Cocoa futures dipped to an eight-month low this week as the market struggled to absorb excess supplies following bumper harvests in top growers Ivory Coast and Ghana and on top of weakened consumer demand for chocolate through the pandemic.
The price drop is causing grave concern amongst farmers, Fairtrade International, which reports that some producers are making less than $1 a day on average. “With chronically low incomes they are living in poverty and are unable to pay for essentials like food, send their children to school or pay for healthcare if they fall sick,” the group warned, adding “the bitter truth is that low cocoa prices, the continuing impacts of the Covid-19 pandemic and rising global temperatures mean that farmers don’t have the resources to withstand the shocks they face. This undermines their ongoing efforts to escape poverty and has serious consequences for the long-term supply of chocolate.”
The warnings came as the group, which owns the Fairtrade sustainability label and represents 1.7 million small-scale farmers and workers worldwide, published research into the living standards of cocoa farming families shows that on average, Fairtrade boosts farmers’ spending on household essentials beyond the need for food by 9%. For households living below the international poverty line of $3.20 a day, this figure jumps up to 14%, meaning poorer families are able to invest more in the pockets of Fairtrade farmers to spend as they choose.
The 2021 study, ‘Effects of Fairtrade on farm household food security and living standards: Insights from Côte d’Ivoire’ by Isabel Knöβlsdorfer et al. from the University of Goettingen in Germany and collaborators, analysed data from 500 randomly selected Ivorian cocoa farming households. They were evenly split between Fairtrade and non-Fairtrade certified co-operative members.
Côte d’Ivoire is the largest global producer and trader of cocoa, and despite the world’s love of chocolate, it remains a very precarious way to make a living, according to Fairtrade. The results showed that cocoa is clearly the most important source of income for most of the households surveyed, accounting for 76% of total household income on average.
Farmers in the most impoverished circumstances benefit most from Fairtrade certification, the data show. They make 69% more income from growing cocoa than their non-certified counterparts.
Anne-Marie Yao, Regional Cocoa Manager at Fairtrade Africa said: “This study confirms that Fairtrade means more money in the pockets of the poorest certified cocoa farmers to spend on essentials beyond the daily need for food. Earning enough money to afford education and healthcare are things we all take for granted but are crucial to be able to live with dignity.”
Do end consumers care?
Fairtrade Chocolate comes at a premium for end consumers. But according to the group, more people want to buy green and ethical products and are prepared to pay more for them. “Fairtrade hopes consumers will continue to choose to buy Fairtrade, so that farmers and workers in low-income countries get a sweeter deal for their produce, rather than a bitter one,” it said. New Global consumer research by Fairtrade and independent research and strategy consultancy, Globescan (2021), shows that the majority of people expect companies they buy their chocolate from to source responsibility, offer transparency and protect the environment. In fact, 57% of people are willing to pay more for products and brands that work to improve society and the environment. Furthermore, in the past year, over half of consumers say they have changed their purchase choices to make a difference on an economic, environmental, social, or political issue.