Fair Trade Certified™
COCOA Review 2010-11
Fair Trade Cocoa Letter from the President and CEO First and foremost, I want to thank you for your commitment to Fair Trade. As you know, our goal is to provide more long-term impact to farmers, workers and the environment by empowering businesses and consumers to make every purchase matter. This 2010 cocoa impact report outlines a variety of life-changing projects—completed and in process—that contribute to that goal and that were made possible through our partnership. Looking ahead, we’re excited about the opportunities before us, including new efforts to secure sustainable supply chains and to generate substantial impact for even more people in cocoa farming communities. You’ll learn more about those efforts in the following pages. We look forward to working with you in the months and years to come.
Sincerely,
Paul Rice President & CEO
“Fair Trade is very important to me because it ensures that I receive a sustainable price for my cocoa that will cover the cost of production and allow me to diversify and reinvest in my farm.” – Ramón Rojas Runco, cooperative member, NARANJILLO, Peru
Table of Contents Fair Trade Cocoa 04 Building Sustainable Futures
05 Good News
Reach
06 Fair Trade Cocoa Origins
Supply
07 The Fair Trade Cocoa Supply Chain
08 By the Numbers
09 Spotlight On Côte d’Ivoire
Impact
11 By the Numbers
12 Price and Premium
Producer Spotlights
13 CONACADO, Dominican Republic
14 Kakokiva, Côte d’Ivoire
16 Kuapa Kokoo, Ghana
17 FUNDOPO, Dominican Republic
18 FEDECADE, Ecuador
19 Naranjillo, Peru
20 AGOPAGRO, Peru
Appendix
21 Fair Trade Principles
22 Frequently Asked Questions
23 Environmental Standards
25 Services and Funding
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Fair Trade Cocoa Building Sustainable Futures Cocoa Production Around the World
Fair Trade: A Sustainable Solution
More than 30 developing countries around the world produce cocoa for the global market and approximately 90 percent of the world’s cocoa supply is grown on small family farms of less than 12 acres. In many West African and Latin American countries, families rely on cocoa production as their principal source of income. And while cocoa is a major world food commodity, with global market value topping $5.1 billion per year, the supply chain is fragmented and complex, so very little of the product’s value makes it back to the more than five
Fair Trade helps cocoa farmers, traders and chocolate manufacturers participate in long-term, stable relationships that support a dependable living for farmers and their families. This in turn allows them to provide a reliable, highquality cocoa supply for the industry.
million small-scale farmers who harvest cocoa beans. Fair Trade is committed to empowering producers in the global south through sustainable pricing and community development premiums. Therefore, we are working to eliminate the loss of value from bean to buyer, through a unique approach to sustainability.
The Plight of the World’s Cocoa Farmers Much of the world’s cocoa comes from small, familymanaged farms. These cocoa farmers rely on local collectors and intermediaries to purchase and transport their product to exporters and processors. Many small-scale cocoa producers work on remote farms and know little of the chocolateconsuming countries where their products are sold and are therefore unaware of the final destination and value of their crop. The intermediaries that funnel cocoa from smallscale farmers to market often profit from the labor of isolated farmers, buying their cocoa at prices much lower than fair market value. Now, after years of low prices paid at the producer level, cocoa production is suffering. Cocoa trees in much of West Africa are slowly becoming barren, producing less and less each year. As the trees age, farmers must use more fertilizers to produce less cocoa. Labor resources are also strained—the problems in cocoa production have spawned an increase in child and slave labor in West African cocoa-producing countries. In the last decade, media reports in the United States and the United Kingdom have focused attention on troubling labor conditions on cocoa farms, moving socially and environmentally conscious consumers to seek alternatives.
The Fair Trade System has a Unique Approach to Sustainability in the Cocoa Sector • Fair Trade standards promote sustained economic
viability for farmers by encouraging them to organize as cooperatives and associations so they can work together to earn fair prices for their products.
• Fair Trade certification assures that Fair Trade cocoa
producers are regularly audited against strict child labor standards. Fair Trade acts immediately when cases are found to protect the children involved and secure their safety.
• Fair Trade standards provide a framework for farmers to
increase their environmental sustainability in producing cocoa crops. They also prohibit the use of dangerous agro-chemicals and GMOs.
• The Fair Trade price guarantees that farmers are paid a
sustainable price for their product. In addition, community development premiums provide an extra source of funding for cocoa farmers who produce Fair Trade goods. The premium is a unique mechanism by which buyers pay cocoa farmers to invest in their farms, cooperatives and communities. Cocoa farmers deploy premium funding to increase product quality, build infrastructure, train cooperative leadership, bring safe drinking water to their communities and establish local health clinics and schools.
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Good News Fair Trade Cocoa Last year was big for Fair Trade Certified™ cocoa. Even in the midst of hard economic times, Fair Trade chocolate has proven to be recession-resilient. Consumer support of Fair Trade chocolate is booming and many of the world’s largest and most influential chocolate companies have pledged to strengthen their commitment to Fair Trade sourcing. Consumers and companies alike have decided that, regardless of economic climate, they are committed to supporting Fair Trade Certified chocolate products.
• Kit Kat followed Cadbury’s lead and converted its Kit Kat bar to Fair Trade in January 2010.*
• Organic chocolate bar company Green & Black’s converted all chocolate products globally to Fair Trade Certified. This deal was especially significant for the Fair Trade organic cocoa cooperatives in the Dominican Republic.
• Divine Chocolate, who sources from the Kuapa Kokoo
cooperative, highlighted on page 16, achieved a significant increase in sales, as did San Francisco’s based Tcho.
• 2010 imports of Fair Trade Certified cocoa increased 67 percent over 2009!
What will these headlines mean for Fair Trade Certified cocoa farmers? A steady and significant increase in Fair Trade cocoa sales and more income for farmers in some of the world’s poorest countries. This report details the impact of Fair Trade Certified purchases and premium payments to farmers and how their lives are changing through the sustainable production of Fair Trade Certified cocoa. Read on for examples of premium-funded development projects, information on the cocoa supply chain and details on U.S. imports of Fair Trade Certified cocoa. * Fair Trade Certified Cadbury Dairy Milk available in the United Kingdom, Ireland, Canada, Australia, and New Zealand. Nestlé Kit Kat bars available only in the United Kingdom in 2010.
