The VOICE Network, which describes itself as ‘a watchdog and catalyst for a reformed cocoa sector’ and is an association of NGOs and Trade Unions working on sustainability in the industry, has published a paper on the current state of certification, which we publish in full below, alternatively download the PDF here.
Managing director Antonie Fountain said: “The past months have seen a lot of developments around certification in the cocoa sector – such as the release of the new ISO standard, Fairtrade’s revised Minimum Price and Living Income Reference Price, and a consultation on the first draft of the new merged Rainforest/UTZ standard. We believe that it is time for civil society to take stock of where we are.
“To this purpose, we are pleased to share a short position paper. Of particular concern to us is the danger of a race to the bottom on pricing, and we call strongly on especially the Rainforest Alliance to put in place minimum pricing and premium systems. Increasing market share by paying the farmer less should not be a strategy for any sustainability standard."
The paper, released to the media this week, argues that “the cocoa sector needs to look at the strengths and shortcomings of voluntary standards” and says that “in order to achieve true sustainability, there must be mandatory due diligence regulations, creating a level playing field for all”.
'Race to the bottom'
Fairtrade welcomed VOICE’S call for civil society groups to take stock and to introduce a minimum price and fixed premium for cocoa in order to prevent a “race to the bottom” on cocoa prices.
It also agreed that the Rainforest Alliance/UTZ, the voluntary cocoa certification scheme with the largest share of the certified cocoa market, should adopt minimum pricing and adopt a premium system, similar in fact, to Fairtrade, noting that it also does not address the need for higher farmgate prices.
“We welcome VOICE’s call for Rainforest Alliance/UTZ to adopt a minimum price to protect farmers and to give clarity on whether the intended mandatory premium under their new standards will have a fixed minimum or is negotiable,” said Jon Walker, Fairtrade International’s senior advisor for cocoa.
“As VOICE rightly points out, cocoa farmers live in extreme poverty. In April 2018, Fairtrade published research on 3,000 Ivorian Fairtrade cocoa farming households, which identified 58% were living in extreme poverty. That's why, after extensive consultation, Fairtrade determined the farmgate price needed to enable living incomes and announced it will increase its minimum price and premium for cocoa with 20% from October this year.”
When contacted by ConfectioneryNews The Rainforest Alliance RA said it also welcomed the VOICE Network's position paper, describing it as 'informative'.
"Low prices in cocoa are a grave, sector-wide challenge and one that is not restricted to certification. Our approach to raising farmer incomes is focused on good agriculture practices that enable cocoa farmers to increase their productivity (achieving higher yields with lower costs) and to produce better quality crops. In Cote d’Ivoire and Ghana the minimum prices are fixed by government (they adjust them every few months) but they are based on the fluctuating global cocoa prices, (the cocoa ICE Futures Europe, London and cocoa ICE Futures US, New York)," the RA said in a statement.
The RA also said its 2020 standard will have a mandatory premium, "it is now in its second round of public consultations and will be published in early 2020."
Regarding VOICE’s call for Fairtrade to publish a timeline to require buyers to pay a mandatory Living Income Reference Price, Walker said, “Fairtrade cannot reach living incomes by unilaterally increasing prices to buyers. Higher prices will only have an impact if buyers are prepared to pay, and a unilateral increase of this size risks wiping out many of the gains made so far made for cocoa farmers. We have always been clear that raising the Fairtrade minimum price was only the first step - albeit an important one - towards a decent income for west African cocoa farmers.”
Walker also agreed that ‘that systemic solutions are needed’ for achieving living incomes for cocoa farmers, including more involvement from governments to lead to a collective approach.
As discussed in the paper, price is another critical element … “chocolate companies and retailers have a tendency to look for the cheapest label.”
Walker added, “We take the VOICE statement seriously and addressing the issues it raises are part of our continuous efforts to improve our work towards sustainable livelihoods. The chocolate that so many of us love to eat cannot continue to be produced at the expense of farmers and their families living in poverty without access to the basic human rights enabled by a living income.”
Oliver Nieburg, a market analyst for Lumina Intelligence Sustainability, said that, while certification is the preferred tool to drive sustainable development, “it is fighting to stay relevant as companies see developing their own supply chain network as potentially more cost and impact effective.
“Third-party certification needs to prove it goes further than company programmes to deliver impact or finds ways to work in tandem with company programmes to deliver impact at scale.
“Lumina recommends certification standards appoint an independent body to evaluate sustainable impact by commodity in the main producing countries each growing season, allowing the body to report without constraints and publish publicly online."
Nieburg told ConfectioneryNews that Lumina’s Food & Drink Sustainability 2019 - Global Progress Report tracked 905 food and drink industry commitments in Q3 2018 and assigned each to one of 29 bespoke issues, such as reduced emissions, farmer support and packaging. Pledges to certified sourcing made up 11.3% of pledges, more than any other issue, it found.
“The market is now swamped with ethical claims with at least 29 standards in cocoa, coffee and tea, with varying proof of impact against the UN SDGs,” said Nieburg.
He said that industry programmes and certification standards are “far from close to eradicating extreme poverty in cocoa – let alone providing a living income.”
Lumina’s upcoming report ‘Third-party certification and company programmes compared’, found 25% of the bestselling chocolate countlines and tablets online carry a certified or company sustainability programme claim, such as Nestlé Cocoa Plan, and Cocoa Life, Mondelēz International’s global cocoa sustainability program.
A recent blogpost on living incomes from Wageningen University & Research said, "The Certification premiums paid to farmers for mainstream certified produce are often either very low or non-existent, and thus offer low or no direct financial benefits to farmers. Evidence of indirect financial benefits of sustainability certification, for instance through improved yields or through a decrease in cost of production, is scarce. Often support programmes do include a diversification component, but generally in a limited way, not resulting in farmers earning significant extra income through diversification.
The blogpost also argued that long term contracts between buyers and sellers, including a premium for farmer performance, for quality or sustainability for example, can be part of a solution. "In this way, farmers earn more because they deliver added value, and buyers can show consumers based on evidence on such performance that they pay farmers a higher price, which is why their products are more expensive. But so far, we are not aware of any successful examples of this that increase farmer incomes at scale. And still, farm size consolidation and enhanced opportunities for alternative income sources still remain important to address as many farmers would not earn a living income while receiving higher prices".