Before launching my chocolate blog in 2014, I published a lengthy article on the benefits and drawbacks of Fair Trade chocolate. Although the agreement was that fair trade certified chocolate was superior to generic retail chocolate, it was not having nearly the good effect that people think it does.
In the eight years since, not much has changed. Hence, in order to demonstrate the effect of Fair Trade chocolate, this article delves into Fair Trade pricing, standards, and expenses for both cocoa producers and consumers.
Is Fair Trade Chocolate Legitimate?
Fair Trade labels have been used for decades to designate items that pay farmers above-market wages for the raw materials they produce. The general criticism is that fair trade items continue to represent a little fraction of the overall market, even decades after the movement started. According to other claims, supplying items at greater costs without consideration for quality leads to market inefficiencies that customers end up paying for.
They are also eager to point out that even the tiniest farmers who participate in these initiatives are unable to earn a livable income. These are legitimate issues. Fair Trade continues to campaign for improvements in market policies that favor small-scale producers. Yet, their programs closely align producer pay rates with global market prices, the bulk of which cater to mass consumer items.
Prices on the open market are variable, and a basic fee is paid regardless of quality. This is true for cocoa, coffee, sugar, and almost every other commodity crop, Fair Trade or not.
Producers will lose in a capitalistic market that seeks to obtain the greatest value for the least amount of money. That is, unless they have direct access to the ultimate market, which has been increasingly common since the outbreak. Nevertheless, for farmers who do not have such access, some are finding it impossible to sell all of what they harvest at increasing fair trade costs, limiting the effect of Fair Trade.
Despite criticism, Fairtrade International (FLO) has managed to establish itself as a well-known and recognized organization. Many still link it with its original goal: to mainstream ethical trading across the globe. The organization’s history demonstrates that the market responds favorably to fair trade items. Consumers are becoming more interested in how and where the ingredients in their chocolate are obtained.
However, some chocolatiers are going even farther, procuring single origin and direct trade cocoas from fermentaries and single intermediates such as Unusual Cacao. By eliminating all or most of the intermediaries usually engaged in the cocoa trade (including, to some degree, fair trade), farmers may be paid more at the farm for producing high-quality cocoa. This strategy addresses the drawbacks of fair trade, but the phrase is not defined nor controlled, raising concerns about brand credibility.
Cacao Fair Trade
Fairtradestandards literature states that their program includes the sale of cocoa in its natural state (raw beans), as well as cocoa butter, chocolate liquor, and cocoa powder. Their premium, however, only applies to things manufactured in their own nation.
The general emphasis of the guidelines is on cocoa traceability, as well as ethical and sustainable production. Fairtrades’ scope also includes business development, with the goal of laying the groundwork for empowerment and the future growth of co-operatives.
The Advantages of Fair Trade Cocoa
The Fair Trade concept permits certified purchasers to purchase items from small producers at a minimum price set by Fair Trade. FLO even provides a price chart to serve as a reference. It contains more difficult-to-find information on the Fairtrade Premium, which is paid to certified producers by certified purchasers.
One of the prerequisites for this incentive is that it be utilized as an investment in the local community, with the purpose determined by vote. FLO’s Fairtrade Minimum Price for cocoa beans in June 2022 was $2400USD, with an extra $250USD per ton handed out as Fairtrade Premium. FLOCERT requires audits to ensure that transaction records are verifiable and that processes are in place to distribute the Fairtrade Minimum Price and Premium fairly.
The Fair Trade Procedure and its Costs Cocoa
The fair trade movement has comparable origins to non-governmental organizations (NGOs). Initially, such organisations were formed in an attempt to organize voiceless people into organised cooperatives. The creation of organizational structures provides farmers with a voice as well as part of the bargaining power they need.
Fairtrade International included cooperatives within its official criteria, requiring farmers to join or create cooperatives and become acquainted with program standards before applying. Yet, whether farmers join or start their own cooperatives, there are fees involved. The actual cost to the individual farmer is determined by the producer group to which they belong or by the expense of creating one themselves.
In the case of FLO certification, these organizations must be democratically managed, ecologically sustainable, and use ethical labor practices. This is intended to avoid child and refugee exploitation, which continues to be a concern in rural regions.
Cacao that is Fair Trade Certified
To become fairtrade certified, the coop must contact FLOCERT regional offices or fill out a form on the internet and request an audit examination. They are subsequently given an application Number and an application package that contains information about FLO standards, contract specifics, and the expenses associated with their kind of company.
The next step is to pay a nonrefundable application fee. Additional costs may apply, depending on the kind of application and applicable categories.
FLOCERT will handle the application once they receive the full paperwork and pay. If accepted, the applicant will acquire a permanent FLO ID and have access to the FLOCERT certification online site (ECERT), which aids in standard compliance monitoring. FLOCERT will subsequently issue an invoice for the first certification costs, an estimate of which may be received in advance by contacting FLOCERT through the website.
Both producers and purchasers will need to agree on the reference market price via a contract while dealing. In this case, the Fairtrade Minimum Price and Premium for cocoa beans must be guaranteed, but when the market price exceeds the Fairtrade minimum price, the market price is paid.
After the contract is signed, the buyer of Fairtrade cocoa must make up to 60% of the contract value accessible to producers at any time. If desired, this may be used as a type of pre-finance for cocoa production. Fairtrade International estimates that 80% of Fairtrade cocoa that year came from Côte dIvoire in their 2020 Cocoa Impact Report.
Sales increased by 31% that year, making it the fastest growing Fairtrade product. Despite this, according to their own research, the typical male farmer makes just $1 per day, while women get only $0.30, considerably below living wage requirements. Fairtrade discovered that from the 2017 cocoa price collapse to 2021, there was an 85% rise in the average income of an Ivorian farmer, however this needed them to diversify their revenue sources.
Cocoa sales were increasing, but not all cacao was sold at fair trade pricing. According to the report, if all of the cocoa produced by the farmers could be acquired at the Fairtrade Minimum Price, average earnings would rise by 9%.
Sugar from Fair Trade
Sugar is another often utilized component in the production of chocolate. The Fair Trade certification method for cane sugar is similar to that of other goods, with a few important distinctions. Fair Trade sugar growers, like cocoa farmers, must be members of a conforming co-operative. Individual cane sugar producers, on the other hand, are likely to belong to more than one association.
The mill interval, input utilization, and water management are all important considerations. Complete membership lists with labor and yield statistics are made accessible in order to monitor strategic resource usage and manage sustainable cane sugar production. The certification also requires a yearly report to sugar[[@]] fairtrade.netIn terms of quantities and yields, kill
Yet, there is no Fairtrade Minimum Price for cane sugar. According to the same 2022 chart, the price paid for sugar is whatever the commercial price is. According to Fairtrade, the absence of a fairtrade minimum price for sugar is due to complicated and skewed pricing fixing procedures.
Instead, Fairtrade gives purchasers with market access, assistance in improving and maximizing their yields, and the extra Fairtrade Premium to help them build up their infrastructure. In addition to the sugar contract price, the Fairtrade Premium is specified to be $60USD per metric ton and $80USD per metric ton of organic sugar.