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Reach Fair Trade Cocoa Origins All across the world, Fair Trade partners are making a difference by sourcing Fair Trade Certified™ cocoa. There are 62 cocoa-growing cooperatives in the Fair Trade system. The producers supplying the U.S. Fair Trade market in 2010 are located in Bolivia, Côte d’Ivoire, Dominican Republic, Ecuador, Ghana, Panama and Peru. Often, cocoa is blended from multiple origins to provide the U.S. market with the high quality of cocoa that the U.S. consumer demands.
Fair Trade Cocoa Cooperatives by Country Country
Number of Coopertives
Country
Number of Coopertives
Belize
1
Haiti
1
Bolivia
1
India
5
Cameroon
1
Nicaragua
4
Colombia
3
Panama
1
1
Papua New Guinea
Costa Rica Côte d’Ivoire
14
Peru
1 16
Dominican Republic
3
Sao Tome and Principe
1
Ecuador
5
Sierra Leone
1
Ghana
2
Sri Lanka
1
Total
62
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Supply The Fair Trade Cocoa Supply Chain Only one-third of the world’s cocoa is processed in the same country as it’s grown. Most cocoa is exported as raw beans to an increasingly concentrated number of cocoa processors in Europe and North America, such as Barry Callebaut, ADM, Cargill and Blommer. The Netherlands, the United States and Germany process over 350,000 metric tons of cocoa beans each year. These major European and U.S. processors, also known as grinders, sell semi-processed cocoa products to consumer-recognized chocolate brands like Cadbury, Nestlé, Mars and Hershey.
Cocoa Processing The process of manufacturing cocoa liquor, cocoa butter and cocoa powder is known as grinding. Raw cocoa beans
are roasted, ground and separated in a staged process to produce different products. Grinding roasted cocoa beans produces cocoa liquor, which is sold as a finished product to chocolate manufacturers. Grinders also press the cocoa liquor to extract two additional products: cocoa butter and cocoa powder. These products are then sold to cosmetics companies, chocolate brands and food manufacturers as ingredients. Chocolate makers purchase all three products and mix them with sugar, milk and emulsifying agents to produce chocolate candy bars and baking chocolate. Cosmetics companies purchase cocoa butter to formulate beauty products like moisturizing creams and soaps. Cocoa powder is used on a large scale by the greater food industry for the production of drinks, desserts, ice cream, spreads, sauces, cakes and biscuits.
Cocoa Producers
Fair Trade Certified Cooperative
Cocoa Processor/ Exporter
US Chocolate Brands International Chocolate Manufacturer
Consumers
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Supply By the Numbers The demand for Fair Trade Certified™ cocoa increased considerably in 2010 due to demand generated by Fair Trade partners that manufacture chocolate bars. Contributing to this growth is also the growing trend of using Fair Trade Certified cocoa butter in personal care products. Cocoa powder has also started to appear in ready-to-drink beverages, baking mixes and ice cream. Channeling growing demand by consumers towards ethical cocoa, imports of Fair Trade Certified cocoa and chocolate products boomed in 2010, with a 67 percent increase from 2009.
U.S. Fair Trade Certified Cocoa Imports
16M+ POUNDS PURCHASED SINCE 2002
15
10
CONVENTIONAL FAIR TRADE COCOA IMPORTS ORGANIC FAIR TRADE COCOA IMPORTS 5
0 2002
2003
2004
2005
2006
2007
2008
2009
2010
2004-2010 volume figures represent an estimate of the volume of cocoa beans necessary to produce the Fair Trade Certified cocoa products that were imported by U.S. business partners. 2002-2003 volumes represent the total volumes of finished cocoa products imported.
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Supply Spotlight on Côte d’Ivoire
Background
The Growing Crisis
The cocoa industry depends on Côte d’Ivoire: the country produces 35 percent of the world’s cocoa, more than twice as much as the second largest cocoa-producing country. And Côte d’Ivoire depends on the cocoa industry: cocoa sales represent 15 percent of GDP, 20 percent of tax revenue and 35 percent of exports. Cocoa employs about 700,000 households and supports about six million people.
A political crisis following the presidential elections in November 2010 brought the cocoa industry in Côte d’Ivoire even deeper into crisis. Alassane Ouattara was internationally recognized as the winner of the elections, but incumbent Laurent Gbagbo alleged corruption in the voting process and refused to cede power. In late January, Ouattara called for a ban on cocoa exports in order to cut off Gbagbo’s main funding source. The European Union (EU) endorsed the ban and forbade ships from the EU to dock in Côte d’Ivoire. Cocoa farmers continued to harvest their cocoa beans, but the majority of beans were stored in warehouses and not exported. Some cocoa was smuggled through neighboring countries. The EU and the West African Central Bank closed their financial institutions in Côte d’Ivoire in order to reinforce sanctions against Gbagbo. In the western region, controlled by pro-Ouattara forces, Ivoirians loyal to Gbagbo fled or were expelled. In Abidjan, the United Nations accuses both sides of killing civilian supporters. One million people fled their homes and hundreds were killed.
When writing about cocoa production in Côte d’Ivoire, journalists often use the word “bittersweet.” It is an obvious word choice, seeing how bitterly farmers and farm workers suffer to produce the raw material for the western world’s most popular sweets. Cocoa yields have been declining due to the lack of investments in new cocoa plants, soil fertility has been declining with no new land available to farm, and some of the worst forms of child labor are found on the majority of the country’s cocoa farms. Many cocoa farmers are abandoning their cocoa trees to start planting different crops. The reason is simple: the prices that cocoa farmers receive for their product do not cover the costs of production. This is a recipe for an unsustainable supply chain. These circumstances have led the cocoa industry to estimate a likely shortage of 1.5 million tons of cocoa by 2020.
