The Importance of Fair Trade Practices in the Cocoa Industry

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A glance at the financial figures from the global cocoa industry and other statistics involving the value chain will make you believe every participant in the cocoa supply chain must be wealthy.

However, the hype around the profitability and lucrative nature of the cocoa industry does not reflect the true realities of the value chain. What many statistics viewers do not know is the industry is riddled by various challenges. From production to sourcing, trading/distribution, and processing, each level of the cocoa value chain has its fair share of ethical and economic issues.

A recurring challenge at the lower levels of the cocoa value chain involves unfair trade conditions and their effects on the industry’s sustainability. Many farmers live below the poverty line, child labour runs rampant, and environmental degradation continues to spread among several other recurring issues ravaging the industry. This situation makes the need for fair trade more apparent.

Understanding Fair Trade

Fair trade is a movement dedicated to ensuring that agricultural commodities producers in developing countries receive fair prices for their goods. It advocates for an even and equitable distillation of profit from the top to the bottom of the value chain, i.e., from processors, through distributors down to the producers.

In addition, fair trade practices promote ethical working conditions and environmental sustainability, ensuring the long-term viability of the industry. The practices are predicated on the following key principles

  • Fair Prices: Ensuring farmers receive a stable and fair price for their products and creating measures to insulate them from the effects of volatile market fluctuations.
  • Ethical Working Conditions: Ensuring farmers are conscious and maintain safe and healthy production environments. It also involves instituting measures to prevent child and forced labour or other forms of exploitation.
  • Environmental Sustainability: Encouraging sustainable farming practices that protect the environment and biodiversity. This involves establishing regulatory standards and incentivizing ecological preservation practices through certifications, rewards, and penalties for non-compliance with regulatory standards

These principles are administered and enforced by international organizations such as Rainforest Alliance and Fairtrade International who examine and certify organizations that meet standard requirements. They also help consumers identify products that meet standards and are thus safe for consumption.

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The Need for Increased Fair Trade Measures in the Cocoa Industry

A significant portion of the production volume in the cocoa value chain comes from Africa – over 70% of the total supply. This part of the supply chain is made up mostly of the cocoa producers.  Sadly, these are also the members of the chain who tend to get the short end of the stick financially, due to an uneven distribution of revenue and profits. Hence, there’s a need for fair trade measures to protect the interests of the farmers.

Several cocoa farmers in West Africa grapple with low income, resulting in extreme poverty. This limits their ability to employ and pay for labour, forcing the farmers to engage children (theirs and others) to work for them for free or on stipends.

There’s also a spike in unsustainable farming practices leading to deforestation, soil erosion, and loss of biodiversity. These practices not only harm the environment but also reduce the long-term productivity of cocoa farms. Ultimately, they contribute to undesirable effects like global warming, posing a threat to the future of the industry and the planet.

Fair trade measures help to mitigate these undesirable conditions and offer the following benefits in the Cocoa Industry.

Economic Benefits

Fair trade ensures cocoa farmers receive fair returns for their products, improving their financial stability and enabling investment in their farms and communities. Premiums from fair trade sales are also often invested into funding community projects such as school development, healthcare facilities, and infrastructure improvements.

Social Benefits

Fair trade reduces child and forced labor by promoting ethical working conditions and supporting education initiatives. It also empowers farmers through training and capacity building, improving their negotiating power and business skills.

Environmental Benefits:

Fair trade promotes sustainable agricultural practices, such as organic farming and agroforestry. These practices protect the environment, help maintain soil health, and enhance biodiversity, ensuring the long-term viability of cocoa farming.

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How Consumers Can Support Fair Trade

While other players in the value chain play direct roles in promoting fair trade practices, the consumers can also contribute to ensuring fair trade principles are upheld in the cocoa value chain. Here’s how you can help as a consumer:

  • Be Informed: Learn about fair trade and its impact on the cocoa and chocolate industry. Understanding the issues helps you to make conscious purchasing decisions and inspires you to advocate for the movement.
  • Buy Fair Trade or RA Certified: Look for RA or Fair Trade-certified chocolate and other products. Your purchases directly support ethical practices and fair wages for farmers. As much as possible, boycott products from manufacturers that do not demonstrate advocacy for fair trade practices.
  • Spread the Word: Take a responsibility to educate others about the benefits and importance of fair trade practices in the cocoa industry. Share information and encourage friends and family to support fair trade products.

Future of Fair Trade in the Cocoa Industry

The future of fair trade in the cocoa industry looks promising. Several new trends and developments are paving the way for a fairer and more ethical market. These include;

Sustainability Initiatives

Several efforts to promote agroforestry and other sustainable farming practices are gaining traction. A prominent example is the EU traceability initiative which ensures that all cocoa imported into Europe can be traced back to the farms they’re sourced from. This and other similar initiatives help foster fair trade, protect the environment, and ensure the long-term sustainability of cocoa production.

Policy Support

Increased support from governments and international organizations also promotes a wider adoption of fair trade practices. By establishing favorable policies for cocoa production and export, the government can help foster a more equitable and sustainable cocoa industry.

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Fair Trade Practices and the EUDR

The European Union Deforestation free Regulation is currently one of the most-discussed subjects in agro-export sustainability networks. The regulation aims to eliminate deforestation and promote ethical farming practices in cocoa production and other related industries.

Fair Trade and EUDR both address issues at the base of the cocoa value chain, primarily focusing on the farmers; although for different reasons.                                                                                                                                                                                                   The EUDR primarily focuses on promoting eco-friendly cocoa trading between Europe and cocoa the rest of the world. It ensures that cocoa farmers comply with strict environmental and social standards. It prevents the trade of goods from farms that do not comply with the standards in Europe.

On the other hand, Fair trade seeks to improve the well-being of the cocoa producers by ensuring they receive the proper remunerations for their products.

But, due to the urgency of the EUDR implementation, it has the utmost attention of most actors and reputable exporters in the cocoa value chain. Nevertheless, it doesn’t undermine the importance of fair trade practices. Instead, it contributes to the increasing awareness of fair trade and other sustainability standards in agriculture.

Hence, EUDR ultimately contributes to fair trade compliance by driving increased sustainability awareness across different stages of the cocoa value chain.

Creating A Fairer Future for the Cocoa Industry

Fair trade practices are important to create a more just and sustainable cocoa industry. Every participant in the value chain has a role to play. While distributors and processors have direct responsibilities, consumers influence the value chain by their choices.  By choosing Fair Trade chocolate, consumers can empower cocoa farmers, protect the environment, and contribute to a brighter future for all.

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