Supply Chain Organizational Governance

Roots of Change:
How Fairtrade Is Unlocking Climate Resilience, Fairer Incomes for Cocoa Farmers

In a recent webinar, representatives from throughout the Fairtrade ecosystem, along with partners Lidl and Tony’s Chocolonely, discussed how the NGO and its partner brands are working to finally make cocoa farming sustainable for producers.

Sponsored Content | / This article is sponsored by Fairtrade International | By Maxine Perella | Published 3 years ago | About a 6 minute read

Image: World Cocoa Foundation/Facebook

Arguably one of the biggest challenges facing brands is how to make the climate transition a fair and just one. This is especially true for supply chains that face endemic problems such as those in the cocoa industry, where farmer poverty has traditionally driven socially and environmentally harmful practices.

The majority of cocoa is produced in two regions in West Africa — Côte d'Ivoire and Ghana — where farming of the crop has resulted in significant deforestation over the years. According to Ceres’ Engage the Chain, two-thirds of African cocoa farmers live below the poverty line, with few earning a living income. Malnutrition is rife, many producers engage in child labor, and a lack of sustainable farming practices has left many communities vulnerable to climate change.

Against this backdrop, Fairtrade International (with headquarters in 30 countries) is working to give cocoa farmers a fairer future — not just by providing essential training and support to farming co-operatives and organizations to help them become successful businesses, but by pushing the chocolate sector to address the challenges that threaten the long-term sustainability of cocoa.

Speaking at a recent webinar, Cécile Henrard, senior business development manager at Fairtrade Belgium — highlighted that the NGO now represents 1.9 million producers and workers worldwide and works with more than 2,500 companies. In 2020, 394 farmer organizations — representing over 440,000 small-scale farmers — held a certificate to produce and sell Fairtrade cocoa.

“Fairtrade is increasingly relevant; we are no longer niche,” she said. “Over the last few years, we have also seen that within the cocoa market, there have been big initiatives to make the cocoa supply chain more sustainable.”

Fairtrade International’s Living Incomes Campaign, launched in 2019, is one initiative that is making a difference where it is needed most — at farm level. Increasingly companies are building off of Fairtrade’s framework to pilot new living income initiatives.

To date, the companies Fairtrade works with have collectively generated $200.8m of Fairtrade Premium for cocoa-farming co-operatives to spend on projects of their choice that benefit their businesses and communities.

According to Anne-Marie Yao, regional cocoa manager for Fairtrade Africa, the Fairtrade Premium is one of the things that sets the NGO apart from other certification schemes. On top of the price farmers and workers receive for their produce or labor, they receive an extra sum of money to invest in improving the quality of their lives. This enables, for example, more women and young people to have an education and engage in income diversification.

She points out, however, that there is much work still to do — as many producers still don’t have the protection that Fairtrade offers. “When farmers already struggle to afford essentials like nutritious food, healthcare, children’s schooling due to the low price they get for their crops … How can we expect them to meet the costs of investing in clean energy or planting trees, or cutting on-farm emissions?”

Lidl and Tony’s Chocolonely are two companies that are working closely with Fairtrade to scale up the NGO’s work. This hasn’t been without its challenges. Philippe Weiler, head of sustainability at Lidl, spoke of how when he joined the retailer’s Belgian operations in 2016, he was told by his buying director that Fairtrade products weren’t selling well in-store. But he soon turned that around.

“Lidl is a discounter with a limited number of products, so every single product needs to have a high turnover,” he said.

The NGO was invited to Lidl’s offices to brainstorm some possible marketing solutions; but all were in vain until the retailer realized that, as long as discount-store customers were given the choice of buying a more sustainable, but expensive, product against a cheaper less sustainable one, most would opt for the less expensive item.

“That’s when we came to the conclusion that if we really want to make sustainable choice part of our habit, then we have to radically change – and that meant not giving the choice anymore to the customer,” Weiler said. “Instead, we decided, let’s try to make our full product range 100 percent sustainable. And that’s what we did.”

As part of this push, last year Lidl launched its own-brand Way to Go! Fairtrade chocolate bar, which guarantees cocoa farmers in Ghana both the Fairtrade Minimum Price for cocoa and the Fairtrade Premium. Weiler says Lidl is now the biggest contributor to Fairtrade in absolute terms when it comes to the highest volumes sold of Fairtrade products in the Belgian market.

“Even if you are a discounter, it is possible to break the rules,” he said, adding that solving big sustainability challenges requires more than small, incremental steps. “It needs to be something transformational, that breaks with the tradition. And to do that you need strong collaboration; you need to have all the relevant stakeholders around the table.”

Meanwhile, Tony’s Chocolonely’s relationship with Fairtrade stretches back more than 15 years. The confectionery firm’s mission is to make 100 percent slave free the norm in chocolate; and for the company’s head of impact, Paul Schoenmakers, certification alone won’t get the chocolate sector there.

“It’s a very important pre-requisite; but in the end companies have a responsibility for their supply chain, and they cannot just outsource that with a certificate,” he said.

In recent years, Tony’s has been working with the NGO on a model that will enable cocoa farmers to have a living income. A key output of this is Fairtrade’s Living Income Reference Price. “It’s a new benchmark we’ve set with Fairtrade in the cocoa industry and a great example of how working together can accelerate change,” Schoenmakers maintained.

Rightly pointing out that chocolate is a luxury product, Schoenmakers believes the cocoa industry is a rich one with enough money in the value chain to make sustainable and fair production the default choice going forward.

“There is absolutely no excuse for the child or forced labor, or deforestation in chocolate — all of that is solvable. We set a new norm and showed it is possible to buy cocoa in a different way and also be a successful, fast-growing company,” he said. “As long as doing the right thing is optional and companies have the choice to put profits over human rights, then a lot of companies will do that. We need to change that.”