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The crisis hit all of the 14 Fair Trade certified cocoa cooperatives in Côte d’Ivoire. Unable to sell their products and with virtually all banks and financial institutions closed, producer organizations were not able to receive payments from their buyers. This means that they did not have cash to buy cocoa from their members in order to secure the needed supply. Individual farmers and workers faced the same cash shortage and many did not have money to pay for food. There was a widespread shortage of medicine, due to the shipping embargo, and many schools were closed due to security reasons or because teachers were not paid. The farmers located in the west of Côte d’Ivoire were hit especially hard. Some Fair Trade farmers abandoned their farms and fled the region and others sought refuge in neighboring Liberia. The turning point of the crisis was marked by Gbagbo’s arrest on April 11, 2011, following which Ouattara was put in power. The cocoa export ban was lifted, but it took another month until the first cocoa exports from Côte d’Ivoire were realized: on May 11, the first shipment left Côte d’Ivoire for Europe. In mid-May financial institutions reopened and farmers were able to start selling their cocoa for export again. In fact, cocoa exports picked-up and were three times higher than in May of 2010. While personal security is still not great, cocoa exports will hopefully help the country to recover from the crisis.
Fair Trade Cocoa Cooperatives Fair Trade has been making a difference in the lives of cocoa farmers in Côte d’Ivoire since 2004, when Kavokiva became the first Fair Trade cooperative. Since then, more cooperatives have joined the Fair Trade network every year. There are now 14 small-holder farmer cooperatives selling Fair Trade Certified cocoa in Côte d’Ivoire with 200 to 6700 members each, for a total of 17,000 farmers participating in Fair Trade. Word is spreading about the benefits of Fair Trade with 16 new cooperatives currently applying for Fair Trade certification.
Many industry efforts are focused on increasing yields and productivity on cocoa farms and creating new cocoa plants that are less prone to disease. Fair Trade, on the other hand, tackles the root cause of unsustainable practices on cocoa farms: prices received by farmers for their product simply aren’t high enough to invest in new trees or to hire workers to help with the cocoa harvest. In addition, Fair Trade cocoa farmers receive a Fair Trade premium that they use to make investments in their communities and businesses. The Fair Trade approach allows farmers to break out of the cycle of poverty and slowly but surely improve their living conditions. As Alex Assanvo, Global Product manager for Cocoa at Fairtrade International, puts it: “Many people don’t think about farmers in that way, but before anything, farmers are business people. When they cannot even cover their costs of production with the sales of their cocoa, they will plant another crop.” Taking a closer look at the 14 Fair Trade Certified producer groups in Côte d’Ivoire illustrates the impact that Fair Trade has on the lives of cocoa farmers. Kavokiva, now certified for seven years, owns a big health center where free treatment is delivered to the 6,767 producer members. The health center owns an ambulance and the cooperative provides health insurance to its members. Kavokiva members also receive subsidies for school materials for their children and are free to take part in a cooperative literacy program. Coopaga, a smaller cooperative with 2,150 members, invested in trucks, computers, and motorbikes in order to organize the transport of the cocoa from members to the cooperative. The cooperative contributed to the construction of a local hospital and distributed cutlasses and machetes to producers. Two cooperatives that became Fair Trade Certified in 2008, COOPAAAKO and COOPAYA, invested in organic production methods and have achieved organic certification of their crops. After a few years of being part of the Fair Trade system, all of these cooperatives have established systems designed to educate their members on the worst forms of child labor and to put an end to unsustainable practices on their farms.
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Impact By the Numbers Since 2002, over $1.25 million in community development premiums have been paid by Fair Trade USA business partners directly to Fair Trade cocoa cooperatives. This additional income has funded programs to create better access to health care and education, support women and protect the environment. Small-scale cocoa producers across West Africa and Latin America benefit from U.S. consumers’ commitment to supporting strong cooperatives, fair prices and fair conditions of employment.
Additional Income for Farmers The price of cocoa varies according to daily market fluctuations. While the current market price for cocoa has reached a record high in recent years, the Fair Trade minimum price provides a vital protection to farmers at times when market prices are low. In the past 30 years, cocoa prices have swung from an historic low of $714 per ton in 2000 to a
high of $3,775 per ton this past spring of 2011. Fair Trade buyers pay the market price as long as it is higher than the Fair Trade minimum price, guaranteeing that farmers earn a sustainable income no matter how much the market fluctuates. After rounds of internal and external consultation, Fairtrade International (FLO) established new Fair Trade pricing, effective January 2011, for producers of cocoa beans and semi-finished products. Since the last review in 1997, farmers’ costs of production and market prices have since increased considerably. The new Fair Trade standard for cocoa aims to establish pricing and guidance that continue to benefit farmers as the market grows. The Fair Trade minimum price increased from $1600 to $2000 per metric ton and from $1800 to $2300 for conventional and organic cocoa beans respectively. Additionally, the community development premium increased from $150 to $200 per ton, which will give farmers more income to invest in their community and in their businesses to improve quality and productivity.
Community Development Premiums $1,250,000
$1.25M PAID TO FARMERS SINCE 2002
U.S. Dollars
$1,000,000
$750,000
$500,000
$250,000
0 2002
2003
2004
2005
2006
2007
2008
2009
2010
12
Impact Price and Premium Support Communities
1 2
6
3 4 5
Fair Trade Premiums Contribute To: 1 FUNDOPO Dominican Republic New Buildings And Equipment, Repairing Churches, Training And Investments In Technical Assistance Program 2 CONACADO Dominican Republic Home Repair Funds, Scholarships, Community Center, Aqueduct System, New School
3 FEDECADE Ecuador Micro-Credit For Members, Organic Certification, Scholarships For Kids 4 ACOPAGRO Peru Construction Loans, Subsidized Organic Fertilizer For Members
5 NARANJILLO Peru Women’s Committee, Agronomist, Crop Diversification Program, Infrastructure Projects, Processing Equipment, New Trucks 6 UIREV Côte d’Ivoire Hiv Treatment, Training On Sustainable Production
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Producer Spotlight CONACADO, Dominican Republic FLO ID
1473
Year Founded
1988
Year Certified
1995
Number of Members
10,000
The Fair Trade Community Development Premium has enabled CONACADO to establish various social and productive programs.
Community Investment
Income Generation
CONACADO allocated Fair Trade premium funds to build a new computer center and a community meeting room in the town of La Milagrosa. Children of cooperative members in La Milagrosa use the new computer center to study and do research. Before the center was built, students had to travel 14 kilometers to reach the nearest computer center.
