Fair-trade cocoa is an agricultural product harvested from a cocoa tree under a Fairtrade certified price support scheme used by cocoa farmers, buyers, and chocolate manufacturers, and is designed to create sustainable incomes for farmers and their families. Food manufacturers that use fair-trade–certified cocoa in their products often display the Fairtrade symbol to indicate that they are contributing to social, economic, and environmental sustainability in agriculture.
Background In the 1990s, exactly 1 percent of the world's cocoa was produced on small, family managed farms, primarily in West Africa and Latin America. Local collectors and intermediaries purchase and transport the cocoa to exporters and processors. Many farmers are unaware of the final destination and value of their cocoa. Low prices and increasing need for fertilizer often created labor shortages, leading to slave labor in many West African countries with cocoa production.
Fair-trade cocoa certification was created to overcome these problems. The first fair-trade certification of a cocoa product was arranged by the Max Havelaar Foundation of the Netherlands in 1994. The product was Green & Black's Maya Gold Chocolate, which was made with cocoa from Belize. The Max Havelaar Foundation was also the first Fairtrade Certification Mark. The Dutch foundation has now incorporated itself into Fairtrade International (FLO), a nonprofit organization with 25 member countries that use fair-trade certification labels.
In 2002, Fair Trade USA, which at that time had been incorporated into Fair Trade International (FLO), started certifying fair-trade cocoa products sold in the United States. In September 2011, Fair Trade USA split from Fair Trade International (FLO).
In 2001, the issue of forced labour in cocoa production was brought to the public's attention by a series of articles published in the United States by Sudarsan Raghavan, Sumana Chaterjee, and the Knight Ridder news agency. They included interviews with victims of child trafficking for cocoa production. Noting that the United States has laws against importing goods produced using slave labor, Congressman Eliot Engel and Senator Tom Harkin proposed to enact a "slave-free" label for chocolate. The United States cocoa industry lobbied against this, and the mandatory labeling proposal was reduced to a voluntary system. Under this system, known as the Harkin–Engel Protocol, chocolate producers pledged that by 1 July 2005, they would use "standards... consistent with applicable federal law, that ensure cocoa beans and their derivative products have been produced without the worst forms of child labor."
A major study of the issue in 2016, published in Fortune magazine in the U.S., concluded that approximately 2.1 million children in West Africa "still do the dangerous and physically taxing work of harvesting cocoa". The report was doubtful as to whether the situation can be improved.
"According to the 2015 edition of the Cocoa Barometer, a biennial report examining the economics of cocoa that's published by a consortium of nonprofits, the average farmer in Ghana in the 2013–14 growing season made just 84¢ per day, and farmers in Ivory Coast a mere 50¢. That puts them well below the World Bank's new $1.90 per day standard for extreme poverty, even if the 13% rise in the price of cocoa the previous year is factored in.
And in that context the challenge of eradicating child labor feels immense, and the chocolate companies' newfound commitment to expanding the investments in cocoa communities not quite sufficient.... 'Best-case scenario, we're only doing 10% of what's needed.' Getting that other 90% won't be easy. 'It's such a colossal issue,' says Sona Ebai, who grew up farming cocoa in Cameroon and is the former secretary general of the Alliance of Cocoa Producing Countries. 'I think child labor cannot be just the responsibility of industry to solve. I think it's the proverbial all-hands-on-deck: government, civil society, the private sector.' He pauses, taking in his own thought for a moment. 'And there, you really need leadership.
Fair-trade cocoa criteria Although the criteria for fair-trade cocoa certification vary amongst different organizations, the following criteria are standard: Fair-trade standards assist farmers to organize as cooperatives and associations so they can earn fair prices for their products. Fair-trade certification organizations regularly inspect cocoa producers to ensure that they meet child labor standards. Fair Trade acts immediately when infractions are found to protect the children involved and secure their safety. Fair-trade standards promote environmental sustainability in producing cocoa crops. They prohibit the use of dangerous agro-chemicals and GMOs. The fair-trade price guarantees that farmers are paid a sustainable price for their product. In cocoa cooperatives, buyers also contribute money to community development, allowing cocoa farmers to increase product quality, build infrastructure, train workers, bring safe drinking water to their communities and establish local health clinics and schools.
Fair-trade cocoa products in the United States As of 2010, there were 62 cocoa-growing cooperatives in the US fair-trade system. The producers supplying the US with fair-trade cocoa are located in Bolivia, Côte d'Ivoire, Dominican Republic, Ecuador, Ghana, Panama and Peru.
