Good news: Fairtrade will raise their premium and minimum price!
Yesterday, Fairtrade announced that they will raise their minimum export price from $2000 to $2400 per ton (1000 kg). That's the minimum price that should be paid for Fairtrade cocoa on the international market. They will also raise their premium from $200 to $240 per ton. This increase will apply from October 1st 2019: the start of the new cocoa season. With this, Fairtrade is taking the first step towards a living income and.. this makes us happy!
Tony’s Chocolonely calculates and pays a higher price for cocoa since 2013, which enables farmers to earn a living income. This price is higher than the minimum price and Fairtrade premium together. But, to enable all farmers to earn a living income, it's extremely important that the entire industry takes responsibility and ensures that cocoa farmers are able to earn a living income. Besides Fairtrade, more and more organizations publish numbers and models on living income and we are supah dupah proud that this is finally on the agenda of company’s, NGO’s and the government.
Even the raised minimum export price is not enough
Due to transport costs and taxes, a cocoa farmer approximately receives $800 per ton less than the (international) export price. Soon with the raised minimum price and the Fairtrade premium every farmer in this world who sells Fairtrade cocoa, will receive a minimum of $1840 per ton of cocoa. This is still a far reach from the price that rolled out of Fairtrade’s own research, in which they calculated what is needed to earn a living income ($2300 per ton in Ghana and $2668 per ton in Ivory Coast). So they need to kick it up a notch.
And what is the deal with Tony’s Chocolonely? Before the start of every cocoa season (October 1st), we calculate our Tony’s premium, based on the best sources possible, the costs of living and the costs of producing cocoa. We then put the outcome next to the farmgate price (which is established by the Ghanaian and Ivorian government every year). The gap between income and expenses, is filled up by us with the Tony’s premium. We establish this premium in a contract with the farmers, at the beginning of the cocoa season. This, to ensure that everyone knows where they are at, during the coming year. (Would you like to know more precisely? Check out this explanation on our recipe for slave free chocolate).
So, what is the difference then? Fairtrade bases their price on recent research from ISEAL, on living income. A good basis, but unfortunately this research wasn’t available at the time we calculated our Tony’s premium. Therefore, we did not take the results of this research into account. Another difference is that Fairtrade’s calculation assumes that cocoa farmer’s income is from cocoa only. But thanks to our partner cooperatives and research done by KIT we know that households have more sources of income, and that farmers grow more than cocoa alone. For this reason, Tony’s calculates with an income of 75% coming from cocoa. Furthermore, we use slightly different numbers for family size and capacity of farmland. At the moment we pay cocoa farmers $2030 per ton in Ghana, and $1840 per ton in Ivory Coast. If you add up the 75% to the calculation from Fairtrade, we are pretty close to each other. At the moment we already pay more than the new minimum price and the Fairtrade premium added together.
So confusing all these differences in numbers, this should be done differently..
It is really amazing that Fairtrade, and other organizations and companies pay more and more attention to living income, but it’s also confusing.. Because at the moment there are so many different methods and calculations in circulation. Our goal is to work together with Fairtrade and other partners for next cocoa season (October 2019), and come up with one international certified calculation and corresponding figures. The differences in the numbers previously mentioned emphasize the importance of having reliable data, and therefore we urge all parties in the industry to share their data. In order to come to the best possible calculation together. To date, a lot of choco giants keep their prices and knowledge a secret, even though there is so much knowledge needed. Let’s make the chain open and transparent!
For this cocoa season we will stick to the agreed Tony’s premium. Prior to the cocoa season we will always use the most recent and most reliable data available to us. We will share our method and will continue to align our calculations with those of numerous partners, in order to make the entire cocoa chain transparent. Complicated? Yes. Can it be done better? Always. But that should not be a reason to do nothing at all. Only together we make all chocolate 100% slave free, and this includes a living income. Let’s raise the bar!