The parties have heralded the model as an industry-first.
Mondelēz says five times more Cadbury chocolate will now be made with ‘sustainably sourced cocoa’, including UK & Ireland brands Cadbury Twirl and Flake.
Barbara Crowther, director of policy and public affairs at Fairtrade, said: "[Cocoa for Cadbury] isn't going to be certified either under the Fairtrade mark or through the sourcing program. It's going to be traded through loyalty payments embedded into Cocoa Life itself and we will work to hold that program accountable.
“It's an entirely different way of working with a company….it’s the next stage of evolution.”
Mondelēz has named Fairtrade as its global partner for Cocoa Life, the Cadbury maker’s ten-year $400m sustainability program launched in 2012.
Cocoa Life covers 200,000 farmers and a million people in communities in Côte d’Ivoire, Ghana, Indonesia, Brazil, India and the Dominican Republic. Mondelēz claims annual income for participating farmers in Ghana has doubled from 2009 to 2014. Around 21% of Mondelēz’s total cocoa volumes were from sustainable sources at the end of 2015 – half from Cocoa Life, half from certified sources. The latest Cadbury brands expansions will at least double the level sourced sustainably by 2018, with the vast majority coming via Cocoa Life.
Under the agreement, Fairtrade will - for example - help Cocoa Life to strengthen cooperatives and support farmers to mitigate the effects of climate change, which is already causing some farmers to lose half of their seedlings every year.
Premiums and pricing
Mondelēz said cocoa premiums paid to farmers under Cocoa Life will be equivalent to Fairtrade’s fixed premium of $200 per metric ton. But the minimum Fairtrade cocoa price of $2,000 will not apply.
Cathy Pieters, director of Mondelēz's Cocoa Life program, said: "It’s not one against the other [the new model versus Fairtrade's existing system]. The challenges are so big and the supply chain is so broken that every effort is a good effort…this is really a great opportunity to go further.”
Crowther added: “There will be parity of value for farmers equivalent to what they would have received under Fairtrade certification."
She added the Ghanaian and Ivorian governments have recently set prices for cocoa above the Fairtrade price, rendering the certification scheme’s current guaranteed minimum practically redundant.
Crowther said: "10-20 years ago, a lot of the companies had sustainability initiatives in one bucket and then their trading was happening somewhere else, separately. But what we're seeing here is a full integration.
"In the UK & Ireland its five times as much chocolate is going to be sourced with sustainably produced cocoa through this model. If we can work in that way, it really does mark progress."
Labeling & communications
Cadbury products in the UK & Ireland will carry a small Fairtrade Foundation logo on the back of pack and a larger Cocoa Life logo on the front.
It will be a phased roll-out starting from May next year with all products covered by 2019.
“We’re not trying to suggest this is a Fairtrade certified product anymore,” said Crowther. “It’s going to change. It’s going to evolve from that.”
Asked if the new way of working comes as a result of the incoming ISO/CEN standard on sustainable cocoa, Crowther said: "The ISO/CEN standards haven’t been a factor in our thinking. It's been more to scale up the pace of progress for farmers."
Plain Cadbury Dairy Milk has been Fairtrade in the UK since 2009. This made Cadbury the largest purchaser of Fairtrade cocoa, buying around 16,000 metric tons a year for the brand. The product is also certified in Canada, South Africa and New Zealand. Cadbury Dairy Milk in the UK will no longer carry the Fairtrade mark front of pack from May 2017 and from 2018 in the other markets. The brand will instead conform with the standard for all Cadbury brands and have a Cocoa Life logo front of pack and a “partnering with Faitrade Foundation” logo on the back.
FLOCERT, which already works as an auditing body for Fairtrade, will independently verify the expanded Cocoa Life program. FLOCERT has already been verifying Cocoa Life since 2015.
Fairtrade certified farmer organization will continue to be audited by FLOCERT if they choose to remain certified. FLOCERT conducts announced and unannounced audits twice every three years under the Fairtrade system.
Cocoa Life Impact
Mondēlez previously said Harvard University will measure the impact of the Cocoa Life program every three years, but it has now appointed IPSOS to measure the impact.
Pieters said IPSOS was better equipped to audit on the ground and added: “The framework [set by Havard] has not changed at all.”
Mondēlez's Cocoa Life program with Fairtrade is to begin in Ghana, but Mondelēz says the learnings may be expanded to other Cocoa Life geographies.
Mondelēz International does not work with any other certification schemes other than Fairtrade. But Pieters said: “Whoever can add value to the Cocoa Life program in a meaningful way is welcome.”
Fairtrade Cocoa Program
In 2014, Fairtrade launched its Fairtrade Cocoa Program. This allowed companies to bulk buy a single commodity as Fairtrade. It was a departure form the full Fairtrade mark whereby companies had to source all possible ingredients for a brand such as sugar and vanilla on Fairtrade terms. The Cocoa Program provided a 14% boost for Fairtrade cocoa sales in 2014 compared to the prior year as companies such as Mars, Riegelein and the Rewe Group pledged to source more Fairtrade cocoa. Ferrero announced in June this year it would double its Fairtrade commitment to source 40,000 MT of cocoa under the Fairtrade Cocoa Program over the next three years.
The European Committee for Standardization (CEN) and the International Organization for Standardization (ISO) will create a joint standard for traceable and sustainable cocoa that can be used as a voluntary reference for company programs and certification bodies. The standard is in a public consultation phase until December 2016.