Fair Trade premiums enabled CONACADO to establish the “Tour del Chocolate” ecotourism program for international visitors to learn about cocoa farming and the impact of Fair Trade. This program allows the farmers of CONACADO to increase income and share their success as a Fair Trade cooperative. Farmers are trained to become tour guides and women from cocoa-growing families have started businesses making cocoa wine, jams, baked goods, chocolate truffles
Education CONACADO supported the construction of a new school and contributed to school repairs in five regional sections of the cooperative. Low-income students now receive scholarships
and community crafts to sell on site.
and school materials to support their studies.
The cooperative invested in a rural health care clinic for a community whose previous clinic did not meet basic minimum standards. The cooperative also provided free medical assistance and information sessions on sexually transmitted diseases. In addition, CONACADO invested in a project to provide improved access to potable water for community members.
Productive Investment By storing crops in warehousing facilities and transporting members’ goods to market, CONACADO helps members attain higher prices for all their hard work. CONACADO has also improved the quality of their cocoa by constructing five new fermentation centers, eight new drying centers and two central warehouses.
Health
“Through the pricing structure and the Fair Trade premium we will be able to invest both in business and in our community to ensure a brighter future for our families and other farmers.” – Santos Mendoza, President of CONACADO Dominican Republic
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Producer Spotlight Kavokiva, Côte d’Ivoire FLO ID
2772
Year Founded
1999
Year Certified
2004
Number of Members
6,767
The Coopérative Agricole Kavokiva du Haut Sassandra was founded in 1999 by 600 farmers in the department of Daloa, the heart of the cocoa-growing region of Côte d’Ivoire, a country that produces about 35 percent of the world’s cocoa. The Ivorian cocoa sector provides a livelihood for one million small-scale farmers, but has suffered severely due to an acute lack of investment during the seven-year political limbo that followed the 2002-2003 civil war. Rural communities lack adequate public infrastructure after years of negligence and no governmental maintenance or support. The average Kavokiva member farms three hectares of cocoa. The cocoa harvest is the main source of cash income for most of these farmers, many of whom also grow Robusta coffee. Fruit and vegetables are grown for home consumption and women sell bananas and other crops at the local market on Fridays. Many villages have no electricity and drinking water is only available from the village well. Access to health care is often limited: the nearest clinic or hospital for some farmers can be more than 10 kilometers away. The illiteracy rate among agricultural communities is as high as 95 percent, with many schools poorly equipped and located too far away for children to attend each day. In the face of these challenges, Kavokiva has undergone remarkable growth since it began organizing small-scale cocoa farmers in 1999. The Ivoirian government recognized Kavokiva as one of the best cooperatives in the country, due to its high-quality cocoa and well-organized structure. Kavokiva gained Fair Trade certification in 2004. As part of its Fair Trade mission, Kavokiva strives to improve the socioeconomic position of its members by supporting the production and marketing of their cocoa and coffee. This includes paying a higher price than local traders and providing small loans for fertilizers, school fees and medical expenses.
In the past six years, the Fair Trade premium has enabled Coopérative Agricole Kavokiva du Haut Sassandra to establish the following specific social and productive programs.
Education Kavokiva distributes scholarships to members’ children to attend school. The premium has also helped to build schools in villages where the government school is too far away and school fees are twice the cost of schools run by the cooperative. Kavokiva provides supplies like blackboards and desks for these remote schools.
Productive Investment Kavokiva hired an agronomist and purchased 50 bicycles and 50 new sprayers in compliance with phytosanitary treatment measures for their cocoa plants. With the new equipment Kavokiva can implement better food safety practices.
Environment The cooperative is promoting conservation through community education and power-saving technology. Kavokva is also in the process of initiating an organic conversion pilot program.
“Kavokiva is one of the leading cooperatives in Côte d’Ivoire and is a source of inspiration and motivation for many cooperatives that want to join Fair Trade.” – Alex Assanvo Global Product Manager for Cocoa Fairtrade Labelling Organizations International
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Credit Program The cooperative has set up a savings account system in order to facilitate the process of its members building financial security.
Women’s Programs The association operates a women’s literacy program to teach reading and writing to community members who didn’t learn or have the opportunity to go to school as children.
Health Clean water and health care are priorities—farmers can’t work on their farms if they are sick. To help reduce the spread of disease, three new wells equipped with motor pumps have been constructed. One of the cooperative’s biggest achievements has been the establishment of their own health center at Gonaté. Fair Trade premiums help pay for a fourperson medical staff who offer treatments and procedures to patients without requiring a visit to a public hospital. They also purchased an ambulance car to collect patients from their villages. This is complimented by a free health insurance program and affordable medicines available to all members. Fulgence Nguessan, President of Kavokiva, said, “The health center and health insurance scheme are the most important benefits. Mortality rates have come down. Previously we lost 30 farmers a year but now fewer than five farmers pass away from illness each year. These improvements are thanks to health insurance. Thirty-six operations were carried out which meant that those farmers are still alive, when at least 20 would have died otherwise. Without the insurance, there would be little else for a farmer to do.’’
“Without Fair Trade or the medical center, I would not be here today. I had an accident and was sick and the medical center helped me.’” – Mr. Kouakou, member of Kavokiva
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Producer Spotlight Kuapa Kokoo, Ghana FLO ID
1475
Year Founded
1993
Year Certified
1996
Number of Members
48,854
Kuapa Kokoo is a cocoa producer cooperative founded in Ghana in 1993 as a response to the liberalization of Ghana’s cocoa market. It is the only farmer-owned organization among the myriad of private companies that has been granted government license to trade cocoa outside of Ghana. Kuapa Kokoo purchases cocoa from members on behalf of the state-run cocoa board which controls all exports and commercializes all cocoa in Ghana. Kuapa Kokoo sales represent five percent of Ghana’s total 700,000 ton production. The members of Kuapa Kokoo are predominantly poor, small-holder farmers living in the most remote and under-resourced parts of the country. Most cocoa growing villages do not have potable water, paved roads, health clinics, motorized transportation or electricity. Most villages lack basic schools, educational materials and teachers. Some farmers are able to grow plantains, coco yams, cassava and vegetables for home consumption and plantains, oranges and palm fruits for sale at local markets. Because the soil on many cocoa farms is too poor to grow vegetables and other food crops, many farmers must purchase food goods. Apart from primary schooling, there are no free social services in Ghana, so most Ghanaians must pay for all health care and secondary education services. In this context, Kuapa Kokoo represents a unique empowerment effort that enables small-scale cocoa farmers to have a voice in cooperative governance and attain more information regarding their dealings with cocoa buyers. Kuapa Kokoo is made up of 1,300 village societies, consisting of 48,854 members, which elect committees and representatives at a regional level, who in turn elect representatives to the National Union. This Union represents farmers’ interests to government and industry bodies and distributes news and market information to its members. Kuapa Kokoo gained Fair Trade certification in 1996. Its Fair Trade partnerships have helped to develop a strong, democratic institutional framework at all levels of the organization. Kuapa Kokoo has helped farmers, especially women, empower themselves, build their confidence, independence and ensure a sense of community participation and ownership. Kuapa Kokoo now owns 45 percent of Divine Chocolate Ltd. and 33 percent of Divine
Chocolate USA Inc., both of which sell Fair Trade Certified™ Divine and Dubble chocolates in the UK and U.S. This unique venture allows Kuapa Kokoo’s members to increase their profits from the value-added sales of chocolate and to enhance their knowledge of the Western chocolate market where their chocolate is sold. The Fair Trade community development premium has enabled Kuapa Kokoo to establish various social and productive programs.
