Scale of solutions vs.

problem

Number of children in
ICI CLMRS ambition for
2020: 400,000
18%
Number of children
in cocoa in West Africa:

(Source ICI)

Number of farmers in
CocoaAction ambition
15% for 2020: 300,000

Number of farmers in
Côte d’Ivôire and Ghana:

cocoa (Source CocoaAction)

barometer Current farmer income:

2018 $0.78

Living income:
31%

Executive Summary (Source Fairtrade)

Scale of efforts vs. scale of problem Smallholder cocoa farmers in Cote d’Ivoire, already
Sector-wide efforts to improve the lives of farmers, struggling with poverty, have seen their income from
communities and the environment made in the cocoa (by far their most important income source)
past decade have not led to significant impact at decline by as much as 37% from one year to the next.
scale. Most of the cocoa farmers are not reached Although prices seem to be recovering at present,
by current interventions. In fact, the modest scope the point remains; farmers are vulnerable to price
of the proposed solutions does not even come drops.
close to addressing the scale of the problem. If
business as usual continues, it will be decades – if Low prices (as well as price fluctuations) are a major
ever – before human rights will be respected and threat to all efforts to achieve sustainable cocoa
and environmental protection will be a basis for sector. As such, price declines are one of the most
sustainability in the cocoa sector. urgent issues the sector should address. Farmers
bear the risks of a volatile price, while other market
Price Decline actors have means to adapt and even make windfall
The world market price for cocoa saw a steep profits. Some reports from farmers indicate that
decline between September 2016 and February not only are they not earning a living income, but
2017. More than a third of its value was wiped out, that some of them are now growing cocoa at a
with a tonne of cocoa going from above US$3,000 loss. Still, there is no concerted effort by industry or
to below US$1,900 in a matter of months. Despite governments to alleviate even a part of the burden
various voices warning that a focus on production of this income shock for the already impoverished
increase policies would lead to a price collapse, most smallholder farmers.
companies and governments were not prepared
when it happened.
Living income enforcement of environmentally protected areas. As
Since our focus on living income in the 2015 Cocoa a result, more than ninety per cent of West Africa’s
Barometer, living income and farmer livelihoods original forests are gone, and any remaining forest
have become keystones in the cocoa conversation, must be protected. In dealing with deforestation,
with some promising steps being taken. This start governments and industry must address several
of an alignment should lead in the short term to important elements. National deforestation plans are
coordinated activities to increase farmer’s income not enough; a global moratorium on deforestation
levels, specifically in West Africa. For this to progress, is needed to ensure cocoa transitions from a slash-
companies need to commit to to pay living income and-burn crop to a sedentary commodity. This must
and living wages in their supply chains, and make be coupled with land tenure reform, and policies
data on this available. Productivity and available to stimulate agroforestry. It is essential that human
labours hours are important elements within this rights are upheld when protecting forests; forced
calculation. evictions coupled with violence have no place in a
A recent report by Fairtrade International submits a sustainable cocoa sector.
first attempt to calculate a living income for cocoa
farmers in Côte d’Ivôire of $2.51 per day, and Infrastructure, Public Spending and Corruption
compares this to actual farmers’ income of $0.78 per The past years have seen governments claiming to
day. On average, cocoa farmer households earn only roll out infrastructure to rural areas. However, there
37% of a living income in rural Côte d’Ivôire. is a gap between the claims and actual delivered
services. For example, the Ghana COCOBOD has
Child labour been shaken by corruption scandals in the last
The release of the 2015 Tulane Report on the years, where millions of dollars of public funds have
worst forms of child labour in cocoa production been diverted. Transparency and accountability
demonstrated that despite more than a decade of are needed around public spending and support
efforts, child labour is widespread. Although there measures for cocoa farmers. It is a matter of
was a slight relative decline of child labour, an importance for the sector to come up with a
increase in cocoa production had led to an absolute comprehensive strategy to foster transparency and
increase of child labourers to 2.1 million children accountability.
in West Africa alone. Not a single company or
government is anywhere near reaching the sector- Legislative Frameworks
wide objective of the elimination of child labour, Voluntary corporate social responsibility initiatives
and not even near their commitments of a 70% by companies alone cannot prevent human rights
reduction of child labour by 2020. Since child labour violations and environmental degradation. Some
is a symptom of deeper problems, it will not be of the core challenges will require legislation in the
eradicated without tackling systemic poverty and a countries that are either the home of – or important
lack of local infrastructures. The recent price decline operating bases for – the largest companies. Such
will most likely also negatively affect child labour. legislation should be based on the United Nations
Child Labour Monitoring and Remediation Systems Guiding Principles on Business and Human Rights.
are useful project-based approaches, and should There should be coordination for a common
be scaled up. At the same time, with the collected process, preferably at EU level, or even at UN level.
data and evidence, more comprehensive national Governments and companies from the cocoa and
interventions will be necessary to achieve the chocolate industry should support such an effort.
necessary scale. It is a matter of urgency for efforts to
be increased – in funding as well as in ambition and Sector-wide efforts
political will – as current levels of engagement will The global cocoa sector is engaging in an ever more
not succeed in eliminating child labour. inclusive dialogue and recognition of the challenges.
National platforms, international platforms, and
Deforestation and land use subject specific platforms all exist beside each other.
Global cocoa production has increased fourfold Such platforms need to lead to actual change, not
since 1960, at the expense of native forests, just more dialogue. There should be much more
specifically in West Africa. This can be equally alignment at a transnational level to achieve proper
attributed to corporate disinterest in the impact. Moreover, retailers must be much more
environmental effects of the supply of cheap cocoa, engaged in the global cocoa dialogue
and to an almost completely absent government
Produced/sold as Certified
(data from questionnaire)

