Staying United While Keeping Apart: Cocoa in the Time of COVID-19

Author Jon Walker

Senior Advisor, Cocoa
Fairtrade International

On the path to sustainable cocoa, the COVID-19 pandemic is a large, unexpected, and frightening detour.

It is laying bare the precariousness of many people in all societies, including farmers and workers in the global south who were already struggling to get by.

Working with over 1.7 million farmers and workers and their supply chain partners, Fairtrade is seeing the impact of COVID-19 unfold on a daily basis. The effects so far have depended on the commodity, time of harvest, if the product is perishable or not, transport capacity, and current demand. Falling demand for some perishable goods has been swift, dramatic and will lead to hardship for producers.

Amidst all the unknowns with this pandemic, including the impact on northern economies and on health systems across the globe, the chocolate industry has an opportunity to consider how we can work together to support cocoa farmers during this critical time and act quickly.

Our mission — to connect producers and consumers, promote fairer trading conditions, and empower producers to combat poverty and take more control over their lives — feels as relevant as ever.

Here are some of the things Fairtrade is doing. We welcome dialogue and collaboration to build on these and other efforts.

Immediate steps: health and safety

Fairtrade announced that cooperatives can invest their Fairtrade Premium funds to minimize the spread of the disease and/or to mitigate any potential negative effects on farmers, and their communities, without prior approval at the organization’s annual General Assembly.

The Fairtrade Premium is an extra sum on top of the selling price that cooperatives earn on every Fairtrade sale, and invest in projects of their choice to benefit their businesses and communities. In 2018, Fairtrade cocoa cooperatives earned more than US$52 million in Fairtrade Premium. Cooperatives can now choose to use premium funds, for instance, to pay out as emergency cash payments, purchase and distribute face masks, or implement hygiene campaigns in their communities.

Many Fairtrade cooperatives have restricted their office operations to protect staff. Some are using alternative means such as WhatsApp groups to stay connected with members. The Fairtrade Africa team in West Africa is setting up virtual groups to connect cooperatives with each other so they can share best practices and materials to keep their members and communities informed about the latest safety guidelines. Fairtrade is assessing other options to provide additional support to producers, both at the regional level as well as globally. FLOCERT has paused all in-person audits to minimize the risk of spreading the virus. Certification decisions that can be made using documents or remote methods are moving forward. This includes trader certifications.

Living incomes: more important than ever

Despite COVID-19, we are continuing our work on living incomes for cocoa farmers, albeit with some changes due to limitations on travel and in-person gatherings. A living income is a primary condition for households to afford essential needs, such as healthcare, and be able to save for unforeseen events, which is now ever so relevant.

Price is one key element of farmers earning a living income. At the point where cocoa prices appeared to be recovering after the collapse in 2017 we are back to an environment of falling cocoa prices.

The Fairtrade Minimum Price is US$2,400 per metric tonne at free on board, or FOB. In Côte d’Ivoire, the Fairtrade Minimum Price is measured against the Ivorian government’s published price (valeur FOB garantie). For the season October 2019 – March 2020, this resulted in a Fairtrade Minimum Price differential of US$235.92 per ton being paid to cooperatives, which are required to pass it along in full to their farmer members.

Initial reports from traders indicated that Ivorian cocoa farmers received approximately US$15.1 million  more for their Fairtrade sales in October to December 2019. The current Fairtrade Minimum Price differential for the mid-crop season, based on the newly published Ivorian government price, is US$212.14 per metric tonne. This additional income for farmers makes a real difference at any time, but now more than ever.

Strong and empowered cooperatives that can respond to their members’ and business partners’ needs can also contribute to enabling living incomes. In 2019, Fairtrade’s West Africa Cocoa Programme reached more than 32,000 attendees at trainings in Ghana and Côte d’Ivoire, on topics including cooperative governance and good agricultural practices among others. We will be publishing a full report on data from this program later in 2020. While in-person trainings are currently suspended to comply with restrictions on movement, the Fairtrade Africa team is providing remote support to cooperatives on health and safety, as well as consulting on options for using their Fairtrade Premium most effectively.

In addition, we have moved from strategy to implementation in living income pilot projects with cocoa cooperatives in Ghana and Côte d’Ivoire These pilot projects include paying our voluntary Living Income Reference Prices, as well as other interventions aimed at different aspects that contribute to higher incomes and stronger, more sustainable farms.

Even as we all focus on protecting lives and livelihoods as a priority, our work on human rights and environmental protection continues. In 2020 we will launch a consultation on our Fairtrade Standard for Cocoa. Critical topics identified are:

  • relevant alignment with the regulated markets in West Africa including the African Regional Standard;
  • review requirements for Internal Management Systems at cooperatives;
  • consider if strengthened requirements on deforestation need to be included; and
  • consider if additional requirements on human rights due diligence – in particular strengthened requirements on monitoring and remediation of child labor – need to be included.

Standing united with cocoa farmers

In this rapidly shifting situation, these are just some of the efforts underway to support cocoa farmers and communities. We appreciate the VOICE Network’s call VOICE Network’s call for the chocolate industry to act. We’ve also seen interesting initiatives from industry such as broadcasting prevention messages from governments, donating hygiene products and making financial contributions to NGOs. We each have a role to play – you will have your own ideas – let’s ensure farmers are part of the decision making.