Health and Education Programs The cooperative built four local schools and two daycare centers for its members’ children. In addition, Kuapa Kokoo purchased two mobile home cinema vans to conduct traveling screenings as part of a Farmer Education program. Kuapa Kokoo also organizes mobile health clinics so farmers that don’t live near town centers can receive consultations from the traveling technician. HIV and AIDS workshops are another important service provided to members.
Productive Investment Kuapa Kokoo purchased new equipment including scales with Fair Trade premiums. With their own scales, farmers don’t have to rely on middlemen to weigh their goods. The cooperative also used Fair Trade premiums to drill over 170 boreholes to provide clean drinking water for its member communities. Access to water saves time and money for farmers who might normally have to walk miles to the nearest village well.
Technical Assistance and Training Trainings on best practices in agriculture, management and leadership skills are provided for members.
Credit Program Kuapa Kokoo formed a credit union, which provides members with access to low-cost credit and banking services.
“A bite of Fair Trade chocolate means a lot to poor farmers in the south. It opens the doors to development and gives children access to health care, education and a decent standard of living.” – K. Ohemeng-Tinyaseo, Kuapa Kokoo farmer, Ghana
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Producer Spotlight FUNDOPO, Dominican Republic FLO ID
2574
Year Certified
2005
Number of Members
1,500
Organic Production
100%
The Fundación Dominicana de Productores Orgánicos (FUNDOPO) is made up of over 1,500 small- to medium-size organic cocoa producers in the Dominican Republic. These groups are organized into 67 smaller production units spread geographically throughout the country in the regions of Villa Altagracia, Yamasa, Puerto Plata, Joba and Blanco Arriba, Nagua, Maimon and San Francisco de Macoris. In these areas, poverty is common and the communities rely on cocoa production as their main source of income. Families supplement their livelihoods with other crops for both family consumption and sale at the local markets. The farmers of FUNDOPO live and grow cocoa in mountainous areas where several major Dominican rivers originate; a place that generates a majority of the water supply for Santo Domingo, the country’s capital. Through cocoa agro-forestry and conservation, the farmers of FUNDOPO are key to protecting the Dominican Republic’s water resources.
Equipment and Buildings In order to increase the cooperatives productive capacity, farmers need better tools and facilities. FUNDOPO used Fair Trade premiums to purchase equipment necessary to dry and ferment export-quality cocoa beans. The organization also used premiums to improve the regional collection center in San Francisco de Macoris and to construct a new meeting center for the farmers of the La Joya communities. For farmers in the Guaconejo region, FUNDOPO purchased a power generator, office chairs and a new computer.
Infrastructure
FUNDOPO became Fair Trade Certified™ in 2005 in order to gain better access to international markets. The organization was restructured in February 2007 with the objective of organizing small-holder cocoa farmers to produce highquality cocoa and obtain better market prices. FUNDOPO’s leaders say that much positive progress has been made thanks to Fair Trade. Farmers are more aware of their role in the supply chain and they have begun to formulate long-term goals and strategies for the first time.
One of the greatest problems facing the cocoa growers of FUNDOPO is the lack of infrastructure and access to main thoroughfares. Because the local government has not paved or built new roads into rural communities, transporting goods quickly and efficiently is nearly impossible for poor farming communities. To address this issue, FUNDOPO has allocated funding to create the infrastructure that farmers need. Fair Trade premiums helped build and repair roads connecting the villages to the main highway. Now farmers can more
The Fair Trade premium has enabled FUNDOPO to implement various social and productive programs.
easily transport their harvest to FUNDOPO’s collection centers.
Community and Cooperative Projects The association has funded the repair and construction of churches and community centers in the towns of Maimon, Piedra Azul, Las Haineras and Las Quebraditas.
Technical Assistance and Training One of FUNDOPO’s primary goals is to increase production volumes and quality, so investment in training and technical assistance is very important for the organization. Fair Trade premiums help the organization pay fees to bring in agronomists for trainings and classes on how to increase productivity and produce the highest-quality cocoa beans possible.
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Producer Spotlight FEDECADE, Ecuador FLO ID
3602
Year Founded
1984
Year Certified
2004
Number of Members
400
The Federación Nacional de Productores de Cacao de Ecuador (FEDECADE) was founded in 1984 to unite struggling cocoa growers and earned Fair Trade certification in 2004. The cooperative is led by 74-year old Victor Chacon Salinas, the President and principal founder. Today the organization coordinates 12 local producer associations that all market their cocoa through FEDECADE. Most FEDECADE members are small-scale producers with fewer than 20 hectares, producing cocoa beans in the mountainous regions of Ecuador where farmers have grown cocoa for centuries. President Victor Chacon says Fair Trade has helped the organization secure contracts and FEDECADE’s high-quality cocoa now earns much more than the Fair Trade minimum price.
The Fair Trade premium helps enable FEDECADE to invest in a variety of social and productive programs.
Education Ten percent of FEDECADE’s premium is allocated for providing and improving education for the member’s children. Last year, FEDECADE granted $3,000 to producers’ children to pay for school fees and supplies.
