Shock decision by Nestlé UK&I to stop using Fairtrade cocoa means farmers will lose Premium

By Anthony Myers

- Last updated on GMT

Fairtrade cocoa has been used to make Nestlé 's popular KitKat bars, giving farmers up to £2m extra in Premiums. Pic: Nestlé
Fairtrade cocoa has been used to make Nestlé 's popular KitKat bars, giving farmers up to £2m extra in Premiums. Pic: Nestlé

Related tags Nestlé Fairtrade foundation

The Fairtrade Foundation has issued a statement in response to Nestlé’s surprise announcement that it is planning to stop using Fairtrade cocoa and sugar in its chocolate bars, including the top-selling KitKats, and use Rainforest Alliance certification instead.

‘After a decade of sourcing cocoa and sugar for KitKat in the UK and Ireland, Nestlé have informed Fairtrade they no longer plan to buy Fairtrade cocoa and sugar from some of the world’s most vulnerable small scale farmers’, the Fairtrade Foundation statement said.

When the partnership ends, Nestlé will source all its cocoa from its in-house Cocoa Plan sustainable scheme.

The Foundation said the move will mean a loss of almost £2m ($2.49m) in Fairtrade Premium each year for co-operatives in Côte d’Ivoire, Fiji and Malawi, representing 27,000 small scale producers. “This income is a real lifeline for some of the world’s poorest farmers​,” a spokesperson said.

A spokesperson for Nestlé UK&I told ConfectioneryNews: "We have really valued our 10 years with Fairtrade and are sorry to be leaving the partnership. However, we have a very large portfolio of confectionery products globally, and the rest is certified by the Rainforest Alliance/UTZ, so it makes sense for us as a business to have one scheme for responsible sourcing. As a global business, we have taken the decision to work with the Rainforest Alliance because their mission and approach aligns closely with our Nestlé Cocoa Plan. We, like the Rainforest Alliance, believe that building farmer resiliency and tackling key social and environmental issues such as child labour are fundamental to the long-term sustainability of the sector.  

"The key points from our side are that we would like to continue working with the Fairtrade farmers who supply us today, and we are paying for them to become certified with the Rainforest Alliance as well if they wish, and that we will be maintaining the same level of spend on cocoa in the 2020-21 as we have done this season with Fairtrade. We are also seeking to empower farmers through a £1m living income pilot by making direct, conditional cash transfer to farming households for making clear progress in the areas of good agricultural practices, re-forestation, child labour and alternative incomes​."

Access to market

Nestlé’s decision will see all future purchases of sugar from European sugar beet producers, meaning cane sugar farmers will not only lose the Fairtrade Premium, but could lose access to market to sell their sugar. Future purchases of cocoa may be from the same co-operatives, but only as part of Nestlé’s own Cocoa Plan initiative, meaning no Fairtrade Premium.

It is understood that Nestlé’ told cocoa farmers in May about its decision and they have expressed grave concerns about the loss of income. The Fairtrade Premium has meant communities have been able to invest in classrooms, dispensaries, canteens and programmes to help women increase and diversify their income. 

Atse Ossey Francis, chairman of the Board of Directors of the Ivorian Fair Trade Network, said: “It is with deep regret and deep concern that we have learned that after proudly producing cocoa for KitKat in the UK for a decade, small cocoa farmers in Côte d'Ivoire will no longer enjoy the benefits of selling their cocoa on Fairtrade terms. Nestlé is one of the leading buyers of Fairtrade certified cocoa through its KitKat brand and we are grateful for all this decade of partnership where we have contributed to the success of Nestlé. A non-Fairtrade trade relationship means regression and continued poverty​.

We invite Nestlé to continue negotiating with us producer representatives and the Fairtrade label in order to find ways of agreement so as to reconsider their decision not to buy on Fairtrade terms. We ask Nestlé to continue the incredible work that has been done over the past 10 years so as not to cut the lifeline of the Fairtrade Premium at a time when we producers need it most.”

Endemic poverty

Besides the new global health pandemic, farmers remain deeply affected by long-term endemic poverty, lack of services, low and unpredictable income and climate change. Fairtrade means access to children’s education, access to health centres, electricity to enable children to learn, as well as improved living and working conditions for farmers in the most remote areas where cocoa is grown.

Nestlé and Fairtrade have made a much-needed difference to farmers' lives in the past 10 years and Fairtrade Premiums are providing tangible support for farmers at this difficult time. Because producers can choose themselves how to spend the Fairtrade Premium, they have been able to act quickly during the Covid-19 crisis to protect their health, support their communities and compensate for disruption to income.

Michael Gidney, CEO of the Fairtrade Foundation said: “Fairtrade exists to represent farmer voices, standing beside them as they fight for their rights. We stand behind farmers as they applaud the benefits of the decade long partnership with Nestlé and as they ask Nestlé to reconsider this course of action at this time. Now, more than ever we need to act as a global community and take actions that are steps forward as we build a better future. As many businesses are scaling up commitments to Fairtrade, more farmers are benefitting from the uniqueness of Fairtrade and more shoppers in the UK able to choose from around 1,000 different Fairtrade chocolate varieties.”

Fairtrade has the highest fixed Premium of any independent certification scheme in cocoa, currently $240 per tonne - that goes directly to the producers cooperatives on top of market price - coupled with a Minimum Price that protects farmers if world markets collapse. Research from Fairtrade International shows the overall financial value to Ivorian Fairtrade cocoa cooperatives and their farmer members increased by almost 35% in 2019.

We urge Nestlé: listen to farmers, do not choose this moment of global crisis to exacerbate the inequalities in the cocoa industry. Be part of the solution and keep KitKat Fairtrade​,” said Gidney.

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A lot of cynism

Posted by François Ruf,

in general, ALL cocoa certifications trigger corruption and are everything but 'sustainable';
Until now, the zero-deforestation cocoa is a mockery. Deforestation keeps going at a high rate in Côte d'Ivoire and Ghana.
On this aspect, Rainforest Alliance is still worse than others since it claims specific environmentral garantees which do not exist. The littje frog is cheating the consumer.
Certification is a tool for the industry to secure its supply at a relatively low cost

So, if Nestlé shifts from FT to RA, it may well be an indicator that FT certified cocoa was considered as too expensive for Nestlé. Even if farmers do not get 100% of the minimum FT price (it remains to be evaluated); it looks like a strong signal: Nestlé does not want to support the recently increased minimum price to farmers.
In other words, Neslé is interested in its cocoa supply, not in producers.

This comment is my personal opinion, certainly shared by other economists, but my research institute has no responsability at all in this opinion.

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They are also paying the LID

Posted by Paul Davis,

All buyers of Ghana and Ivorian cocoa, which includes Nestle, will be paying an additional 400USD per metric ton Living Income Differential premium from October in addition to what they already pay farmers through their programs of Cocoa Life. Nestles contribution to farmer incomes will be higher from October not lower.

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Always higher price for beans and fair trade is not necessary anymore.

Posted by Henk Dekker,

Farmers should always get a much higher price for the cocoa not only based on fairtrade or other organizations. If they get paid enough farmers will send kids to school, will not use child labour or slavery, will start farming organic etc etc.

Farmers and industry will safe costs on fairtrade/UTZ/etc offices/managers/paperwork that takes good money farmers should get for their effort.

Good decision from Nestle if they take the next step and pay more for the beans!!

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