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.
This groundbreaking move will result in the tripling of sales of cocoa under Fairtrade terms for cocoa farmers in Ghana, both increasing Fairtrade cocoa sales for existing certified farming groups, as well as opening up new opportunities for thousands more farmers to benefit from the Fairtrade system.
- Fairtrade Foundation
At a stroke, the move will bring the Fairtrade mark into every corner shop and newsagent in the country, on a chocolate bar that is one of Britain's flagship brands. It is a key development in the mainstreaming of fair trade.
Although Cadbury and the Fairtrade Foundation have been in discussions for two years, there had been no public hint of such an announcement. Just a year ago, a Cadbury spokesperson justified their Cocoa Partnership funding programme in Ghana in an interview in New Consumer, explaining that the company did not intend to take the Fairtrade route: "The issue for Ghanaian farmers is not price ... The real issue ... is productivity and volume."
Harriet Lamb, Fairtrade Foundation and Todd Stitzer,
Cadbury, speaking from the Eastern Region of Ghana
It turns out that productivity and volume are still key to the decision to go Fairtrade. Todd Stitzer talks to Harriet Lamb in the video above about how Fairtrade will help them secure their supply chain, by giving them "a continuous supply of high quality chocolate from farms that are sustainable". This is important, as the future of cocoa production in Ghana is uncertain.
Ghana faces significant challenges in maintaining the future sustainability of its cocoa production. Annual production of cocoa is well below its potential capacity, with productivity (output per hectare) at 40% of its estimated potential. It has an ageing farmer population, and faces an exodus of youth from the sector.
- Mapping Sustainable Production in Ghanaian Cocoa, a report for Cadbury by the Institute of Development Studies and the University of Ghana
Cadbury sources nearly two thirds of its cocoa from Ghana and has done so for more than 100 years. As Todd Stitzer says in the video, "business is getting increasingly aware that if they're not responsible for the source, the source is going to go away".
Fairtrade is currently quite an affordable proposition for Cadbury. The world market price for cocoa has been rising for some time, now standing at around $2,200 a tonne, so all chocolate companies have been paying well above the Fairtrade minimum of $1,600 a tonne. Cadbury will also pay a Fairtrade premium of $150 on every tonne of cocoa, but Todd Stitzer has said there will be no change to the group's financial forecast that its overall input costs would rise between 6 and 8 percent in 2009.
It is the pioneering work of existing Fairtrade co-operatives and alternative trade organisations that has paved the way for Cadbury to join the fair trade journey.
A small group of visionary Ghanaian cocoa farmers formed the Kuapa Kokoo co-operative, with the help of Twin Trading, in the early 1990s. Kuapa Kokoo have grown into a large thriving democratic organisation of 45,000 cococa farming, producing one per cent of the world's cocoa output on Fairtrade terms, though they currently sell just 10 per cent of this to the Fairtrade market.
Ten years ago, Kuapa Kokoo went on to found Divine Chocolate, a company whose existence has shaken up the chocolate industry. Divine Chocolate was set up to be more than just a Fairtrade chocolate company: it has producer ownership and participation at its heart. Kuapa Kokoo own a 45 per cent stake in the company, so farmers sit on the board and share in the profits.
Todd Stitzer was quoted in the Financial Times as saying he is not trying to “pull the rug out” from smaller Fairtrade companies. “If there are only small players in Fairtrade, it’s sort of self-defeating ... If big businesses get behind it, you can have a much greater impact on agricultural societies.”
Divine is delighted that Cadbury has joined them in saying to the industry that the current way of working is neither sustainable nor fair. Together we really have the chance to create a step change, where the very least companies should do is to pay a Fairtrade price for the ingredients they buy, and that anything less is just not acceptable.
- Divine Chocolate
Divine Chocolate was founded ten years ago to change the way the chocolate industry works forever. Today's announcement from Cadbury is one step further along that long road.
After a decade of persistent efforts this story of the new way the world could do business is catching up mainstream and Cadbury, the UK’s biggest chocolate producer has positively responded to it. This is good news and we are happy once again to be associated with it.
As our campaign over the last decade is gaining root, we further believe that farmer-ownership in businesses as portrayed by the Kuapa Kokoo and Divine business model is the true way to empower the farmers further up the cocoa value chain and able to share the wealth they have helped to create.
- Kuapa Kokoo