Fairtrade will be raising its Minimum Price and price premium for cocoa with effect from 1 October 2019.
“Most cocoa farmers are unable to afford decent housing, food and education, and that will continue as long as chocolate traders, manufacturers and brands fail to address the issue of price,” said Fairtrade International CEO Darío Soto Abril. “Many farmers still live in extreme poverty.”
As part of the solution to what it described as “the huge power imbalances in the cocoa supply chain,” the Fairtrade Minimum Price will increase by 20 per cent for conventional cocoa from 1 October 2019 and by an unspecified, larger amount for organic.
At the same time, the Fairtrade Premium will also rise by 20 per cent. Growers decide for themselves how to spend the Premium – for example by building community facilities or investing in their farms to improve productivity or diversify crops.
“Fairtrade’s new Minimum Price and Premium for cocoa will help lift many growers out of extreme poverty and move towards a decent income,” said Mr Soto Abril. “However, there is still a long way to go before farmers earn enough to enjoy a decent standard of living.”
Alongside an increase in the Fairtrade Minimum Price and Premium at the beginning of October, revised living income reference prices have been set for Ghana and Côte d’Ivoire which show the price farmers need to receive for their cocoa in order to enjoy the basics such as decent housing, nutritious food and education.
Fairtrade says its Living Income Reference Price is based on what farmers need to earn for a decent standard of living, taking into account variables such as viable farm size, sustainable yields, production costs and potential savings from growing food for home consumption on the farm.
After a revision of the preliminary reference values, they have now been updated to US$2.20 per kilo of cocoa at the farm gate for Côte d’Ivoire and US$2.10 for Ghana.
“Several brands have already committed to this vision. Tony’s Chocolonely, a leading chocolate brand with a track record of paying additional funding to farmers, has committed to paying the revised Living Income Reference Price from October. Oxfam Fair Trade and Belvas have already been committed to the Fairtrade Living Income Price for several months. It’s a great start, but we want to work with many more chocolate companies to help farmers achieve a decent income,” said Mr Soto Abril.
Together with the new Minimum Price and Premium, the Fairtrade Living Income Reference Price comes into effect a full year ahead of a planned ‘living income differential’ announced by the governments of Ghana and Côte d’Ivoire.
Fairtrade has welcomed the government initiative as an important step towards securing sustainable prices for cocoa farmers.