What do the announcements mean for cocoa farmers?

Bama Athreya and Tim Newman:

Fair Trade provides many benefits for cocoa farmers. From ensuring that core labor rights are protected to providing a fair price and a social premium for investment in important community projects to the democratic organization of farmers, Fair Trade is the best available system to improve the living and working conditions of cocoa farmers.

Cadbury’s announcement is a step in the right direction. The benefits of Rainforest Alliance certification for workers are less clear. While the standards do incorporate core labor rights, ILRF is concerned that the program does not have the necessary labor expertise to ensure that workers’ rights are protected and the program does not address the essential issue of the price paid to farmers for their beans.

Neither of these recent announcements should be an ending point for working together to improve conditions for cocoa farmers. These programs are constantly evolving and there is still a long way to go. ILRF remains committed to working with cocoa farmers and organizations in West Africa and around the world to support their work to organize collectively and ensure that their rights are respected.

Philip Sigley:

Listening to Radio 4, a news item came on saying that the European Commission regarded the EU fishing fleet as too large and it needed to be cut to make it sustainable. My thoughts turned to the 3 million farmers producing 3.6 million tonnes of cocoa with such low productivity that the land committed to cocoa has, amongst other things, negatively impacted on biodiversity and exacerbated deforestation. Yet the tools for the farmer to do the job properly are available, but not implemented.

The comparison with EU fishing was obvious – but how to achieve sustainability in both cases, how to make the reductions? What happens to those who do not make the cut?

How can 3 million cocoa farmers ever be sustainable? – it cannot unless you accept the market as it is and therefore must accept also that the Millennium Development Goals cannot be achieved based on the income from cocoa alone which will simply not be sufficient for every cocoa farmer and his family in the way the market is structured. Who funds the diversification into non-cocoa areas and what areas will they be?

My biggest fear is that the Cadbury and Mars announcements further convince developed country governments and donors that niche markets are the solution and gives a basis for such governments to continue to avoid significant contact with the mainstream markets on sustainable solutions.

If countries are to emerge from low income status to achieve middle income status or better, this will be driven by infrastructure and investment in the capacity of the country to support its productive communities. Where there is an over dependency on the one or two commodities which form the backbone of the economy, then you risk creating negative effects for the sustainability of those markets if the producers do not benefit from their labours in an equitable way. Where is the vision of a positive future?

The underlying point to be considered in the Mars/Cadbury announcements is: what is the economic framework and wealth of the economy of the country where the proposed activities are based and what is likely to be the impact of the interventions?

For those farmers fortunate enough to be included in these programmes there will be improvements in their standards of living. But let us consider also the likely consequence of closer manufacturer/farmer relationships. Those in the closed supply chain will be assisted to be more productive and cocoa will be the main thrust of their activities as they are in a cocoa supply chain.

According to the FAO, 8 million hectares are planted with cocoa in the producing countries. We need about 3.6 million tonnes of cocoa per annum and if, by adopting best practice models, productivity of say 1 tonne per hectare is achieved then potentially we have a massive cocoa surplus. Accordingly, alternatives have to be found for cocoa farmers in a joined up plan which must be a public-private partnership and cannot be achieved by private sector intervention alone.

The Fairtrade Foundation website states “Fairtrade standards go further in seeking to support the development of disadvantaged and marginalised small-scale farmers and plantation workers.”

Ghana has in recent times enjoyed stability and growth. The marketing board system also provides much of the support needed in relation to the traceability aspects of Fairtrade. The combined effect of these factors means that the Cadbury initiative will make some farmers within a stronger cocoa origin even stronger and more productive.

The temptation is there for others to follow the example – and if all take the option of Ghana then potentially, with the 1.7 million hectares there planted with cocoa in ghana (if you believe the FAO figures), significant increases in the wealth of Ghana farmers would be achieved. However, where would the increase in Ghana production be off set? Perversely the impact of these initiatives is to create “disadvantaged and marginalised small-scale farmers” in another country or maybe even in Ghana.

Could we see significant world over-production of cocoa and consequent price declines, the impact of which would be minimised by farmers operating under the fair trade banner?

From a mainstream cocoa market point of view the Cadbury and Mars announcements do not affect the need for fundamental change in the need for effective public private partnerships.

Michael Niemann:

Cadbury's announcement has a direct impact on the farmers: According to the numbers reported by the BBC, fair trade beans sourced from Ghana will increase by 10,000 tons. Given the current cocoa prices, the floor price of $1,600/ton will not matter, however, these 10,000 tons will yield an additional social premium of $1.5 million for cocoa farmer communities. That, in turn, will provide a significant increase in the amount available for community projects in cocoa farming communities. More farmers will gain access to clean drinking water, sanitary facilities and education for their children.

The impact of the Mars announcement is less obvious. The 100,000 tons to be certified by Rainforest Alliance do not necessarily mean more money for the farmers. It may actually mean less money at first. Even if Mars pays for the certification, the farmers are still responsible for the investments necessary to bring their farms into compliance--planting additional trees, removing cocoa trees too close to watersheds, etc. The promise, of course, is that such farmers will eventually receive more income because they are more productive farmers.

As I have written my blog, much of the funding the chocolate industry, including Mars and Cadbury, in recent years has focused on improving farming practices and thus increasing yield. If all farmers implement the same strategies, the net result will be in increase in supply that may well undermine world prices. The subtext of these "farmer improvement" strategies is to modernize cocoa farming, weed out "unproductive farmers" and create a smaller more productive cocoa sector. Cocoa would be cheaper – or at least not rise in price – and, hopefully, more sustainable. This strategy has broader implication for the total economy of the countries involved.

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