The coalition of NGOs behind the Cocoa Barometer have launched a consultation on farm gate prices, calling on chocolate companies and government cocoa bodies to pay significantly higher fixed farm gate prices and premiums to cocoa farmers.
The consultation comes after six months of falling global cocoa prices, which now stand at around $1,900 per tonne, down from around $3,000 a tonne for most of last year. For the first time in over a decade, cocoa prices have dropped below the Fairtrade minimum floor price of $2,000 per tonne.
The cocoa sector is enjoying a period of positive and extensive collaboration on sustainability issues, with chocolate companies and governments working together on gender, child labour, deforestation, rural poverty, and, most of all, farmer productivity.
Yet there has been very little discussion of the idea of tackling farmer poverty in the most direct way: by paying them more.
"Everyone agrees a price increase is not the only thing we need to be looking at. But it seems we are looking at everything except for how to raise prices for cocoa farmers."
- Antoinie Fountain, MD of VOICE Network
There is a dearth of ambitious approaches to tackling farm gate prices. The Fairtrade minimum floor price of $2,000 a tonne is a start, but even to return cocoa prices to those enjoyed before the last three decades of commodity price stagnation would involve tripling this amount. Adjusted for inflation, the average long term cocoa price over the last 150 years has been about $6,000 a tonne.
We have made the Pa Pa Paa LIVE website, with a child's eye view of life from two schools in Ghana, free to view!
Here's a round up of some of our favourite videos from the website:
An exuberant tour of the cocoa harvesting process.
Songs and Music
An introduction to Ghanaian popular music. Includes Elvis Badu, the school's best dancer.
The Kuapa Kids look at the little symbols that appear on Divine Chocolate bars and what they mean in west African culture.
A visit to a Fairtrade banana farm in eastern Ghana.
Campaigning NGO Banana Link, as part of the Europe-wide Make Bananas Fair campaign, recently visited several Fairtrade banana and pineapple plantations in Ghana.
This heartening story shows how the combination of Fairtrade certification, empowered and organised independent trade unions - and, increasingly, organic production - can really transform the environmental and social prospects for fruit plantations.
In mid-November, a joint press release declared a new “global partnership” between Fairtrade and Cadbury, the brand owned by global snack company Mondelēz International.
They announced that Cadbury Dairy Milk will no longer be Fairtrade certified. Instead, all Cadbury products will be brought under Mondelēz International’s in-house sustainability programme, ‘Cocoa Life’. The Fairtrade logo will be replaced with the Cocoa Life logo, and Fairtrade will become an implementing partner for Cocoa Life, with this partnership being indicated on the back of pack.
It has been seven years since Cadbury Dairy Milk became Fairtrade certified in the UK. It was a pivotal moment – perhaps the pivotal moment – in the ‘mainstreaming’ of Fairtrade in this country. At a stroke, 350 million chocolate bars a year were certified, bringing the Fairtrade Mark into every corner shop in the country.
Fairtrade campaigners celebrated and the future looked promising, with Cadbury chief executive Todd Stitzer saying that he planned to convert their other chocolate brands to Fairtrade "as soon as we can do it". It felt like perhaps Cadbury had re-engaged with its progressive Quaker roots, bringing a new 21st century ethics into the heart of its business model.
A year later, the company was the subject of a hostile and controversial takeover by US multinational Kraft, though not before they had converted the Green & Blacks range owned by Cadbury to Fairtrade. Although Kraft promised to honour Cadbury's Fairtrade commitments, it was clear that there would be no further expansion of Fairtrade certification as had previously been hoped. In 2012, Kraft split into two companies, and Cadbury became a brand owned by a new multinational food company called Mondelēz International.
The new joint announcement from Cadbury and Fairtrade unsurprisingly describes the new deal in glowing terms as a “ground-breaking commitment” and an “evolution of our partnership”. But for Fairtrade campaigners, it is mixed news at best.
There's an interesting short interview over on Confectionery News with Oliver Nieburg. He talks to Marina Vanin, global cocoa director at Fairtrade International, about their plans to review the pricing and strategy for Fairtrade cocoa. Fairtrade International is conducting a study in Ghana and Côte d'Ivoire to inform the review.
Oliver points out that Barry Parkin, head of procurement for Mars and chair of the World Cocoa Foundation, has said that cocoa incomes may need to quadruple to make cocoa sustainable. Marina is cautious and does not say whether the Fairtrade price and premium will rise after the review.
It's National Nut Day on 22nd October, an annual celebration of all things nutty!
Farmer-owned nut company Liberation is celebrating the power that women and men in nut producer communities have through Fairtrade.
Trading Visions offers a free Powerpoint presentation for teachers focusing on business studies, enterprise or social enterprise. It showcases nut company Liberation as an example of a successful social enterprise.
Barry Parkin, head of procurement for Mars and chair of the World Cocoa Foundation, recently acknowledged how much farther current sustainability efforts in the cocoa sector have to go before farmers receive anything resembling a living income.
Speaking at the World Cocoa Conference 2016, he highlighted the need to triple or quadruple farmers' incomes to make cocoa farming an attractive proposition for the next generation.
"We can double or more the yield, we can double the income - which is a good start - but it's not yet sustainable. To get to sustainable we've got to triple or quadruple the income. That's the harsh reality... to get to a living income, a level where farmers are thriving, where the next generation want to be farms, it's a big big step."
- Barry Parkin, Global Procurement Head, Mars
It's not every day that there's an opportunity to sample the finest fair trade wines and chocolate in such grand surroundings.
Last night, Trading Visions attended a wine, cheese and chocolate tasting held in the beautifully ornate Judges' Dining Room at the Old Bailey!
We were guided expertly through the selections by Sarah Jane Evans, who is not only a Master of Wine, but is also a board member of the Academy of Chocolate! Yes, there is an institution, set up in 2005, devoted to "eating fine chocolate".
What was particularly special about the evening was Sarah Jane's lively descriptions of the different producers behind the products. For example, Rococo partner with the Grenada Chocolate company, and buy their cocoa beans directly from them, which means more money goes back to the Grenada Organic Cocoa Farmers' Cooperative.
Sarah Jane advocates for choosing quality chocolate that is ethically sourced and traded, but also commented that "in the end you have to decide whether you like it as chocolate."