Productive Capacity and Facility Improvements The vast majority of FEDECADE’s earned premium funds contribute to improvements to the cooperative’s collection facilities. The processing warehouses are continually improved and expanded to accommodate the cooperative’s cocoa production. Fair Trade premiums help provide the capital needed to build and operate the centers. The cooperative plans to construct two more processing warehouses in the coming year to give easier access to cooperative members who are more remotely located.
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Producer Spotlight Naranjillo, Peru FLO ID
2873
Year Founded
1964
Year Certified
2004
Number of Members
5,000
Organic Production
59%
La Cooperativa Agraria Industrial Naranjillo Limitada (Naranjillo) was founded in 1964 by 32 farmers in the Naranjillo region of Peru in response to the excessively low prices the farmers received for their cocoa and coffee crops. Today, Naranjillo is the largest producer of organic cocoa in Peru. Fair Trade Certified™ in 2004, Naranjillo continually strives to improve the quality of its products and the quality of life for its farmers. The cooperative’s main offices are located in Tingo Maria, in the mountainous jungle of eastern central Peru, but members are spread across the Huánuco, San Martin and Ucayali departments, each with its own cocoa and coffee warehouses and branch office. This large, active cooperative has developed several committees that manage not only the production and sale of product, but also promote the health, education and socio-economic development of the organization’s members. The success of the cooperative and the value that Fair Trade provides its members can be measured by its astonishing growth, adding 1,500 members in just two years. The Fair Trade premium has enabled Naranjillo to establish various social and productive programs.
Investments in Infrastructure and Assets Naranjillo has invested almost $230,000 in infrastructure construction projects and equipment for the cooperative and its members. The organization has allocated Fair Trade premium funds to invest in everything from electronic scales and moisture detectors to machine part replacements and new warehouse doors. Naranjillo uses premium funds for larger infrastructure projects like water wells, coffee drying stations and elevated tanks, and in 2009 it used premium funds to purchase three laptops and two printers for its business offices.
Crop Diversification As part of its efforts to promote crop diversity and increase farmers’ incomes, Naranjillo has dedicated Fair Trade premium funds to the research and development of new types and forms of chocolate for international markets. The project aims to develop new business opportunities for cooperative members through training in new production techniques and promotion of new products to the Fair Trade market.
Education Committee Naranjillo has dedicated over $40,000 towards capacity building activities for the members, managers and delegates of the 36 sector committees of the cooperative. The Education Committee was created to manage premium funds with the aim of educating cooperative members and their families on a variety of subjects including health, education and leadership. The committee uses Fair Trade premiums to develop leadership skill workshops for cooperative members. The programs include national and international internship opportunities for cooperative members and managers. The Education Committee also uses premium funds to promote the importance of staying in school to cooperative members’ children, as part of their educational campaign.
Family Development Committee Fair Trade premiums directly support the work of Naranjillo‘s Family Development Committee, a working group dedicated to developing activities that will benefit cooperative members and their families. The committee’s work is generally distributed into the following areas: productive activities, food security, business training and skill development in the household. Within these activities, the committee seeks to develop higher levels of participation from women in the management and development of the cooperative. Each of the 36 sector branches holds training sessions and capacity-building courses that teach family members various subjects ranging from “Starting Your Own Small Business” to “Values, Leadership and Society.”
Sustainable Production Project Through the Sustainable Production Project, the cooperative carries out technical assistance activities in organic production. Fair Trade premiums fund this project in which technicians give both group and individual workshops and courses at “field schools,” where members participate actively in trainings on their own farms. The Sustainable Production Project’s goal is to teach producers to implement good agricultural practices in their production processes so that the cooperative can guarantee a uniform high-quality product and promote the conservation of land within the cooperative’s sphere of influence.
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Producer Spotlight ACOPAGRO, Peru FLO ID
3106
Year Founded
1992
Year Certified
2004
Number of Members
1,800
Organic Production
83%
Cooperativa Agraria Cacaotera Acopagro Ltd (ACOPAGRO) is a cocoa producer located in the San Martín region of Peru. ACOPAGRO was formed in 1992 amid a socio-economic crisis caused by the cultivation of coca for production of cocaine and the resulting presence of armed groups. The association was initially funded by the United Nations’ cocoa cultivation program as a response to the crisis. In 1997, 27 producers moved on to establish the cooperative. Today ACOPAGRO has over 1,800 members spanning four different provinces in San Martín. The cooperative’s purpose is to promote cocoa cultivation, ensure market stability, and raise the income levels of farmers. In addition to growing and selling cocoa, farmers also raise livestock and poultry for consumption. Among the community’s greatest challenges is access to health and sanitary services, clean drinking water and educational opportunities for farmers’ children. The cooperative sought Fair Trade certification for these reasons with the hopes of investing premiums in health, nutrition and education programs. The cooperative’s efforts to build technical capacity and promote social inclusion have proven successful. ACOPAGRO is considered to be one of the best models of the Alternative Development Program in Peru, and has received recognition for its quality cocoa.
The Fair Trade premium has enabled ACOPAGRO to establish various social and productive programs.
Productive Investment ACOPAGRO purchased two computers, paid for truck repairs, built new collection centers with solar dryers and contracted technicians to assist members with quality control. The cooperative also published a brochure with technical advice on post-harvest activities. These investments allow the cooperative to improve the quality of their beans and increase their export capacity.
Land Improvement Many of the members’ land productivity has been improved by premium funds. ACOPAGRO paid cash bonuses to individual members to help them obtain agricultural inputs like organic fertilizer and repellants.
Cooperative Facilities and Certification Assistance ACOPAGRO constructed a new headquarters and central collection center using premium funds. The cooperative also allocated Fair Trade premiums to pay organic certification fees and help transition 45 members’ farms to organic production. Lastly, the cooperative funded a training program for members’ children to learn the basics of organic agriculture in the hopes that many of the youth will become future members and auditors for the cooperative’s Internal Inspection program.
