Farmer organizations will be guaranteed a higher price for cocoa sold on Fairtrade terms, as part of Fairtrade’s strategy towards enabling living incomes.
Fairtrade International said it will raise the Fairtrade Minimum Price for conventional cocoa from US$2,000 to US$2,400 per tonne at the point of export (FOB), marking a 20 per cent increase.
For organic cocoa, the Fairtrade price will be US$300 above the market price or the Fairtrade Minimum Price, whichever is higher at the time of sale. This is a change from the current minimum fixed price of US$2,300 per tonne for Fairtrade certified organic cocoa.
World cocoa prices plunged by more than a third last year, and it is farmers who bear the brunt of price volatility. Fairtrade is the only certification scheme that has a mandatory minimum price, which acts as a safety net for farmers when market prices fall while allowing them to benefit when prices rise.
For reference, the current cocoa price set by the government of Côte d’Ivoire, the world’s biggest cocoa producer, is US$2,124 FOB. Fairtrade buyers pay farmer organizations the differential when the Fairtrade Minimum Price is higher.
The additional Fairtrade Premium will be increased from US$200 to US$240 per tonne, the highest fixed premium of any certification scheme. This is an amount on top of the selling price, paid directly to farmer organizations to spend on projects of their choice.
The premium helps to build strong and viable cooperatives that can respond to their members needs and strengthen them as long-term business partners for buyers.
In 2017, Fairtrade cocoa farmer co-operatives earned nearly US$43 million in Fairtrade Premium to invest in their communities and businesses.
The new price structure, agreed by the Fairtrade Standards Committee, a multi-stakeholder body which includes farmer and trader representatives, will take effect on 1 October 2019. The decision follows a lengthy consultation process across the cocoa supply chain with Fairtrade farmers, traders, manufacturers, and chocolate brands.
“This is good news for West Africa’s cocoa growing communities,” said Fortin Bley, an Ivorian cocoa farmer and chairperson of Fairtrade Africa’s West African Network. “Farmers have been badly squeezed by low world prices, so the higher Fairtrade Minimum Price and Premium help to level the playing field for a more sustainable future.”
Full technical information for implementation of the new Fairtrade Minimum Price and Premium will be provided in a formal price announcement in February 2019.