Trading Visions invites you to make that decision at our fair trade chocolate and wine tasting event which is on Thursday 7th July, 7-9pm at Fairly Square. There will be a range of delicious Divine Chocolate to try with the accompanying Fair Trade wine, as well as savoury nibbles.
An international team of researchers has published a paper showing that Theobroma cacao - the cocoa tree - is surprisingly old. Ten million years old in fact.
As a result, wild strains of cocoa in South America may contain much larger amounts of genetic variation than previously thought, which bodes well for breeding more diverse varieties that can better resist diseases, pests and climate change. Cocoa, like many cultivated agricultural crops, suffers from a lack of genetic variation.
"We hope to highlight the importance of conserving biodiversity so that it can be used to augment and safeguard the agricultural sector. By understanding the diversification processes of chocolate and its relatives we can contribute to the development of the industry and demonstrate that this truly is the Age of Chocolate," says co-author Dr Santiago Madriñán of the University of the Andes in Bogotá, Colombia.
The latest Cocoa Barometer 2015, published by a coalition of European development and campaigning organisations, makes for interesting reading.
It looks at value distribution within the cocoa supply chain and asks whether the many sustainability developments that have sprung up in the cocoa sector are resulting in sufficient income for cocoa farmers. It focuses on Ghana and Cote d’Ivoire, which between them produce most of the world’s cocoa.
The report gives an overview of the cocoa supply chain context:
Most of the sustainability approaches being funded by the chocolate industry, including those of the certification initiatives, focus on increasing farm productivity. It is a vision that has been most clearly articulated by Mars: increase cocoa yields, and improved income for farmers will follow.
“I’m really proud that our iconic Mars Bar brand is at the forefront of Fairtrade’s new Cocoa Sourcing Programme. It’s a crucial next step in our global commitment to certify that 100 percent of our cocoa has been produced in a sustainable manner by 2020 and it means that all three of our top UK chocolate brands now source certified cocoa, supporting farmers to improve productivity and yields and ultimately leading to improved income and better quality of life for farmers, their families and their communities.”
- Blas Maquivar, President, Mars Chocolate UK
The Cocoa Barometer report is more sceptical. After all, basic supply and demand economics suggests that increasing the supply of cocoa will result in falling prices overall.
“This could increase the dependency of farmers on cocoa and additionally lead to an oversupply of cocoa and to decreasing prices. It is at present unclear whether investing in higher productivity – leading to additional production costs for inputs and hired labour – is a functioning business model leading to higher net farm income.”
- Cocoa Barometer 2015
The report shows that productivity is an issue. Yields per hectare are lower than they could be, and farmers would benefit from training and subsidised inputs. The size of cocoa farms has also been decreasing over recent decades and the report explores the possibility that many farms may be too small to be economically viable.
But increasing yields isn’t enough if prices are too low. So what do cocoa farmers get paid?
On a recent visit to Ghana, I visited Bayerebon School, where a group of school children film regular videos about their everyday life for our Pa Pa Paa LIVE website.
The videos are aimed at their peers in UK classrooms. They devise the videos, plan a script and film the scenes. Then a colleague from our partner organisation in Ghana, the Fairtrade co-operative Kuapa Kokoo, uploads the videos for us. We download them, do a bit of basic editing, subtitle them, and then put them on the Pa Pa Paa LIVE website. We often put together worksheets to accompany the videos too.
There was an interesting piece in the Guardian profiling a school campaign to make sure the bananas supplied through the government's school fruit scheme were Fairtrade.
The headteacher at Polesden Lacey Infant School encouraged pupils to explore the Fairtrade movement as part of the school's commitment to green issues. She helped the children write a letter to the school's fruit suppliers.
The company replied in May, directing them to the banana supplier, who in turn passed them to the Department of Health. Eventually they were informed that schools could not put a label on the fruit because "Fairtrade" was a brand name. The children were not impressed – without the Fairtrade stamp they felt unsure about the fruit.
There has been much talk in Fairtrade over the last few years about “scaling up with integrity” or “mainstreaming” – i.e. growing the Fairtrade system by working with big corporate players while also ensuring that the core values and social, economic and environmental standards of Fairtrade are not compromised.
Although there have been some original principles that have fallen by the wayside – the basic Fairtrade proposition has remained the same. It is a product-based certification system, in which all ingredients in a product that can be Fairtrade must be Fairtrade, with guaranteed prices for producers, including a minimum price, a Fairtrade premium and an organic premium, social and environmental standards, and obligations on traders and importers.
Despite the rise of numerous alternative certification systems, Fairtrade has mostly stuck to its guns and kept the same model, arguably the gold standard of ethical certification marks. And a campaigner movement of activist consumers – particularly in the UK – has responded to that gold standard and voted with their wallets.
That now looks set to be shaken up, as Fairtrade International have launched a new business model that gives companies a wider and more flexible range of options for engaging with the Fairtrade system. The model is called ‘Fairtrade Sourcing Programs’ and currently applies to three commodities: cocoa, cotton and sugar.
This week, the EU passed a new public procurement directive that will allow public authorities across Europe to make a deliberate choice for fair trade products.
The new law confirms a European Court of Justice ruling which clarified that public contracts can award additional points to products "of fair trade origin".
Compliance with environmental, social and labour obligations are now enshrined in the principles of procurement law, which is a great step forwards.
The new public procurement directive is expected to enter into force in March 2014 and EU Member States will then have two years to translate it into national law.
The European Parliament's Fair Trade Working Group is chaired by British Labour MEP Linda McAvan.
It's Social Enterprise Day today, a celebration of how business can be used to achieve social objectives.
Trading Visions has two social enterprise teaching resources for schools: Powerpoint presentations showcasing two Fairtrade companies that put farmers at the heart of their business model.
'Behind the Brands' examines company policies in seven areas: women, small-scale farmers, farm workers, water, land, climate change and transparency.
Following the publication of the report and associated campaigning by Oxfam, the three big chocolate industry players - Mars, Nestlé and Mondelēz International (which used to be Kraft) - have all responded by making commitments to tackle gender inequality.
"The impact of Mondelēz International, Mars and Nestlé's promises, if kept, will reverberate across cocoa supply chains. Empowering women cocoa farmers has the potential to improve the lives of millions of people, some of whom are earning less than $2 a day."
