture Organization of the United Nations Regional Federation of Association of Ecological Small Coffee Producers in FAPECAFES Southern Ecuador Fairtrade Labelling Organizations, International Federation for Alternative Trade, FINE Network of European World Shops and European FairTrade Association FLO Fair Trade Labelling Organization FTO Fair Trade Organization FUNDEPPO Foundation of Organized, Smallholder Producers FUNDES Corporation for Development and Creative Production GIZ German International Cooperation (formerly GTZ) IFAT International Federation for Alternative Trade IICA Inter-American Institute for Cooperation on Agriculture ILO International Labour Organization IMO Institute for Market Ecology INEC Nacional Institute for Statistics and the Census INIAP Nacional Institute for Agriculture Research ILABEL International Social and Environmental Accreditation and Labelling Alliance JAS Japanese Agricultural Standard MAGAP Ministry for Agriculture, Livestock, Aquaculture & Fisheries NEWS Network of World Shops NGO Non-governmental Organization NOP Nacional Organic Program of the USDA RA Rainforest Alliance RSPO Round Table for Sustainable Palm Oil SAN Sustainable Agriculture Network SFC Sustainable Farm Certification SPP Symbol for Smallholder Producers UNCTAD United Nations Conference on Trade and Development UPA Unit of Agricultural Production UROCAL Regional Union of Coastal Small Farmer Organisations WFTO World Fair Trade Organization 2 Table of Contents Citation: ______________________________________________________________ 1 Acknowledgements ___________________________________________________________ 1 Disclaimer ______________________________________________________________ 1 Acronyms _____________________________________________________________________ 2 EXECUTIVE SUMMARY _______________________________________________________________________ 1 Introduction ______________________________________________________________ 1 The study methodology ________________________________________________________ 1 The producer organisations and the standards _____________________________________ 2 Cocoa value chains ____________________________________________________________ 4 Cocoa and livelihoods _________________________________________________________ 4 Productivity and quality ________________________________________________________ 5 Hired labour ______________________________________________________________ 6 Sales and market access _______________________________________________________ 6 Use of the Premium ___________________________________________________________ 7 Producer incomes and expenditure ______________________________________________ 8 Food security ______________________________________________________________ 9 Changes in assets _____________________________________________________________ 9 Gender and equity ___________________________________________________________ 10 Satisfaction with producer organisations _________________________________________ 10 Producer organisations - governance ____________________________________________ 12 Environmental impacts _______________________________________________________ 12 Changes at national and regional scale ___________________________________________ 13 Conclusions _____________________________________________________________ 14 SECTION 1: INTRODUCTION & CONTEXTUAL ANALYSIS ____________________________________________ 1 1. Introduction _____________________________________________________ 1 2. Methodology ________________________________________________________________ 1 2.1 Overall conceptual framework, research questions and theory of change ____________ 1 2.2 Methodology ____________________________________________________________ 7 2.3 Selection and sampling strategy _____________________________________________ 7 2.4 Data gathering ___________________________________________________________ 9 2.5 Data management and analysis _____________________________________________ 11 2.6 Confidentiality __________________________________________________________ 12 2.7 Limitations _____________________________________________________________ 12 3. Context ____________________________________________________________________ 13 3.1 Global cocoa markets _____________________________________________________ 13 3.2 Ecuadorian cocoa ________________________________________________________ 16 3.3 Cocoa value chains and actors ______________________________________________ 17 3.4 Ecuadorian cocoa economy ________________________________________________ 21 3.5 Cocoa livelihoods and patterns of poverty ____________________________________ 21 3.6 Ecuadorian cocoa production and varieties ___________________________________ 23 3.7 Sustainability standards ___________________________________________________ 26 4. Overview of the Study Organisations ____________________________________________ 32 SECTION 2: THE FINDINGS ___________________________________________________________________ 39 5. Findings on the poverty impact of sustainability standards on individual producers _______ 39 5.1 Producer profiles ________________________________________________________ 39 5.2 Farm size and livelihoods __________________________________________________ 39 5.3 Farm characteristics, production, productivity and quality _______________________ 42 5.4 Sale of cocoa to buyers____________________________________________________ 46 3 5.5 Value chains ____________________________________________________________ 48 5.6 Quality _____________________________________________________________ 52 5.7 Market access ___________________________________________________________ 54 5.8 Members knowledge of the value chain and ability to influence price ______________ 54 5.9 Prices and the distribution of the Premium (producers and organizations) __________ 56 5.9 Distribution of the Fairtrade Premium _______________________________________ 58 5.10 Understanding of the Fairtrade Premium _____________________________________ 58 5.11 Income _____________________________________________________________ 59 5.12 Food security ___________________________________________________________ 65 5.13 Perception of change _____________________________________________________ 66 5.14 Perceived changes in the community ________________________________________ 67 5.15 Changes in household assets _______________________________________________ 67 5.16 Changes in household wellbeing and welfare __________________________________ 68 5.17 The future _____________________________________________________________ 69 5.18 Hired labour, child labour and working conditions ______________________________ 69 6. Findings on the impact for producer organisations _________________________________ 72 6.1 Overall producer perceptions of the producer organisation ______________________ 72 6.2 Access to training and technical assistance ____________________________________ 73 6.3 Organisational infrastructure _______________________________________________ 75 6.4 Access to post-harvest facilities _____________________________________________ 77 6.5 Organisational development and membership _________________________________ 77 6.6 Information communication and participation in meetings _______________________ 79 6.6 Accountability, democracy and transparency __________________________________