An estimated 14 million people in the developing world depend on cocoa production for their livelihoods
Below you can find out about:
- Problems facing cocoa producers
- Benefits of Fairtrade for producers
- Fairtrade certified producers
- Buying and selling Fairtrade cocoa
- Fairtrade Standard for cocoa production
The problems facing cocoa producers
More than 30 developing countries produce cocoa, providing 14 million people with a livelihood
Cocoa is produced, traded and consumed in vast quantities across the globe. Though the majority of cocoa consumption occurs within the developed world, cocoa is grown in tropical regions of the developing world. More than 30 developing countries produce cocoa, supporting more than 14 million people.
In some countries of West Africa and Latin America, cocoa production is the primary income stream. In the Ivory Coast and Ghana, 90% of the farmers rely on cocoa for their primary income. Around the world, 90% of cocoa is grown and harvested on small family farms of 4.8 hectares or less, while just 5% comes from plantations of 40 hectares or more.
Producers lack access to markets and financing
Cocoa is a volatile commodity with wildly fluctuating prices and is frequently traded as futures or options – contracts that trade a commodity at a later date for a fixed price today. Since futures and options make income predictable, farmers should benefit from consistent selling prices for their crops over long terms, however futures contracts on the major markets are in units of 10 metric tons or more and the typical subsistence cocoa farm may produce just 1/2 ton per year. As a result, accessing these markets is virtually impossible for small farmers.
Credit is also a key issue for farmers with seasonal crops like cocoa; outside of the harvest season, producers need loans to address immediate needs and pre-financing for planting and cultivation of their crop.
The number of traders standing between a small farmer and the chocolate found on grocery store shelves is exceedingly large. When farmers bring their product to market, middlemen frequently take advantage of them. Unaware of the real value of their crop, due to sparse communication, farmers frequently receive lower than market prices. Also, many farmers claim that commercial traders frequently use distorted scales to trick farmers into thinking their cocoa weighs less than it actually does.
Producers lack information about quality and industry requirements
Quality requirements and industry knowledge are tools cocoa farmers can use to add value to their crop. Given their limited education and lack of direct market feedback from end buyers, many small farmers are unable to utilize this knowledge.
Cocoa farmers face a number of other problems, including:
- Low prices that may not even cover costs of production,
- Expensive production inputs and family costs such as tools, fertilizers and pesticides, medicine, food and clothes,
- A lack of economic diversification and education that make it difficult for farmers to engage in more lucrative pursuits,
- And an increase in child and slave labour in cocoa-producing West African countries. In 2001, the International Labour Organization and other organizations reported widespread child slavery on many cocoa farms in the Ivory Coast, source of 43% of the world’s cocoa.
Many of the challenges that exist between small farmers and traders can be addressed by organizing small farmers’ organizations and pooling resources.
The new cocoa agreement and sustainability
In June 2010 in Switzerland, cocoa-producing and consuming countries signed a pact to make the industry more fair and sustainable. At a United Nations meeting in Geneva, key actors of the cocoa sector signed the International Cocoa Agreement (PDF) outlining objectives for a more sustainable cocoa economy, measures to improve the transparency of the international cocoa market, and efforts to promote techniques for improving quality.
The agreement strengthens the cooperation between member countries, NGOs, the private sector, and funding and development agencies.
Benefits of Fairtrade for producers
Fairtrade cocoa offers farmers an opportunity to make a real living, as the Fairtrade Standards include a Minimum Price. A Fairtrade Premium is added to the purchase price and is used by cooperatives for social and economic investments such as education, health services, processing equipment and loans to members.
Please click on the link below for comparisons between Fairtrade Minimum Prices and market prices:
Also, the FAIRTRADE Certification Mark on a product provides consumers with the assurance that Fairtrade cocoa producers are regularly audited against the strict child labour standards that prohibit the worst form of child labour and forced (bonded) labour. It considers the International Labor Organization (ILO) Conventions 29, 105, 138 and 182 as the relevant standards on child labour – and has developed its own standards accordingly. To read more about Fairtrade and child protection, click here.
Fairtrade Standards for cocoa
The Fairtrade Standards for cocoa include:
- Producers are small family farms organized in cooperatives or associations which they own and govern.
- The Fairtrade Minimum Price is paid directly to the producer organizations. When the world market price rises above the Fairtrade Minimum Price, the market price is paid plus the Fairtrade Premium.
- A Fairtrade Premium is paid on top of the purchase price and is used by producer organizations for social and economic investments.
- Environmental standards restrict the use of agrochemicals and encourage sustainability.
- Pre-harvest lines of credit are given to the cooperatives, if requested, of up to 60% of the purchase price
- No forced labour of any kind, including child labour.
To find out more about the Fairtrade Standards for cocoa production, please download and read the full product Standard.
Fairtrade certified producers
Fairtrade cocoa producers are small family farms organized in cooperatives or associations which the farmers own and govern democratically.
You can read a number of case-studies of Fairtrade cocoa producers on the Fairtrade Foundation website.
To find out which cocoa producer organizations are currently Fairtrade certified, you can check the database available on the FLO-CERT website.
Buying and selling Fairtrade cocoa
If you want to find out what products are available in your country, visit the website of your national Fairtrade organization. If you’re interested in selling Fairtrade cocoa in your country, see our information about selling Fairtrade.
Guidance Documents for Fairtrade producers and buyers
Fairtrade International offers the following guidance documents as a complement for the Fairtrade Cocoa Standard.
Guidance on Productivity and Quality Improvement
The following guidance document on productivity and quality improvements is designed as a support document for cocoa producer organizations. It provides an explanation on what productivity and/or quality improvement is and what investments this may require, as well as additional information on the reporting of these investments. This document relates to section 4.3.7 and 4.3.8 of the Fairtrade Standard for Cocoa for Small Producer Organizations.
Find Fairtrade Minimum Prices and Premiums
Consultation on the limited review of the Standard for Small Producer Organization ongoing until 10 July 2013. Please go to the Standards work in progress page to participate.
Participate in the consultation about the Hired Labour Standard review! Consultation period running from 6 May to 5 August 2013.