- Judy Beals, Behind the Brands campaign manager
Although none of the Big 10 companies comes out of this scorecard particularly well - not a single one gets an overall 'Good' or 'Fair' score - Nestlé and Unilever emerge at the top of the list with a 'Some progress' overall score. General Mills, Kellogg's and Associated British Foods languish at the bottom with a 'Poor' score.
Associated British Foods hit back at the Oxfam report, saying that “the idea that ABF would use a ‘veil of secrecy’ in order to hide the ‘human cost’ of its supply chain is simply ridiculous” although they also pledged that their next corporate responsibility report this autumn “will confirm significant improvement in disclosure from the previous report”.
The Behind the Brands website does a great job of making visible the small number of huge companies that own so many of the everyday brands that most people are familiar with. Twinings for example is owned by Associated British Foods; Ben & Jerry's by Unilever; Cadbury by Mondelēz International; Quaker Oats by Pepsico.
There's an opportunity to go a step further with this tactic and start to examine the less well known giants of the food system: the traders and processers. The big four are Archer Daniels Midland (ADM), Bunge, Louise Dreyfus and, one of the largest and most secretive companies in the world, Cargill.
It's Social Enterprise Day today and we've produced a new Powerpoint presentation for teachers.
The presentation showcases social enterprise Liberation, a Fairtrade nut company owned by the farmers who grow and gather the nuts.
Nestlé is converting its two-finger Kit Kat to Fairtrade from January 2013, doubling the volume of Fairtrade cocoa that the company purchases. The four-finger Kit Kat went Fairtrade in 2010.
Nestlé will purchase 5,300 tonnes of Fairtrade cocoa from nine cooperatives in Cote d’Ivoire to produce 800 million two-finger Kit Kats a year.
This means that 2.5% of Nestlé’s global cocoa purchases are now Fairtrade.
It's an important moment for the Fairtrade movement in the UK, with the three big players that dominate the chocolate market - Kraft, Nestle and Mars - all having converted their flagship confectionery product to Fairtrade.
The Fair Play pack is an exciting collaboration between Dubble Fairtrade Chocolate, Trading Visions and children’s author Tom Palmer.
The pack is crammed full of lesson plans and activities based on Tom Palmer’s book Off Side. Off Side is about a sixteen year old son of a cocoa farmer who is trafficked from Ghana to England, thinking he is going to be a famous footballer.
“Cooperative enterprises help build a better world.” That’s the slogan for the UN International Year of Cooperatives 2012, which was launched just a few weeks ago, and it’s a salient reminder that there are alternative ways to ‘do business’ in a world ravaged by economic crisis, climate change and undemocratic leadership.
Cooperatives are business enterprises owned and controlled by the very members they serve, able to balance the pursuit of profit and shareholder value with the needs and interests of their members and their communities. In assigning 2012 as International Year of Cooperatives, the UN has recognised the impact that cooperatives are having in poverty reduction, employment generation, sustainable development and social integration.
The slogan above could just as well apply to social enterprises. Today is Social Enterprise Day. A day of celebration and profile-raising for organisations that are harnessing the power of business to create a fairer world.
The UK is recognised as a world leader in social enterprises with 62,000 UK based-social enterprises contributing over £24 billion to the economy and employing 800,000 people, while simultaneously addressing the real needs of communities.
The BBC ran a story last week returning to the issue of child labour on cocoa farms in Côte d'Ivoire.
Humphrey Hawksley opens the short news video by observing: “Deep in the cocoa belt of the Ivory Coast, it’s not hard to find children at work.” He then goes on to interview a farmer, some children, and a chocolate industry PR representative.
The first stories of child slavery in the Ivory Coast hit the news over a decade ago. Then in 2001, the major players in the global chocolate industry signed the Harkin-Engel Protocol, a voluntary code of self-regulation drawn up by industry to avert proposed “slave free” labelling legislation in the US.
The Harkin-Engel Protocol provided for the creation of a foundation - the International Cocoa Initiative (ICI) - to tackle child labour, and pledged to develop a certification system that would ensure chocolate was free from the worst forms of child labour.
The impact of these efforts have since been assessed through the authoritative Tulane University studies. Their final report was released earlier this year and concluded that while there has been action from the chocolate industry and “significant evidence of impact”, the funding has simply not been sufficient to achieve their stated goals.
Less than 5% of children and their caregivers surveyed in Ghana and Ivory Coast have reported exposure to industry programmes to tackle child labour. That gives an idea of the scale of what still needs to be done. At Trading Visions, we've estimated that the big industry players commit no more than 0.1% or 0.2% of their chocolate sales turnover to "social investment" in cocoa farmers' livelihoods.
Guest article from Neil Howard, a PhD student writing his thesis on anti-trafficking discourse and policy at the University of Oxford.
In 2003, Benin and a small group of cotton-producing African nations took a complaint to the World Trade Organization (WTO) citing massive economic evidence that US cotton subsidies reduced national and household incomes. Noting that US subsidies to 25,000 cotton conglomerates totaled three times the entire USAID budget for Africa’s 500 million people, the plaintiffs demanded the immediate cessation of subsidies and compensation for their lost national incomes.
Though in a separate case the WTO ruled that US subsidies did indeed affect global prices, US negotiators refuted any correlation between reduced prices and lost national or household income in countries such as Benin, and placed pressure on friends and foes alike to ensure that the African initiative was ultimately dropped.
In this article, I will present evidence from my research that challenges the US position. In fact:
Fair Trade USA, until recently known as Transfair, has announced its resignation from membership of the international Fairtrade labelling system, effective from the end of December 2011.
“FLO and Fair Trade USA share a belief in the importance of empowering producers and workers around the world to improve their lives through better terms of trade. However, as we look to the future, we recognize that we have different perspectives on how best to achieve this common mission.”
- Fair Trade USA and FLO joint statement, Thursday 15th September 2011
The intention appears to be for Fairtrade International (FLO) and Fair Trade USA to collaborate as best they can to maintain continuity for producers and companies, but it is clear that most players in the movement would rather this had not happened.
The Fairtrade Foundation recently pubished a useful "commodity briefing" on Fairtrade and Cocoa, combining a clear and succinct overview of the global cocoa industry with a case for why Fairtrade is needed.
