New minimum price for Fairtrade organic cocoa will offset volatility, claims FLO

By Jane Byrne

- Last updated on GMT

Related tags: Fairtrade, Fairtrade cocoa, Fair trade, Fairtrade certification

A new minimum price for Fairtrade organic cocoa, which comes into force early next year, will act as an income safety net for growers amid ongoing price volatility in the sector, according to the organization behind the standard.

As of 1 January 2011, certified farmers are assured a minimum price of US$2300/metric tonne for their organic cocoa sold on Fairtrade terms, or the market price if higher, said the Fairtrade Labelling Organizations International (FLO).

And organic cocoa growers will earn an additional US$200 in Fairtrade premium to invest in business and community projects for every metric tonne (MT) of cocoa they sell, up from US$150/MT, added the FLO.

The Fairtrade standards require that buyers pay cocoa farmers’ organizations at least the current market price. In the current cocoa market the market price is relatively high. But the minimum price will be very important in case the market price drops,” ​stressed the Fairtrade advocates.

With such a system in place, farmers are thus protected to earn at least a certain income off their cocoa crops, maintains the FLO, adding that the Fairtrade minimum price is higher for organic than non-organic cocoa to take into account higher production costs for organic production.

In October, the FLO announced that it was raising the minimum price for conventional Fairtrade cocoa to US$2000/MT at FOB level, also effective from the start of the new year.

There are currently Fairtrade cocoa producer organizations that are organic certified in the Caribbean, Central and South America including the Dominican Republic, Belize, Honduras, Colombia, Peru, Ecuador and Bolivia.

And the FLO told this publication that Fairtrade has been an important tool for cocoa farmers in Latin America to convert to organic production.

“Most cocoa producer organizations in Latin America are now certified organic. They joined Fairtrade first and worked on building their businesses and once they reached a certain level of organizational development then they converted to organic production.

In this case, they used Fairtrade Premium funds to invest in the infrastructure and fees needed for organic certification.”

There are also two Fairtrade and organic certified cocoa organizations in the Ivory Coast but in their case, said the FLO, they had organic certification first and then sought the Fairtrade backing.

Products with double organic and Fairtrade certification form a category that represents one of the fastest growing segments of the chocolate market worldwide, with over one third of Fairtrade products sold today also organic certified.

Consumer demand for organic cocoa products is informed by increasing concern over the safety of the food supply along with other environmental issues, claims the International Cocoa Organisation (ICCO), which notes, however, that organic cocoa production constitutes less than 0.5 per cent of total production.

According to Euromonitor International, global organic chocolate sales were estimated to have increased in North America from a value of €26.6m in 2004 to €114m in 2009, and globally the market analysts note that in 2004 the market was worth €294m rising to €441 in 2009.

Mintel’s Global New Products Database (GNPD) reveals that worldwide there were 475 new product launches of organic chocolate products last year. Germany accounted for 107 of these, while the US had 74 and the UK 31 similar launches.

Related topics: Commodities, Cocoa & Sugar, Ingredients

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