In 2010, the amount of fair-trade–certified cocoa and chocolate products in the United States increased drastically, with a 67% increase from 2009. However, this is a small percentage of the total market for cocoa products. Also, in the USA, products which have as little as 11% fair-trade–produced cocoa can be labelled as Fair Trade Chocolate. In some cases, if other ingredients besides cocoa are fair-trade, the amount of fair-trade cocoa may be less.
In January 2010, Kit Kat converted its Kit Kat bar to use fair-trade–certified cocoa, but later stopped using fair-trade cocoa in the Kit Kat.
Economic impact Additional income for farmers Typically, the farmers who grow the cocoa beans only receive 3.2% of the price of the final cocoa bar. In Ghana and the Ivory Coast, the two largest contributors of chocolate in the world, farmers will make as little $0.50 per day and the majority of their income is dependent on cocoa farming. In the past thirty years, cocoa prices have been as low as $714 per ton in 2000 to as high as $3,775 per ton in spring of 2011. Although the market price of cocoa fluctuates, fair-trade certification has created a minimum price for which the cocoa farmers must be paid per ton. The farmers receive either the market price or the fair-trade minimum, whichever is higher. In January 2011, Fairtrade International (FLO) created an international standard for the minimum price that farmers of fair-trade cocoa receive per ton of cocoa. It was increased from $1600 to $2000 per metric ton. The minimum price set by Fair Trade ensures a consistent minimum wage for farmers. This gives farmers financial stability and the ability to plan for future events. This consumption smoothing yields a better quality of life for the farmers and their families.
Additionally, the cocoa farmers' average age is increasing, currently sitting at about 50 years old. Few young people want to stay in the industry as the wages are so poor that they are looking elsewhere for work. By increasing their wages through fair-trade practices, younger generations are encouraged to stay and the industry can continue to produce. Without increasing income, the chocolate supply will fall as the aging population is unable to produce at current levels.
Since 1998, Fair Trade USA has helped US-based companies using fair-trade cocoa to generate more than $220 million in additional income for their cocoa cooperative-farming communities.
Community development Since 2002, $1.25 million has been paid by Fair Trade USA–certified cocoa companies directly to fair-trade cocoa cooperatives for community development projects. These additional funds allow cocoa-farming communities to run programs that create better access to healthcare and education, support women, and protect the environment. Fair Trade USA's cocoa cooperatives are largely in West Africa and Latin America.
Increasing equality for women While men are paid little while working on a cocoa farm, women are often paid less if at all. In the Ivory Coast, women constitute nearly 70% of the farm labor producing cocoa yet receive just over 20% of the income. Women constitute only 25% of the landowners producing cacao in the Ivory Coast. As a result, women are unable to get loans or a line of credit to increase the quality of their crops and the productivity of their trees through investments in equipment. Fair-trade cocoa ensures that all are paid equally regardless of gender. As a result, women are able to invest in their farms. This increases agricultural productivity and product quality. Women are also shown to have greater marginal returns than men when given higher income. Improving their income also has the effect of improving the lives of their children as well.
Political impact In Côte d'Ivoire, where much of the country's wealth and employment is based on cocoa production,Global Witness. 2007 Hot Chocolate: How cocoa fueled the conflict in Cote D'Ivoire. the government and the rebel group Forces Nouvelles (FN) are competing for land producing fair-trade cocoa; revenues from the cocoa trade have contributed to funding armed conflict. After the 2010 presidential election, incumbent Laurent Gbagbo alleged corruption in the voting process and refused to cede power to Alassane Ouattara, the internationally recognized winner. Ouattara called for a ban on cocoa exports in order to cut off Gbagbo's main funding source. The European Union (EU) endorsed the ban and forbade ships from the EU to dock in Côte d'Ivoire. Cocoa farmers continued to harvest their cocoa beans, but most beans were stored in warehouses and not exported. Some cocoa was smuggled through neighbouring countries.
Environmental impact A lifecycle analysis study of the environmental impact of cocoa production in Ghana, the world's second-largest producer of cocoa, shows that the majority of cocoa production in Ghana is not environmentally sustainable,Ntiamoah, Augustine, with George Afrane. 2007 Environmental impacts of cocoa production and processing in Ghana: life cycle assessment approach. causing a variety of problems ranging from ozone layer depletion, water and soil contamination by pesticides, to atmospheric acidification and abiotic depletion.
In order to obtain fair-trade certification, cocoa producer companies are required to follow fair-trade environmental standards. On a case-by-case basis, they must assess the environmental impacts of a cocoa farmer's operations, develop plans designed to mitigate those impacts and monitor the implementation of those plans. Although the environmental standards for fair-trade certification vary by organization, they all include sustainable irrigation practices, crop rotation, reducing carbon emissions, improving biodiversity, prohibiting GMO crops, safe use of only legal pesticides and proper hazardous waste disposal.