The broad picture it paints is one of growing global demand for chocolate, driven by rising incomes in emerging economies, increasingly outstripping available cocoa supplies. In West Africa, the productivity of cocoa farming is low, with a lack of access to finance and technology, outdated farming methods, and no incentives to improve depleted soil or replace ageing trees.
Cocoa farmers in West Africa are likely to receive 3.5 to 6.4 per cent of the value of a chocolate bar, compared with around 16 per cent in the 1980s. Over the same period, the manufacturers' share has increased from 56 to 70 per cent and the retailers' from 12 to 17 per cent. Often their children can see no future in cocoa: the average age of a cocoa farmer in West Africa is 51 years.
Last night I attended the packed private view of a new art exhibition by renowned Ghanaian artist Owusu-Ankomah at the October Gallery in central London.
An inspiring moment last week, as around 400 people from around Europe met in Krems, Austria to plan for a European-wide movement for "food sovereignty".
The final declaration of the Krems forum defines food sovereignty as "the right of peoples to democratically define their own food and agricultural systems without harming other people or the environment".
It is subtly and profoundly different from "food security" - the dominant paradigm for tackling the problem of hunger and food production, exemplified in the "green revolution" and fossil fuel intensive, large scale, industrial farming. While crop yields have increased, around a billion people are malnourished. The dominant food system is one that aims primarily to make money rather than feed people.
What is refreshing is that these moves to establish a European campaign for food sovereignty follow in the footsteps of the peasants and farmers of the global South. The movement for food sovereignty originated in the global South and is a bold attempt to reclaim the global narrative on food production.
An inspiring video from the global peasants movement La Via Campesina explains the history and power of this idea whose time has come:
A House of Commons select committee has released a critical report about Kraft's conduct in the wake of its takeover of Cadbury in 2010.
Though couched in the careful language of officialdom, Is Kraft working for Cadbury? reveals the frustration of MPs when Kraft CEO Irene Rosenfeld turned down repeated requests to appear before the committee to answer questions about the controversial acquisition.
Trading Visions has published a Chocolate Scorecard assessing the main chocolate companies active in the UK market on their progress towards a more sustainable chocolate supply chain.
We scrutinise Kraft/Cadbury, Mars and Nestle alongside smaller players. These three companies control 83% of the £3.7bn UK chocolate market, and 43% of the £62bn global market.
Despite having all committed to clear ethical plans they contribute just £20m in total to support cocoa producers, no more than 0.1% or 0.2% of their turnover on chocolate sales.
It is quite a promising picture compared to five or ten years ago, with most companies finally investing in cocoa farmers’ livelihoods and lots of interesting things happening. But it is also evident that the big players are global giants, and they could be doing so much more.
Trading Visions will be producing the scorecard report annually to monitor the chocolate industry’s performance across a number of ethical indicators, from Fairtrade and organic certification, through to child labour and the use of controversial palm oil. We would really welcome feedback on how it could be improved.
We want to start a constructive conversation to better help campaigners and consumers understand the reality behind the all the initiatives, commitments and marketing.
Trading Visions, in collaboration with the LSE International Development Department, held a well attended public discussion debate on Tuesday 1st March 2011. The topic was 'Has Fairtrade asked for enough?'.
You can watch and listen to the panellists and the discussion below.
Deborah Doane is Director of the World Development Movement, which campaigns for justice and equality for the world's poor. Deborah was a founder and trustee of AntiApathy, and recently joined the Board of the Fairtrade Foundation.
"From the mainstream players, I think Fairtrade can demand more, without losing them... because of the incredible power of the movement behind it." - Deborah Doane
Adam Brett co-founded Tropical Wholefoods, and is a director of Fullwell Mill. He has been a self employed entrepreneur since 1990, working on the development of fair trade food businesses in Uganda, Burkina Faso, Pakistan, Zanzibar and Zambia. He is a Trustee and Judge for the Ashden Awards for Renewable Energy.
"I think [supply chains] are absolutely destined to be inefficient, in an extraordinary way. And conventional economics - of ‘oh yes everything's going to work out, we're going to end up with a nice optimal situation where we're going to live in the best of all possible worlds’ - is completely childish! We actually have to grab our supply chains by the proverbial soft parts and squeeze, to make sure that they work as well as we can possibly make them work." - Adam Brett
Julia Clark is a consultant. As Head of Marketing at Tate & Lyle Sugars, she led the switch of the company’s entire retail sugar range to Fairtrade in 2008. At the time this was the largest ever commitment to Fairtrade by any major UK food or drink brand.
"The people at the bottom of the supply chain are not only disenfranchised and disempowered by the system, their own communities haven't taught them how to grasp opportunities and make much of those opportunities. They're small cane farmers because they don't know how to be anything else. And Fairtrade is starting to teach them how to be business people." - Julia Clark
Robin Murray is an industrial economist and a co-founder and board member of Twin Trading. Twin has established a number of pioneering producer-owned Fairtrade companies, notably Cafédirect, Divine Chocolate, Agrofair UK and Liberation Nuts.
"We're trying to create a different kind of economy. An economy not mediated by markets, but where markets are lodged within a reciprocal or mutual economy." - Robin Murray
"We buy organic Fairtrade dried mangos for about 6 euros a kilo, when it gets to the shop it costs about 25 euros a kilo. So about 22% is going back to the producer. 65% goes straight into supermarkets' pockets." - Adam Brett
"The retail power [of supermarkets] is extraordinary - and it drags us all down with it." - Deborah Doane
The whole debate is also available as a podcast.
If you've walked past an Oxfam shop this Fairtrade Fortnight you might have noticed a rather fetching poster in the window showcasing the fact that they sell various "Fairtrade masterpieces".
The poster features products from Liberation Nuts, Traidcraft, Tropical Wholefoods, Divine Chocolate and Cafédirect - and Oxfam have also produced a little recipe leaflet to use with them.
Fairtrade sales in the UK have soared once again, increasing 40 per cent from £836m in 2009 to £1.17bn in 2010.
Chocolate - often a focus of public concern and of campaigns on trade and child labour - is the leading Fairtrade product by value, with sales more than quadrupling in 2010 to an estimated retail value of £342m.
