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14 Feb 2020
Higher Fairtrade price boosts Ivorian cocoa farmers’ incomes by $15 million in Q4
Fairtrade Africa
Sales of Fairtrade certified cocoa from Côte d’Ivoire in the fourth quarter of 2019 increased farmers’ earnings by approximately $15.1 million USD (€13.8 million) compared to non-Fairtrade cocoa, according to preliminary figures released by Fairtrade International.
The higher earnings are due to the difference between the guaranteed Fairtrade Minimum Price and the current Ivorian government-set cocoa price. Fairtrade increased its Minimum Price for cocoa by 20 percent to $2,400 per tonne at FOB (point of export), effective 1 October 2019. This means that Fairtrade certified cooperatives in Côte d’Ivoire are currently receiving almost $236 more per tonne on top of the government-set FOB price.
More than 140 Ivorian cocoa cooperatives sold approximately 64,000 tonnes on Fairtrade terms from October through December 2019, according to available trader reports. The cooperatives are now distributing the earnings, including the full amount of the difference between the Fairtrade and government prices, to their farmer members as required by the Fairtrade Standards. This effectively raises the farm gate price that Fairtrade farmers receive by 17 percent. Payments to cooperatives and to farmers are being audited by Fairtrade’s independent certifier, FLOCERT.
“I’m very happy,” said Ettien N’Guessan, who has been a cocoa farmer for more than 40 years. “I can take care of my children’s needs.” He also plans to invest in some farm improvements.
“Cocoa farmers deserve to earn a decent living just like anyone else,” said Anne Marie Yao, West Africa Regional Cocoa Manager for Fairtrade Africa. “The additional funds going into the pockets of these farmers are the tangible result of people choosing Fairtrade chocolate. It makes a big difference.”
In addition to the Fairtrade Minimum Price, certified cooperatives also receive the non-negotiable Fairtrade Premium of $240 per tonne, which was also increased by 20 percent as of 1 October. Each cooperative will democratically decide at their annual General Assembly how to invest their Premium in their businesses and communities. The Fairtrade Premium earned on Q4 sales is estimated at more than $15.3 million.
About two-thirds of the world’s cocoa is grown by smallholder farmers in Côte d’Ivoire and Ghana. More than 190,000 Ivorian cocoa farmers are members of Fairtrade certified cooperatives.
The Ivorian and Ghanaian governments announced last year their own mandatory Living Income Differential of $400 per tonne to ensure that all farmers receive a higher minimum farm gate price. This should take effect in October 2020.
At the same time, Fairtrade is working with chocolate companies and retailers to test various interventions that impact price, income diversification and other components of a holistic strategy to enable cocoa farmers to earn a living income.
“The additional money that farmers are receiving as the result of the Fairtrade Minimum Price is a step in the right direction, as is the government’s Living Income Differential for all cocoa farmers starting in October 2020,” said Jon Walker, Fairtrade International’s senior advisor for cocoa. “However, many cocoa farming households will still not be earning a living income even with these higher prices. That’s why Fairtrade is working with cooperatives, their commercial partners and governments to test what factors work in enabling farmers to actually achieve a living income. This includes price but also income diversification and cost efficiency, for example. It’s essential for chocolate industry players to continue to step up their commitments, since that’s the only way farmers will truly see a sustained impact.”
Fairtrade Africa