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Appendix Fair Trade Principles Fair Trade standards provide the foundation for our sustainable development model. Both buyers and sellers of Fair Trade products agree to uphold fair and rigorous social, economic and environmental standards. The standards level the playing field for the Global South and empower businesses and consumers in the Global North to make every purchase matter. When you buy Fair Trade Certified™ products you give farmers fair prices for quality products that improve lives and protect the environment. Each year, Fair Trade business partners improve the lives of approximately 1.2 million farming families in 70 developing countries. Here’s how…
Fair Trade Principles • Guaranteed Prices and
Community Development Funds
• Access to Credit
• Environmental Sustainability • Child Labor, Forced Labor and
Work-Place Discrimination are Prohibited
• Democracy and Transparency
• Community Development
Guaranteed Prices and Community Development Funds Fair Trade’s unique commitment to specific, pre-established prices and community development premiums distinguishes the Fair Trade Certified mark from other sustainability labels. Farmer groups are paid a price that covers the cost of sustainable production, a premium for community selected development projects and an additional price premium for certified organic crops. This empowers farmers with equal negotiating power, while still encouraging them to improve quality in order to negotiate even better prices.
Environmental Sustainability Fair Trade standards require environmentally sustainable farming methods that protect farmers’ health and preserve ecosystems. These standards strictly prohibit the use of GMOs and the most toxic agrochemicals, promote active conservation of soil and water resources and protect surrounding forests. More than half (62 percent) of all Fair Trade imports in 2010 were also certified organic.
Child Labor, Forced Labor and Work-Place Discrimination are Prohibited
Buyers are required to offer commercial credit to farmers upon request, either directly or in collaboration with financial intermediaries. Access to timely credit on favorable terms secures supply chains by allowing farmer organizations to increase export capacity and invest in product quality.
Fair Trade farmers and workers can count on more than just better prices. Fair Trade standards require freedom of association and safe working conditions. Child labor, forced labor and discrimination are strictly prohibited. When standards are breached, we take immediate action to protect children and forced laborers to ensure fair treatment for all on the farms and factories that carry the Fair Trade mark.
Democracy and Transparency
Community Development
Empowerment is an essential component of building sustainable communities, and therefore of Fair Trade. Small-holder farmers form cooperatives that allow them to process and export their harvests competitively. Both farmers and farm workers form councils to transparently and democratically manage community development funds. These organizations are audited annually for transparency, democratic processes and sound financial management.
U.S. importers and manufacturers pay premiums for community development that allow farmers and farm workers to invest in life-changing projects. These projects—from clean drinking water, school scholarships and health care services to housing, reforestation and organic certification—benefit entire towns and regions.
Access to Credit
Find more, visit www.fairtrade.net/standards/
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Appendix Frequently Asked Questions What is Fair Trade? Fair Trade is a global movement to alleviate poverty in farming communities around the world in ways that are socially and environmentally sustainable.
What does it mean to be Fair Trade Certified? Fair Trade certification assures consumers and businesses that the quality products they purchase improve lives and protect the environment. The Fair Trade Certified™ label means that a product meets the requirements of Fair Trade’s rigorous international standards for social, economic and environmental sustainability.
How does Fair Trade certification ensure that the products I buy are fair? Fair Trade producers undergo audits to demonstrate that they are implementing Fair Trade standards to ensure that the products consumers buy are traded in the most fair and just manner. Through adoption of Fair Trade standards, farmers strengthen their communities and take their products directly to global markets. In turn, these efforts support dramatic improvements in income and quality of life.
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Appendix Environmental Standards In order to improve producer’s living and working conditions, their environment must also be clean and healthy. Strong environmental standards are therefore integral to Fair Trade. Only products that meet strict international environmental standards earn the right to display the Fair Trade Certified™ label. These standards support our mission to foster increased social and economic stability, leading to stronger communities and better stewardship of the planet.
“Thanks to Fair Trade I have received capacity building trainings on organic production and now I am committed to maintaining a method of production that will protect and sustain the environment.” – Ramón Rojas Runco, Cooperativa Agraria Industrial
Naranjillo LTD, Peru
Environmental Stewardship An estimated 30% of producer organiztions
invest a portion of their Fair Trade premiums for community development in environmental initiatives.
In order to obtain Fair Trade certification, producer organizations are required to adhere to core Fair Trade environmental standards. Additionally, they must assess the environmental impacts of members’ operations, develop plans designed to mitigate those impacts and monitor the implementation of those plans. Through this environmental impact assessment, organizations are encouraged to progress toward higher standards and to increase their sustainable production.
Standard
core requirement
Soil and Water
• Enhance soil by applying sustainable irrigation practices, such as crop rotation • Source water sustainably and reduce water use over time
Biodiversity and Carbon Emission
• Report current benefits to ecosystems and current methods of carbon emission reductions • Report new methods to improve biodiversity or limit carbon output • May choose to focus on specific targets by incorporating goals into a development plan
GMO’s
• Prohibit use of GMO’s
Agrochemicals
• No selling, using or distributing of any prohibited materials • Handle and store all agrochemicals safely • Avoid aerial spraying over rivers and other water
Pests and Waste
• • • •
Control pests in a safe and sustainable way Farmers educated on the use of approved pesticides Alternatives to chemical pest control must be explored Develop disposal plans for hazardous waste in an environmentally sustainable manner
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Fair Trade and Organic While Fair Trade Certification does not require organic certification, it does support organic farming with training for producers and a higher price incentive for organic products. Many producers invest their Fair Trade premium funds in organic certification, which has led to outstanding results: 62 percent of all Fair Trade imports into the United States are also organic.
Approximately 50% of all Fair Trade producer organizations worldwide hold organic certificates
High Standards = High Quality By adhering to strict Fair Trade standards, farmers are not only able to make great strides in environmental sustainability, but also in the quality of their products. With the Fair Trade premium for community investment, farmers can spend more time and money on things like environmental education, training, quality testing and equipment efficiency. Through the development of sustainable growing and harvesting practices, quality crops are produced at no cost to our fragile ecosystems, and often receive a much higher price in both mainstream and specialty markets.
In truth, Fair Trade and organic certifications are not in competition, they are complementary. While Fair Trade certification does go a step further to require adherence to additional social and economic standards, holding dual certification shows a profound commitment to environmental responsibility, and reveals visible progress towards achievement of all Fair Trade standards. Ultimately, reaching for these standards encourages the production of goods that benefit you, farming communities and the earth.