We've created a special resource for teachers joining in with Fairtrade Fortnight's cotton bunting decorating activity. This new resource focuses on adinkra symbols, the unusual patterns that feature on the wrappers of Divine Chocolate bars.
Alongside this, we've got a rather fantastic webcast from Kuapa Kokoo farmers' children in Ghana, where they decorate a pack of the Fairtrade cotton bunting with adinkra symbols and explain the significance of each symbol.
This is available to watch for free, along with the lesson plan, on the Pa Pa Paa LIVE website.
This Fairtrade Fortnight, why not choose the adinkra symbol that you think is most like you, and decorate your Fairtrade cotton bunting with it?
'Choc Finger', aka Anthony Ward of Armajaro Holdings, has now sold the immense stockpile of cocoa he's been sitting on since July when he cornered the market by buying up and taking delivery of 240,000 tonnes of cocoa beans.
That £658 million purchase represented about 15% of global stocks and drove cocoa prices up to a 33-year high.
A recent Guardian article reports that Cadbury is to be restructured by its new American parent company, Kraft, to avoid paying millions of pounds in UK tax.
The restructuring plan apparently involves creating a parent holding company in Zurich, which would allow much of Cadbury's profit to be booked in Switzerland, thus benefiting from a much lower rate of corporation tax. In Zurich, rates begin at 15%, whereas corporation tax in the UK is currently 28%. Last year, Cadbury paid £197m in UK tax.
This is a form of “tax avoidance”, which can be defined as the minimisation of tax liability by lawful methods, as distinct from “tax evasion” which refers to illegal efforts not to pay tax.
The fact that tax avoidance is legal doesn’t stop national governments from trying to crack down on it, though often with limited success.
In 2004, HM Revenue & Customs tried to stop Cadbury Schweppes from using subsidiary companies in Dublin to benefit from the 10% corporate tax rate there. In a landmark case Cadbury Schweppes appealed to the European Court of Justice and won. Now, Cadbury’s move to Switzerland underlines the dwindling strength of national governments as they attempt to tax footloose multinationals.
A far cry then from the early days of the company.
In the late nineteenth century George Cadbury was determined to use his wealth to promote social reform and justice, implementing and campaigning for improved labour conditions, shorter working hours, old age pensions and sickness benefits in a way that anticipated the founding of the welfare state.
He would have understood instinctively the tax justice argument: that tax represents a social contract between citizen and state. Tax revenues not only support collective goods such as the NHS or the education system, the very act of taxation fosters better and more accountable government.
To mark Social Enterprise Day this Thursday we've asked Sophi Tranchell, Divine Chocolate's MD, to set a challenge for young people who are thinking about careers in business. Sophi asks 'can good business be good business?' in an interview on YouTube.
Kuapa Kokoo, the co-operative representing almost 50,000 small-scale cocoa farmers in more than 1,200 villages across Ghana, recently commissioned a striking bronze statue of a male and female cocoa farmer.
The statue stands on a road island in the centre of Kumasi, the second largest city in Ghana, and is a celebration of cocoa farming and its important role in Ghanaian economy and society.
Kuapa Kokoo’s managing director, Kwasi Aduse-Poku, made a speech at the inauguration of the monument to “honour our gallant and dedicated farmers whose efforts contributed in no small way to the building of our nation”.
Over several years they have criticised Fairtrade on the basis of its claims and seem to view the large proportion of the population who 'get' Fairtrade as deluded.
Yet, they still fail to understand quite what Fairtrade is. It seems that the IEA views Fairtrade as a type of charity, giving a little bit more money here and there to poor people, while the giver needs to be assured at every step that the money is spent wisely.
For anyone who has met Fairtrade producers, we know it is about so much more than just the money. It's about transforming the trading relationship between consumers and producers.
One of the latest criticisms levelled at Fairtrade by the IEA is that "Fairtrade products can squeeze out from the market other socially labelled products". Surely a bizarre statement from a free market think tank! If Fairtrade products are proving more popular with consumers in our 'free' market in the UK then surely this is what is supposed to happen. No-one is forcing people to buy Fairtrade.
Unfortunately the IEA remain short of solutions for poverty in developing countries. While repeating the manta that free trade is the answer, not Fairtrade (aka charity in their eyes), they fail to acknowledge that the market is anything but free when poorer countries try to trade with us.
When the IEA starts a more vocal campaign to lift trade barriers which harm the poorest, I'll start to take them more seriously.
Andrew Mitchell, the international development secretary, is in the news over revelations that he intervened on behalf of the multimillionaire cocoa dealer known as 'Choc Finger', after receiving funding from him while in opposition.
'Choc Finger' is the nickname of Anthony Ward, whose hedge fund Armajaro Holdings donated £40,000 to Mitchell's parliamentary office between 2006 and 2009. The firm donated £50,000 separately to the Conservative party in 2004.
Armajaro Holdings had been banned from trading in western Ghana, over allegations of smuggling. Cocoa is often smuggled over the western border of Ghana to take advantage of better prices in the Ivory Coast, which results in lost tax revenue for the Ghanaian government.
After Choc Finger requested his help, Andrew Mitchell phoned the British high commissioner in Ghana and his officials in his office contacted the Foreign Office to say that the matter required "urgent attention". This is despite the fact that his department is responsible for promoting development and the reduction of poverty, not promoting British business interests overseas.
The trading ban on Armajaro was then lifted.
Andrew Mitchell now faces an investigation after being referred to the parliamentary standards watchdog.
I attended an energetic and enjoyable Fairtrade supporters conference put on by the Fairtrade Foundation on Saturday.
It felt to me like it had really built on the success of last year's conference, with more reflection and honesty about difficult issues, and lots of useful information being shared.
Most of all, it's great to have so many of the brilliant campaigners from around the Fairtrade movement gathered together in one place.
I enjoyed the contrast of watching Caroline Lucas, Green MP for Brighton Pavilion, and Andrew Ethuru, a Kenyan producer director of Cafédirect, speak one after the other in the plenary session.
Caroline talks very quickly, her words tumbling out passionately and eloquently, as she drew our attention to the big picture, the need to shift from a world based on relentless economic growth, to one that increases human well being.
She highlighted the fact that although DFID's overall budget isn't being cut, big changes are being made, for example big cuts in funding for development awareness, and for policy work, in other words less focus on tackling underlying causes.
