WASHINGTON, DC, U.S. — Fairtrade will increase the Fairtrade Minimum Price for conventional cocoa from $2,000 to $2,400 per metric ton at the point of export (FOB), marking a 20 percent increase. For organic cocoa, the Fairtrade price will be $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 $2,300 per metric ton for Fairtrade certified organic cocoa.
World cocoa prices plunged more than a third last year with farmers bearing the brunt of price volatility. Fairtrade is the only certification scheme that requires a mandatory minimum price, which acts as a safety net for farmers when market prices fall while allowing them to negotiate when prices go higher.
For reference, the current cocoa price set by the government of Ivory Coast, the world’s largest cocoa producer, is $2,124 at FOB. Fairtrade buyers pay farmer organizations the differential when the Fairtrade Minimum Price is higher.
The Fairtrade Premium for cocoa, which is paid on top of the purchase price, will be increased from $200 to $240 per metric ton, the highest fixed premium of any certification scheme. This is 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 member and community needs and strengthen them as long-term business partners for buyers. In 2017, Fairtrade cocoa farmer cooperatives earned nearly $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 October 1, 2019. The decision follows a lengthy consultation process across the cocoa supply chain with Fairtrade farmers, traders, manufacturers, and chocolate brands.
The challenges in the West African cocoa sector are huge, with a Fairtrade study in April 2018 showing that 58 percent of Fairtrade certified cocoa-farming households in Ivory Coasthad incomes below the extreme poverty line. The new Fairtrade Minimum Price will allow average Fairtrade cocoa-growing households to earn above the extreme poverty line. Fairtrade expects to review its cocoa Minimum Price and Premium again in three years.
“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.
