Fairtrade Cocoa

Cocoa is produced, traded and consumed in vast quantities across the globe. Though the majority of cocoa consumption occurs within the developed world, cocoa is grown in tropical regions of the developing world. More than 30 developing countries produce cocoa, supporting more than 14 million people.

In some countries of West Africa and Latin America, cocoa production is the primary income stream. In the Ivory Coast and Ghana, 90% of the farmers rely on cocoa for their primary income. Around the world, 90% of cocoa is grown and harvested on small family farms of 4.8 hectares or less, while just 5% comes from plantations of 40 hectares or more.

Cocoa is a volatile commodity with wildly fluctuating prices and is frequently traded as futures or options – contracts that trade a commodity at a later date for a fixed price today. Since futures and options make income predictable, farmers should benefit from consistent selling prices for their crops over long terms, however futures contracts on the major markets are in units of 10 metric tons or more and the typical subsistence cocoa farm may produce just 1/2 ton per year. As a result, accessing these markets is virtually impossible for small farmers. 

Credit is also a key issue for farmers with seasonal crops like cocoa; outside of the harvest season, producers need loans to address immediate needs and pre-financing for planting and cultivation of their crop.

Quality requirements and industry knowledge are tools cocoa farmers can use to add value to their crop. Given their limited education and lack of direct market feedback from end buyers, many small farmers are unable to utilize this knowledge.

Cocoa farmers face a number of other problems, including:

• Low prices that may not even cover costs of production,
• Expensive production inputs and family costs such as tools, fertilizers and pesticides, medicine, food and clothes,
• A lack of economic diversification and education that make it difficult for farmers to engage in more lucrative pursuits,
• And an increase in child and slave labour in cocoa-producing West African countries. In 2001, the International Labour Organization and other organizations reported widespread child slavery on many cocoa farms in the Ivory Coast, source of 43% of the world’s cocoa.

Many of the challenges that exist between small farmers and traders can be addressed by organizing small farmers’ organizations and pooling resources.