What makes cocoa ‘fair trade’? Understanding the labels on chocolate

Jose Ortiz-Ortega has spent his entire adult life farming cocoa in the Dominican Republic’s Duarte province. He recalls some particularly lean times in his younger days, when he would pull down just 700 pesos a month – equivalent to about $18. Now, he makes roughly that every day as a labourer on one of his neighbour’s farms, plus about 125,000 annually from his own small plot.

It’s not much, but it’s enough to sustain a modest life for the 72-year-old and his family, which includes Mr. Ortiz-Ortega’s two sons – both cocoa farmers like him – and his granddaughter.

He attributes at least part of the higher income to his joining a fair trade farmer-owned co-operative a decade ago. The pay he gets by selling through that system, he says, is significantly better. “We never used to receive what we get now from the co-op,” he said as he stood over a pile of wet, freshly-harvested cocoa in a forest clearing one recent afternoon.

For cocoa farmers, this is one possible solution to the problem of volatile prices and aggressive attempts by chocolate companies to pay as little as they can.

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What is fair trade chocolate?

The fair trade system is meant to ensure cocoa farmers are paid more, and that their farms adhere to labour and environmental standards. These requirements are set out and enforced by Fairtrade International, a global network of non-profits. It is one of several similar certification programs; Rainforest Alliance is another prominent one.

Central to fair trade is the pricing. Under the system, farmers receive a “fair trade premium” of US$240 per metric tonne of cocoa in addition to the market price. Producers that meet organic farming requirements (such as not using pesticides) make an additional US$300 per tonne on top of that.

Farmers selling fair trade work in co-ops. Like the old wheat pools of the Canadian Prairies, these offer more power to negotiate prices and share costs. The idea is to cut out cocoa buyer middlemen, keeping more money for the farmers.

For instance, explained Ramon Emilio Perez Duarte, general manager of Cooproagro, one of the DR’s cocoa co-ops: the current market price for cocoa is US$2,900 per tonne and big chocolate companies are trying to pay US$150 less than that, but with the various additional fair trade payments, the co-op is getting US$3,500.

Fair trade also establishes a minimum price of US$2,400 per tonne (plus the various premiums) that buyers will pay if the market price of cocoa falls below that.

Chocolate companies that want to label their products as fair trade must meet all of these requirements and be certified by Fairtrade International.

How is this different from corporate sustainability programs?

Some chocolate companies label their products as “sustainable,” or with other similar terminology, but it doesn’t always mean the same thing as fair trade. These programs have a wide variety of standards: some are done in co-operation with third-party certification bodies, while others are designed and administered internally by the companies. The exact terms of the programs vary, and many offer little actual benefit for farmers.

“Living income as a concept has become a key objective for the cocoa sector in the past few years, however it hasn’t changed core business activities so far,” the organization Voice, a coalition of non-governmental organizations pushing for better pay and working conditions in the cocoa industry, wrote in its scathing Cocoa Barometer report last year. “Decades of calls for higher prices have so far not been answered.”

The key to knowing what the standards are is checking the labels and the specific name of the program. This should tell you whether it is certified by Fairtrade International or another non-profit, or whether it is run by the company, and whether there are transparent standards and evidence they are returning higher pay to farmers.

Beyond higher pay for farmers, what else does the fair trade system provide?

On top of providing a steadier income, fair trade funds are used for community development projects, chosen by the farmers. In Duarte province, these have included building roads, bridges, electricity infrastructure and paying for members’ children’s school fees.

When Marisol Villar, 56, took over her family farm 13 years ago, it had no access road. She had to load her cocoa on a horse and ride through the jungle to get to a processing centre, she recounted. It took half an hour just to secure two 70-kilo bags to the horse; at times, it would lose its footing in the forest and spill the cargo. By the time she reached her destination, the cocoa was not fresh enough to ferment properly.

Then, Cooproagro built her a road with fair trade funds. Now, the co-op sends a pickup truck around to collect her harvest on a regular schedule.

In the case of another local community, Cooproagro president Pedro Aracena said, the only way in or out was by fording a river. At times, residents could not leave for weeks straight. So the co-op built a pedestrian bridge. “It used to be impossible, during high water, for people there to access health services or school,” he said. “Now, we have finally fixed that problem.”

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The co-ops also handle some of the processing of the cocoa from their members’ farms. This ensures farmers keep can keep more of the profits that would otherwise be reaped by other businesses further down the supply chain. Cooproagro ferments and dries cocoa, while Conacado – another co-op in the Duarte province – also processes it into cocoa powder, butter, nibs and liquor.

“Being able to get to market directly – we want to be more efficient,” said Elizabeth Burgos, the quality control manager at Conacado’s factory.

If Cooproagro or Conacado finish the year with a profit, they return the money to the farmers who own them as a dividend.

The trip to the Dominican Republic was partly funded by Bigger than Our Borders, an NGO-supported initiative urging the Canadian government to increase foreign-aid programs. They did not review or approve the article.