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FLO raises Fairtrade cocoa premium

By Jane Byrne , 14-Oct-2010
Last updated on 14-Oct-2010 at 13:17 GMT

A hike in US$50 in the Fairtrade premium per metric tonne (MT) of cocoa should encourage investment in sustainable cocoa initiatives and better farming practices, claims the group behind the standard, which expects ongoing growth in Fairtrade products.

The Fairtrade Labelling Organizations International (FLO), said that as of January 1 next year, cocoa farmers will earn US$200 in Fairtrade Premium to invest in business and community projects for every MT of cocoa they sell, up from US$150/MT.

Timetabled increase

FLO spokesperson Reykia Fick told ConfectioneryNews: “The decision to raise the Fairtrade minimium cocoa price was part of a scheduled review by the FLO standards committee.

It carried out extensive research with cocoa growing cooperatives in 14 countries, as well as with a wide range of stakeholders in the cocoa supply chain, to determine the level of increase required.”

The group maintains that when market prices are above the Fairtrade Minimum Price, Fairtrade buyers must pay at least the market price. But as cocoa prices drop, Fairtrade farmers have the security of a minimum price floor below which their income cannot fall.

“Though world market prices reached an all-time high in January, they have begun a potentially dangerous downturn,” stresses the FLO.

With this higher Fairtrade Premium and a rapidly growing Fairtrade cocoa market, FLO said it expects cocoa farmer organizations will earn at least US$10m in 2011 for development projects they choose as priority.

Fick said that, obviously, without proper investment, farms become less productive, resulting in a reduction in the amount of high quality Fairtrade cocoa available.

Approximately 90 per cent of the world’s cocoa supply is grown and harvested on family-owned farms with plot sizes of 12 acres or less, while only 5 per cent of cocoa is grown on plantations over 40 hectares in size.

Child labour

While it is up to the farmers to best decide how to invest the extra funds, Fick reports that cocoa growers are tending to put extra revenue earned into farm improvement projects as well as their children’s education.

The difficulty in making a living in cocoa farming has led to an increase in child labour in West African producing countries. Fick argues “that stronger governmental and international controls are required to eliminate child labour from cocoa growing, but that raising the Fairtrade Premium price will also help in this regard.”

An estimated 1.2 million farmers and workers sell through the Fairtrade scheme, and the FLO believes the hike in the premium will encourage more producers to join the initiative.

The organisation said it is also developing a Fairtrade Minimum Price for organic cocoa which it expects to announce in November, and which also be valid from 1 January 2011.

Fairtrade sales

Sales of Fairtrade certified products increased 15 per cent in 2009, thus bucking the recessionary trend, according to data from the FLO.

It said that sales of Fairtrade-certified sugar and cocoa saw the biggest sales increases last year, as several major confectionery manufacturers made commitments to source fairly traded ingredients, including Cadbury Dairy Milk, Nestlé’s Kit Kat, and Green & Black’s, as well as the ice cream maker Ben & Jerry’s.

Fairtrade cocoa sales were up 35 per cent in 2009, while Fairtrade sugar sales grew by 57 per cent.

Fairtrade sales grew ‘exponentially’ in Eastern Europe, South Africa, and many countries in the global south during 2009, FLO said, and shoppers in the most established Fairtrade markets also increased their spending on Fairtrade products.

“The largest Fairtrade markets had strong growth: 14 per cent in the UK and 7 per cent in the USA,” the FLO said.

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