Andrew Ethuru on the other hand spoke with a more measured pace, taking his time, and building up gradually to an impassioned conclusion. Andrew is chairman of the Michimikuru tea co-operative's Fairtrade Premium committee in Kenya, their tea goes into Cafédirect's 'Everyday Tea' range.
Andrew spoke of the challenge now for Michimukuru, which is that even as overall sales of Fairtrade tea are growing, Michimikuru’s Fairtrade sales are declining. His warning was that market share for small producers is shrinking as multinationals with big tea estates move into mass market Fairtrade tea.
"The question we have to ask ourselves is," he said, "has Fairtrade been hijacked, because there is big money there?"
He asserted that at the heart of Fairtrade should be small producers, small farms, and labour-intensive high-quality production.
Good news for Fairtrade cocoa farmers.
FLO (Fairtrade Labelling Organisations International), the standards setting body for the Fairtrade Mark, have announced new, higher prices for Fairtrade cocoa, which will kick in on 1st January 2011.
The Fairtrade minimum price for cocoa will increase from $1,600 a tonne to $2,000 a tonne. The Fairtrade premium will increase from $150 a tonne to $200 a tonne.
The new Fairtrade minimum price is not immediately relevant, as cocoa prices are well above it, currently at around $2,800 a tonne, although prices are starting to fall again as experts predict an end to the production deficits of recent years.
But FLO expects cocoa farmer organisations to reap at least $10m in Fairtrade premium payments in 2011.
The new standards for cocoa prices are long overdue. The last review took place thirteen years ago. It is a fairly predictable and conservative increase though, roughly corresponding to inflation. $1,600 in 1997 would be worth $2,176 now.
There was lots of excitement in the media over the last week, with cocoa prices briefly hitting a 33-year high after a single buyer cornered the market, purchasing and taking delivery of 240,100 tonnes of cocoa.
That’s £658 million worth of cocoa beans, representing around 7% of the world’s annual production of cocoa, or 15% of current global stocks.
The buyer is a hedge fund called Armajaro Holdings, headed up by multi-millionaire Anthony Ward. The fact that Mr Ward has actually taken delivery of the beans suggests that he is stockpiling them, betting on future cocoa shortages with the hope of selling them on for a whopping profit.
The World Cup isn't just popular in England. Football fever is at crazy levels all over Ghana at the moment too.
The Ghanaian Black Stars are currently at the top of what was considered a pretty tough group, having won four points from two matches with Serbia and Australia. They play against Germany tonight and a draw would be enough to see them through to the finals.
While a win for the Germans looks more likely in Johannesburg tonight, the Black Stars have grown in confidence and are undefeated so far. It’s certainly going to be an interesting match.
Football is undoubtedly the world’s most popular game, loved by millions, if not billions, of people, irrespective of race, gender, religion or class. It is also the world’s most globalised sport.
Take Ghana’s Black Stars for example. Their coach is a 55-year-old Serbian, Milovan Rajevac, who has been praised for his consistent hard work in building up the team. There’s Stephen Appiah, the Ghanaian midfielder who plays for Bologna; John Mensah, who plays as a defender for Lyon; and regular captain, talismanic midfielder Michael Essien who plays for Chelsea, sadly injured and unable to take part in the World Cup.
Football is also a rare example of globalisation that works, that is, globalisation that doesn’t just advance the interests of rich and powerful nations at the expense of poor nations.
The run up to Easter, when the British prepare to chomp their way through 80m Easter eggs, is the traditional time of year for guilt fuelled exposés of the continuing problem of child labour in the cocoa industry.
A recently aired Panorama documentary sees a renewed media focus on the issue in the UK, one of many since harrowing stories of West African child slaves first came to global public attention ten years ago.
That original media and public outcry paved the way for the Harkin-Engel Protocol, a voluntary code of self-regulation that has defined chocolate industry efforts to tackle the worse forms of child labour in the supply chain over the past nine years.
Children and chocolate have long been associated; it is because chocolate is such a potent symbol of the innocent joys of childhood that revelations about children being trafficked or forced to undertake hazardous and excessive work on cocoa farms are so incendiary.
For this blog post, Trading Visions reflects on some of these issues, with contributions from four authors exploring the intersection of childhood and chocolate.
What has big chocolate been doing about child labour in the cocoa industry?
by Michael Niemann
Child labour and cocoa: whose voices prevail?
by Amanda Berlan
Chocolate and childhood in the North
by Catherine Phipps
Report from a child labour workshop in Ghana
by Tom Allen
A BBC Panorama documentary filmed in Ghana and Cote d'Ivoire was aired last night that highlighted the continuing problem of child labour in the cocoa industry, ten years after the issue was brought to global media attention with harrowing stories of West African child slaves in 2000 and 2001.
It has been nine years since international public concern led to the signing of the Harkin-Engel Protocol, a voluntary code of self-regulation created by the chocolate industry to prevent the worst forms of child labour in the supply chain. The protocol was originally created to stave off proposed US legislation that would have required all chocolate sold in America to state on the label that it is “child slave labour free”. Unfortunately, little progress has been made.
The focus in the Panorama documentary on incidences of child labour among farmers supplying cocoa to two Fairtrade cooperatives in Ghana and Cote d'Ivoire reminds us that the Fairtrade Mark does not guarantee “no child labour”, it guarantees a fair price to farmers and a Fairtrade premium to farmers' organisations. However Fairtrade does clearly emerge in the documentary as the only credible system that can trace cocoa back to individual farms and thus take remedial action when breaches of standards on child labour are identified.
Last week, Cadbury and Kraft agreed terms for an £11.6bn takeover. It ended a long, drawn out and very public campaign by Cadbury to preserve its independence.
Cadbury's unions have led the opposition to the takeover, warning that thousands of jobs will be put at risk. Kraft now has a considerable amount of debt and a record of aggressive cost-cutting. The Unite union put together an opposition document for Cadbury's shareholders.
Kraft has stated that it expects "to honour Cadbury's commitments to sustainable and ethical sourcing, including Fairtrade" but it looks unlikely that Kraft would continue to expand its use of Fairtrade cocoa beans into brands beyond Dairy Milk.
The deal has re-shaped the global chocolate industry, which is now dominated by just four large companies: Kraft/Cadbury, Mars, Nestle and Ferrero. This excellent interactive graphic at the Guardian website shows at a glance the new companies and their product range.