1,449
1,188
879

918

1,166

575

491

481

458
639
582

291
252
218
390

223
238

177

136
178

93
70
2014

2015

2016

2017

2014

2015

2016

2017

2014

2015

2016
UTZ RFA/SAN Fairtrade

Additionally, almost all of the efforts in the cocoa Certification

sector are based on technical solutions, e.g. Several companies have committed to reaching
increased productivity, crop diversification, use of 100 percent certification of their cocoa. However,
agrochemicals and new planting material, or the even if they reach this goal, certification alone, using
provision of trainings to improve farming techniques. existing standards, is not a sufficient solution. None
However, the challenges facing the cocoa sector are of the major standards (Rainforest Alliance, UTZ or
often not technical, but deal with power and political Fairtrade) have been able to significantly contribute
economy, such as price formation, the asymmetrical to ensuring farmers achieving a living income,
bargaining power of farmers, unbridled market reducing child labour, or halting environmental
concentration of multinationals, and a lack of degradation. Though average income of certified
transparency and accountability. Tackling political farmers might be slightly higher, the overall impact is
problems with technical solutions will not foster a relatively low. Premiums make only a slight difference
sustainable cocoa sector, but simply install another to a farmer’s income, although they are an important
form of a business-as-usual scenario. source of revenue for cooperatives. Standard-setting
organisations are aware of these problems, but the
National developments competition between certification schemes has put
Producing nations have set a few careful first steps them under pressure, and chocolate companies
in aligning cocoa policies. This should be further and retailers looking for the cheapest label have
developed to include supply management and not led to the bar being raised. Companies are
holistic agricultural policies, to ensure significant either moving away from buying certified cocoa
improvements for cocoa farmers. Transparency or combining the work of the standard setting
and accountability are key principles within this organisations with own projects.
alignment.
All standards should include living income as a key
Western Europe, the United States, and Australasia requirement. This should include a minimum farm
are not only the largest bloc of consuming nations; gate price based on living income calculations, which
they are also the home states for almost all of the could be coupled with a flexible premium.
large cocoa and chocolate multinationals. As such,
they have a doubly important role to play in making Focus: Ensuring a Living Income
the cocoa sector respect human rights and protect Cocoa farming will not be sustainable until it can
the environment. provide a living income to farmers. There is a clear
role for companies to fundamentally change their
Companies: Certified cocoa* / used cocoa 20171
* certified or own project verified cocoa
approach, promoting not just a one-sided productivity
drive, but using net income, not beans per hectare, as
a key metric. Net farmer income must become a Key
Trader/Grinders Performance Indicator for the sector, and data on this
must be publicly shared. Farmers should be supported
36% Barry Callebaut 3 1,020
and encouraged to increase yield in a sustainable
manner, including through diversification, proper
26% Olam 950
use of agrochemicals, and rejuvenation. In the short
term, companies should pay a higher farm gate price,
42% 750 Cargill 5
potentially through flexible premiums or unilateral price
hikes. In the medium term, government supported
38% 593 Ecom supply management solutions should be put in place
to control the amount of cocoa available. This should
19% 500 Sucden be coupled with holistic national agricultural policies
that also look at reforestation, crop diversification, land
22% 400 Touton 4 reforms, and pension schemes.

102 Cemoi 4 31% Focus: Transparency & Accountability

Transparency and Accountability are essential steps
100 Cocoanect 25% for both companies and governments towards
safeguarding human rights and implementing
N.A. Blommer sustainability. HRDD should be implemented at national
and EU or even global level. Grievance mechanisms for
Chocolate Producers victims of human rights should also be developed and
put in place at a mandatory level. While recognising that
35% 450 Mondelēz International 2 governments have sovereignty on expenditure, there
is a real need for financial transparency on revenues
43% 434 Nestlé from various forms of cocoa taxes and export tariffs, as
well as transparency on expenditures on infrastructure,
> 50% 410 Mars 2,4 social, educational and health services, the
development of local communities, and the protection
75% 200 Hersheys 2 of the environment.

70% 135 Ferrero 3 In the absence of mandatory HRDD, companies should

seek to develop such processes for their global value
45% 128 Lindt und Sprüngli 6 chains and support efforts towards the introduction
of such regulation. Additionally, a more balanced
perspective and transparent approach on corporate
(1) most companies refered to ICCO conversion rates: Cocoa reporting should be adopted by companies; not just
butter 1.33, Cocoa paste/liquor 1.25, Cocoa Powder and communicating successes and intentions, but also
cocoa cake 1.18 being open about errors and failures so that sector-
(2) cocoa demand estimated wide lessons can be learned.
(3) 1.9.16-31.8.17
(4) 2016 Conclusion
(5) 01.06.2016 – 31.05.2017 Many stakeholders in the sector are well aware that
(6) traceable and verified the present approach – with a multitude of different
strategies and hundreds of projects that are not
necessarily focused on the underlying issues – will not
be successful. Additionally, stakeholders know that
the ongoing investments in measures to make cocoa
production more sustainable are by far too low to
improve the situation significantly. There is not enough
political will, neither is there enough alignment, sense
of urgency, or ambition to tackle the sector’s challenges.