In 2014 Fair Trade International total income was €17,206,000 and global Fair Trade sales reached $6.5 billions.
Not too bad for a corporation. Oh sorry, a nonprofit organization…wait, WHAT?!
Aside from the fact that I am never going to believe in a thousand years that a nonprofit (or honestly any type of organization) can fairly allocate €17M of income, this is not the problem I have with Fair Trade certified chocolate. I wouldn’t mind them earning millions of euros as long as they got their job done, which is to get cocoa farmers in developing countries away from poverty. And HERE is my problem.
Fair Trade proclaims: “When farmers can sell on Fair Trade terms, it provides them with a better deal and improved terms of trade. This allows them the opportunity to improve their lives and plan for their future”.
Lies. Just a bunch of lies.
After an extensive research, now I am able to tell you WHY.
For cocoa, lets consider 2 main facts:
- 90 to 95% of cacao is produced by small farmers who work 3 hectares of land or less.
- Fair Trade does not certify individual farmers, but only cooperatives.
Single cocoa farmers are definitely too small, produce too little and are too poor to have the resources to find buyers and establish a supply chain to deliver their cacao. Therefore, cacao industry in developing countries is made out of COOPERATIVES to which single farmers can adhere to have a chance to sell their cacao. Cooperatives have managers and leaders (that are NOT laborers, but just landowners) that among other things are responsible for administrating the money coming into the cooperative’s treasury and especially for paying the single farmers.
The fairness proclaimed by Fair Trade should be found in their pricing system. They guarantee a Minimum Price – which is a fix price at which Fair Trade farmers can sell their cacao without being affected by market fluctuations (like guaranteeing minimum wage, thank you! And for the record it has been below the market price for years) – and also give a Premium – an extra payment x lbs over the market only for the cacao that farmers are able to sell as “Fair Trade Certified”.
WHO is this extra money paid to?
Since Fair Trade does not certify individual farmers but only cooperatives, the extra money goes to cooperatives. This is because cooperatives are supposed to spend that money in “social projects” that would benefit the entire community. From starting schools, to building infrastructures, to establishing health programs, to providing harvesting tools and education, and so on. All to improve the farmers’ quality of life. This would be so nice in theory!
Problem is that the “extra” money (all that is left after Fair Trade tremendously high membership fees, otherwise 64% of Fair Trade income wouldn’t be made out of membership fees) has to pass through the hands of the cooperative’s leaders BEFORE reaching the farmers. This means that farmers are seeing very very little of it. Any clue of the level of corruption in West Africa that accounts for 70% of the global cocoa production? Ever heard of the African Cocoa Mafia? You got the idea. The cooperative decides how that money gets spent, and how that money gets spent is none of Fair Trade problems.
So whenever you buy Fair Trade, YOU ARE NOT PAYING MORE TO THE FARMERS, but to cooperatives that God only knows what they do with your extra money.
Interviews to cocoa farmers and reports on the matter reveal a shocking picture.
Cocoa farmers are seeing that extra money in most cases once a year during cooperatives’ festivals, of course without knowing what the cooperative actually owes them and what the real terms should be. Some cases report also of cocoa farmers that don’t even know what Fair Trade is, that it is supposed to be beneficial to them or that they are even part of it. They know to pay an annual fee to their cooperative and that whatever extra money they get from it is a “gift” from the management. Payments by the cooperative for the Fair Trade cocoa sold are constantly late. Infrastructures begun are never finished. No schools. No roads. Cocoa farmers that decided to join a Fair Trade Certified cooperative thinking that it was a great deal all fall in debt because the membership fees end up being higher than the premium they get.
Do we also want to talk about the “better deal and improved terms of trade” that Fair Trade cocoa farmers should get? Here are just a few:
- Thanks to the guarantee of a Minimum Price, cocoa farmers are stuck with a prefixed number at which to sell no matter the condition of the market. If the price of cocoa goes up, they can’t sell it for more. (Not that they are given any tool to know the actual price of cocoa in the market anyway. They can only rely on the word of Fair Trade cooperative leaders and buying agents).
- The system of a Minimum Price implies that cocoa farmers have no incentives to improve the quality of their cacao. They wouldn’t be paid more anyway, so why bother. But they can loose the deal in comparison to better non-Fair Trade cacao produced by someone else. Ever tried a Fair Trade product like coffee and thought it tasted worse than a non-Fair Trade one? Here you have your explanation. No incentive to innovate or grow a better crop.
- Fair Trade declines any responsibility for finding buyers.
Cocoa farmers inside Fair Trade terms end up being in worse conditions that the ones outside Fair Trade.
With all nowadays Fair Trade chocolate hype, the demand for Fair Trade cocoa increases daily, making it harder for small farmers to stay independent. Farmers will be basically forced to join. No other choice to survive than being trapped in this game.
What are Western consumers then paying that extra money for?
Unfortunately, the Fair Trade sticker on a chocolate bar is more a marketing tool than a warranty for fairness. However, I am in NO WAY suggesting for you not to buy Fair Trade chocolate. There are many honest chocolate brands out there that had to recognize the power of a Fair Trade sticker on their products and decided to go through the pain of being Fair Trade certified while still making sure to take good care of their cocoa suppliers and exceed Fair Trade Premium and Minimum Price.
Most of the fine chocolate makers that don’t have the Fair Trade sticker on their chocolate are also already paying a true premium price to the cocoa farmers that they hire/work with or buy from, and it goes DIRECTLY into their hands, and exceed Fair Trade standards creating projects and opportunities to better farmers’ lives with their own finances.
Don’t judge a company by the stickers on its chocolate. As always, research is key!
(Note: DON’T MISS this incredible undercover investigation conducted in Ghana and Ivory Coast cocoa plantations in 2012 from where I got most of the info for this article. Here!)
Do YOU believe in Fair Trade chocolate?
I did NOT get paid and did NOT receive any kind of favor for writing this article. These are my honest opinions at your service.