Nestle is now in the unsual position of being third place, behind the Mars and the new Kraft/Cadbury giant, an unfamiliar role for the world's largest food corporation. It might not remain that way for too long as it is eyeing up Hershey, an American company with an iconic status similar to Cadbury in the UK.
Last week saw years of patient courtship pay off for the Fairtrade Foundation, as it secured Fairtrade status for the nation’s favourite “chocolate biscuit bar”, Kit Kat. The cocoa will come from co-operatives in Côte d’Ivoire, and the sugar from farmers in Belize.
Appropriately enough, the news broke on the same day as cocoa prices reached one of their recent peaks: $3,378 per tonne on the New York futures market, the highest level since 1985. Prices are said to have been boosted by speculation about dwindling supplies from Côte d’Ivoire.
The news has been greeted with a good deal of unease among campaigners and activists. Though Kit Kat was originally launched in 1935 by Rowntree and is something of a British institution, Rowntree was of course taken over by Nestlé in 1988, just as Cadbury is looking likely to be swallowed up before too long. And Nestlé has the dubious distinction of being one of the world’s most notoriously unethical companies.
There was a disappointing three-day UN World Food Summit in Rome earlier this week. Given that around a billion people are malnourished and suffering the effects of high global food prices, the summit could have been a great opportunity for rich countries to pull together and make real commitments to eradicate world hunger.
Instead, Silvio Berlusconi was the only G8 country leader who even bothered to attend the summit. The director general of the Food and Agriculture Organisation, Jacques Diouf, made headlines when he expressed disappointment at the outcome of the summit, and criticised rich countries for managing to mobilise trillions of dollars to combat the financial crisis while neglecting to tackle food security.
It is disappointing because in July this year G8 leaders pledged to put £12bn into boosting sustainable agriculture in poor countries, and now that money is failing to materialise. Agricultural development aid seems to be falling by the wayside once more.
Yet, small-scale, sustainable agriculture is the future. Investing in smallholder farming will not only support the two billion people who depend directly upon it, it is our best chance of feeding the rest of us in the long term.
It was the Fairtrade Supporters Conference in London today, one of the best Fairtrade Foundation conferences I've attended.
I would have liked to have seen more reflection about the future of Fairtrade campaigning in the UK. This sort of conference could be the space for genuine consultation and strategic debate about the direction of the Fairtrade movement. As it is, they are always rather top-down in approach and tend to take the campaigners for granted, treating them as a resource to be deployed rather than as co-creators in a shared endeavour.
Nevertheless, the conference still did a great job making us feel part of a campaigning community, stoking up enthusiasm and sharing useful information. It was good to hear about DFID's £12m of new investment in Fairtrade, aiming to bring another million producers into the system. Harriet Lamb described how costly and time consuming it can be to bring new producers or commodities into the system, using the example of Zaytoun olive oil from Palestine which took over five years to certify Fairtrade. For all the success of Fairtrade, it still requires substantial external investments to scale up and deepen its impact.
The final panel discussion of the day - "what role does fairness play in sustainable consumption" - was particularly interesting.
Starbucks recently switched the majority of its coffee to Fairtrade in the UK and Ireland. After years of over-marketing their fair trade credentials in their stores and on their marketing and educational materials, the reality is catching up with the rhetoric.
Mind you, the rhetoric has stepped up another gear too, with a massive multimillion-pound ad campaign launched to squeeze out as much ethical mileage as possible. Like the big budget television ad focused on Fairtrade and Ghana currently being run by Cadbury, the Starbucks campaign marks an interesting point where, in this country at least, Fairtrade has become not so much a burdensome extra cost for companies as a powerful marketing tool.
Cocoa prices hit a 24-year high last week, reaching $3,183 per tonne on the New York futures market, now well above the Fairtrade minimum price floor of $1,600 a tonne. Meanwhile the International Cocoa Organisation (ICCO) revised down its forecasted surplus for next year’s harvest from 100,000 tonnes to 25,000-50,000 tonnes.
It seems that demand for cocoa – which took a hit because of the global recession – is picking up again more quickly than expected, even as production is predicted to fall.
As reported widely over the past few weeks, Fairtrade Dairy Milk chocolate bars are at long last rolling off the production line at Cadbury’s Bournville factory. This is a momentous, if long overdue, event for the fair trade movement, increasing all UK Fairtrade sales by 25% in one swoop and making the Fairtrade Mark visible in many more retail outlets.
The Fairtrade certification of Dairy Milk is a massive piece of ‘choice editing’, in a similar way to when Sainsbury switched all its bananas to Fairtrade. Usually ethical consumers have to make an active choice when buying Fairtrade products. When switching completely to Fairtrade bananas, Sainsbury addressed the fact that most people won’t actively seek out products that address issues such as sustainability and human exploitation, but will buy them when they are their only choice and they are right under their nose. The fact that Cadbury has followed suit by converting the most popular chocolate bar in Britain to Fairtrade, so placing Fairtrade in every newsagent and supermarket in Britain at no extra cost to the consumer, is a welcome development.
The development does also mark a big shift in the balance of power within the fair trade movement, raising all the big questions that arise when multinational companies adopt the Fairtrade Mark. So while it is an excellent thing, we need to be wary and thoughtful about the long term impact, and in particular ensure that the Fairtrade mission is not compromised or weakened in any way.
Tom Palmer, a children's author who writes fast paced football novels, went to Ghana recently to do some research for the latest book in his football detective series. He visited a Kuapa Kokoo cocoa farm and one of the schools that we work with, and wrote a lovely blog about his travels for the Dubble website.
It is always fascinating to read first impressions of people's visits to far away places. When you first travel to a new and unfamiliar country, you are like a natural anthropologist, excited by the minutia of everyday life, recording details and impressions that you will later find commonplace and familiar but which contain important insights that are worth holding on to. It is a bit like a dream that will lose its vivid colour unless you record your observations.
An early start today with a thermos of Oromo coffee to keep us awake for the long drive up to Leeds for the Fairtrade Schools conference. This was in the rather splendid surroundings of the Leeds Business School, a converted Victorian grammar school.