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Appendix Services and Funding U.S. Fair Trade 2010* • Beneficiaries: 1.2 million farmers and workers
• Community Development Premiums: $14 million in 2010, $56 million since 1998
• Producer Organizations: 330 U.S., 878 worldwide
• U.S. Sales: $1.2 Billion
• Additional Income: $220 million since 1998
• Products: 9,500+ in over 60,000 retail locations *Inclusive of all product catergories
Fair Trade USA is a nonprofit, mission-driven organization that tackles social and environmental sustainability with an innovative, entrepreneurial approach. We are the leading independent, third-party certifier of Fair Trade products in the United States, and the only U.S. member of the global Fairtrade International network. Only products that meet strict international Fair Trade standards earn the right to display the Fair Trade Certified™ label. These standards support our mission to foster increased social and economic stability, leading to stronger communities and better stewardship of the planet. Since 1998, we have helped our industry partners in the United States to generate more than $220 million in additional income for farming communities. As a Fair Trade industry partner, you play an essential role in our mission by offering Fair Trade Certified products to your customers and creating market opportunities for producer organizations. The U.S. market for Fair Trade Certified products is now the world’s largest, and this growth makes it possible for 1.2 million people in some of the world’s poorest countries to make sustainable, tangible improvements to their quality of life.
Services Fair Trade USA offers a comprehensive range of services that support our industry partners efforts to source Fair Trade Certified goods, receive credible verification of responsible sourcing practices, and help hard-working men and women throughout the developing world retain more value from their crops and products.
Standards and Certification Globally, Fair Trade sets, audits and enforces strict labor and environmental standards. In the United States, Fair Trade USA’s comprehensive internal audit program helps ensure the integrity of every product bearing the Fair Trade Certified label and provides consumers with an easily identifiable symbol of social and environmental responsibility. The international certification agency FLO-CERT has developed a global network of highly-trained field auditors who monitor cooperatives and companies to verify their compliance with strict Fair Trade social and environmental standards, as well as the investment of community development premiums. Offering certification services in more than 70 countries, FLO-CERT became the only social certification to gain accreditation in 2008 by the International Standards Organization (ISO), based on the strength of its audit and certification processes.
Measuring and Reporting Impact Fair Trade USA works with farmers and producer organizations around the world to capture and summarize the impact that results from participation in Fair Trade through training and development efforts, additional income generation and premiums for community development. Throughout the year, Fair Trade shares this information directly with partners and the public through detailed impact reports and impact stories that help connect consumers with the people behind their favorite products.
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Fair Trade delivers a demonstrable difference on the ground. Since Fair Trade USA’s founding, farmers and workers around the world have earned more than $220 million in additional income. These funds include more than $56 million in Fair Trade premiums, funds that are dedicated to the most pressing development needs in farming communities and democratically administered by the project beneficiaries themselves. Projects financed with Fair Trade premiums include housing programs, investment in sustainable farming techniques and biodiversity, schools and scholarships, health systems, women’s empowerment programs and more.
Supply Chain Development One key ingredient necessary to grow Fair Trade’s impact is securing the supply of key ingredients for U.S. buyers. In addition to identifying new and additional sources of Fair Trade ingredients for U.S. companies, Fair Trade helps U.S. companies to identify short- and long-term needs, connect them with suppliers and importers of Fair Trade raw materials and helps their existing suppliers convert to Fair Trade. We also work with producer organizations to improve their quality and business acumen and connect them directly with U.S. buyers.
Consumer Awareness and Demand Fair Trade USA also works to build consumer demand by creating awareness and understanding of what Fair Trade is and by getting more products in more categories on more shelves in more locations. We also offer consumer marketing research to help our partners tell the Fair Trade story; point of sale materials that illustrate the real world differences Fair Trade makes; support for farmers and industry partners at key trade shows; opportunities to leverage your marketing and PR budgets with national awareness-building and sales campaigns like World Fair Trade Day and national Fair Trade awareness month in October.
and build awareness. These activities are funded through our philanthropic endeavors and serve as a significant value-add for our partners.
Resource Development By securing philanthropic funding, we create a multiplier effect to make your investments in Fair Trade work harder and go farther each year. In fact, for every dollar we receive from partners, we raise an additional 43 cents from foundations, individual donors and government sources. We also receive significant sources of in-kind funding from foundations and corporations for technology, legal counsel, public relations and marketing support. For instance, in-kind SAS contributions from Salesforce.com enable us to collect and report vital certification data. These funds also support our Research and Development activities to expand the range of services we offer our clients and the impact we can generate for producers. Philanthropic donations have created stronger sources of coffee supply in Brazil thanks to U.S. AID and Walmart; enabled Fair Trade Towns USA thanks to Green Mountain Coffee and the Green Mountain Coffee Roasters Foundation; and allowed Fair Trade to expand into new categories like sugar and apparel thanks to a number of venerable and gracious philanthropic organizations.
Impact and Awareness Growth in general public awareness for Fair Trade significantly increases the amount of impact going back to producers. Between 2005 and 2010, Fair Trade awareness increased fourfold, from 9 percent to 34 percent. At the same time, additional income earned by producers increased from $3 million to $56 million, respectively. We have a long way to go, but we want Fair Trade to become a household word.
Building the Fair Trade Movement
How Our Funding Works
Fair Trade USA also works with grassroots organizers, including dedicated individuals, communities of faith and national advocacy organizations such as United Students for Fair Trade, Catholic Relief Services, Lutheran World Relief and others to mobilize support for companies offering Fair Trade Certified products. In addition, we support the efforts of Fair Trade Towns USA and Fair Trade Universities, where local community leaders and governments, as well as students and administrations, have declared their support for Fair Trade products and practices to boost consumer demand
Service fees comprise the majority of Fair Trade USA’s income, approximately 75 percent of our $9 million budget in 2010. Similar to the Fair Trade model, we aim to be a sustainable social enterprise, with diversified risk through multiple funding sources, so we also seek charitable donations to augment service fees, and we regularly review our programs to ensure that all companies that want to take part in Fair Trade can do so. In 2010, our $9 million budget - $7 million in service fees and $2 million in philanthropic contributions - returned $14 million in community development premiums to farmers and workers.
For questions regarding this report, please contact
[email protected]
Fair Trade USA 1500 Broadway, Suite 400 Oakland, CA 94612 tel: 510-663-5260
[email protected] www.FairTradeUSA.org
