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Demand for fair-trade cocoa continues to grow but traceability problems exist

02 December 2012

In October 2012 it was announced on the website Confectionerynews.com that ‘Nestle UK and Ireland is doubling its commitment to Fairtrade cocoa by making its two-finger Kit Kat brand Fairtrade from January 2013’, alongside its existing Fairtrade four-finger product. This is reported to require an additional 5,300 tonnes of Fairtrade cocoa and expected to benefit 4,500 Fairtrade cocoa producers in Côte d’Ivoire.

The article observes that Hershey, Ferrero and Mars have already made ‘sweeping pledges to source 100% certified cocoa by 2020’. In some instances this is based on Rainforest Alliance certification and is increasingly focused on the elimination of child labour: Hershey recently committed itself to ‘source 100 percent certified cocoa for its global chocolate lines by 2020 and accelerate its programs to help eliminate child labor in the cocoa regions of West Africa’, with the international ‘Raise the bar’ campaign urging the company to set incremental benchmarks to certify all of its cocoa fair-trade, which has more rigorous requirements. Nestlé has yet to make such wide-ranging future commitments.

Early in 2012, an investigation by the Fair Labor Association (FLA) ‘found numerous child labor violations across Nestlé’s supply chain’. In response to these findings, Nestlé has developed an 11-step plan to address child labour issues. However, NGOs claim that the plan addresses production in zones supplying only 15% of Nestlé’s cocoa needs. Tropical Commodity Coalition’s 2010 Barometer report claimed that ‘just 1.1% of Nestlé’s global 360,000 ton annual cocoa volume’ was derived from ‘certified farms which seek to eradicate child labor’.

On the certification side of the industry, criticisms of the UK Fairtrade organisation were broadcast in a BBC television programme on 10 October 2012, which ‘claimed that consumers were being misled as chocolate bars labeled Fairtrade [might] contain no sustainable cocoa, as beans become mixed at ports and at other stages in the supply chain’. These concerns relate to the traceability of fair-trade certified cocoa beans. There is currently no requirement on manufacturers to hold fair-trade produced cocoa separate from conventional cocoa in the transportation and processing of cocoa beans, since it is argued that this ‘would require millions of pounds of investment’. All that is required is that ‘if Nestlé uses 4,000 tons of cocoa bean to produce four-finger Kit Kats, it must purchase 4,000 tons of Fairtrade cocoa’ and pay the US$200 Fairtrade premium per tonne in order to be able to use the Fairtrade logo for that product. 

Editorial comment

Unlike organic products, separate handling and processing with clear traceability is not required for fair-trade products such as cocoa (and a range of other products). Currently, companies effectively buy the right to use the Fairtrade label for a specific volume of product, while the certifying agency guarantees that the specified volume of tonnage required is sourced from farms that comply with Fairtrade standards. With new traceability systems being developed (often based on bar coding and other separate handling arrangements), once the economies of scale in the production and marketing of cocoa are achieved it may well be possible to move over to full traceability of Fairtrade cocoa, without incurring major new investment costs.

This is just one of the many policy challenges facing the fair-trade movement, as both large multinational companies and discount retailer chains take fair-trade products into the consumer mainstream. Given recent EU initiatives on labelling, a case is beginning to emerge for some sort of statutory requirements to provide guidance to ensure that primary producers are receiving a specified proportion of the final retail price in line with consumer expectations. This is particularly the case where consumers are being asked to pay a price premium for fair-trade labelled products.


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