We met up with the mighty DGH, Divine Chocolate's resident chocolatier, who ran an excellent lunchtime cookery workshop at the refectory. He was supported by special guest Carl, from the Ministry of Chocolate. They were two chocolatiers on a mission!
Over at Pa Pa Paa LIVE, the interactive webcast service we run with Comic Relief, we've got a special webcast up to celebrate International Day of the African Child on Tuesday 16th June.
We hope that it highlights the sort of aspirations young people in Africa have for their futures; free from poverty and full of opportunities.
International Day of the African Child has been celebrated on 16th June every year since the end of Apartheid in 1991. It honours the thousands of black schoolchildren who took to the streets during the Soweto Uprising of 1976 to protest about the inferior quality of their education, and draws attention to the lives of African children today.
We kicked off May 2009 with a City of London May Day event organised by Trading Visions, Justshare and the Fairtrade London Campaign.
It was a perfect sunny afternoon to fly the Fairtrade flag and we made a real statement by setting up our stands in the heart of the City – right at the steps of the Royal Exchange!
The last two months have seen two of the biggest chocolate industry players announce major ethical certification initiatives.
Cadbury's Dairy Milk bar will be Fairtrade certified in the UK and Ireland by the end of 2009, with plans to convert more of their range, and Mars are working with Rainforest Alliance to sustainably source all their cocoa by 2020, starting with Rainforest Alliance certification for the Galaxy bar in 2010.
To put these announcements in context and explore their significance, we put some questions to Mars and Cadbury, and to three external commentators...
Short film by Reuters with Divine Chocolate welcoming British confectioner Cadbury's decision to convert its biggest selling chocolate bar, Dairy Milk, to Fairtrade.
Trading Visions and Comic Relief have launched an interesting new service for schools, in collaboration with Kuapa Kokoo and Divine Chocolate, called Pa Pa Paa LIVE. It's an online video broadcasting service, delivering webcasts from a rural junior school in Ghana to classrooms across the UK.
Fairtrade Labelling Organizations International (FLO), the global Fairtrade certification umbrella body, has commissioned the first ever global consumer survey on Fairtrade. It was carried out by GlobeScan, and involved a sample size of 14,500 people in fifteen countries.
The results are encouraging reading. The survey shows that ‘active ethical consumers’ make up just over half the population (55%) in the countries surveyed. These consumers are willing to reward or punish companies that meet, or fail to meet, their expectations, and they influence others with their opinions.
Half of the public (50%) in the fifteen countries are now familiar with the Fairtrade mark and of these people, nine out of ten (91%) trust it. The survey also shows that 64% of all consumers in the surveyed countries believe that Fairtrade has strict standards, a quality that FLO says closely correlates to consumer trust. And 72% of all consumers believe independent certification is the best way to verify a product’s ethical claims.
I don't know about you, but I was secretly hoping the G20 summit last week would live up to Gordon Brown's hype, surprise us all and radically re-shape the global economic system.
Next week, Gordon Brown is hosting a high profile G20 summit. The ambitious objective of the twenty-two world leaders gathering in London is to tackle the global economic crisis. Expectations are high, but few people have faith that politicians will deliver unless they are pushed to take radical progressive action.
Trading Visions, in collaboration with the LSE Centre for Civil Society, held a well attended public discussion debate on Tuesday 24th February 2009. The topic was 'Who Owns Fairtrade?'
Some of the themes explored included:
• the contradictions of fair trade being a consumer brand as well as a movement;
• the fact that ownership can be claimed by such a wide range of stakeholders, from Fairtrade schools to Sainsbury;
• the contrast between the rigours of certification for small scale producers and the ease of involvement for large corporations;
• the ideal and reality of the fair trade partnership along the value chain.
You can watch and listen to the panellists and the discussion below.
Kate is co-founder of Tropical Wholefoods and has also worked in Uganda developing fair trade fruit drying. Tropical Wholefoods is based in a Soil Association certified factory in Sunderland, and produces snacks, foods and natural soaps.
Rajah is a tea plantation owner, his life’s work has been to convert the Fairtrade certified Makaibari Tea Estate in Darjeeling to organic permaculture, with tea bushes integrated into a wider subtropical forest ecosystem.
Katie is a sustainability consultant at PricewaterhouseCoopers LLP. She was previously at Marks & Spencer, where she worked on the launch of Fairtrade cotton products and the move to Fairtrade coffee.
Dyborn Charlie Chibonga
Dyborn is CEO of the National Smallholder Farmers’ Association of Malawi, which represents over 100,000 small scale farmers. He also serves on the board of the International Nut Cooperative which is selling Fairtrade nuts under its own UK brand, Liberation.
Pauline is an independent consultant focused on helping small-scale producers in Africa and Latin America profit from the international marketplace. She is a founder of two Fairtrade companies, Cafédirect and Divine Chocolate.
Questions and Discussion
The whole debate is available as a podcast.
Cadbury and the Fairtrade Foundation have announced that Cadbury's Dairy Milk chocolate bar, and its hot chocolate beverage, will become Fairtrade certified in the UK and Ireland by the autumn of 2009.
Dairy Milk is the UK's best selling bar, with 300 million of them being produced every year. The chief executive of the company, Todd Stitzer, says he plans to convert their other chocolate brands to Fairtrade "as soon as we can do it". Dairy Milk represents 20% of Cadbury's chocolate range.
Tens of millions of people are now suffering the effects of increased and volatile food and fuel prices, including the world's 450 million smallholder farming households, home to around two billion people. Average food prices rose 83 per cent between 2005 and 2008
The Fairtrade Foundation announced today that Fairtrade sales rose 43 percent over 2007, defying the economic downturn and reaching an estimated retail value of £700m in 2008. The number of families regularly buying ethical tea, coffee, fruit and clothes in 2008 rose by 1.3 million to 18 million.
Philip Sigley, Chief Executive of the Federation of Cocoa Commerce, and Fairtrade business pioneer Pauline Tiffen go head to head on the benefits of 'free' and 'fair' trade supply chains for cocoa producers.
Philip Sigley, Chief Executive of the Federation of Cocoa Commerce (FCC)
Speech at JustShare debate
St Mary Le Bow Church, London, 4th July 2006
Ladies and gentlemen,
Thank you for this opportunity to explore with you the key topic of "fair" trade and mainstream in relation to the international cocoa trade: