Thank you for taking action and calling on Ghirardelli to go Fair Trade and proudly label its product that way. By now you have probably heard from the company with its arguments against a label and you may be feeling a bit confused.
Below, we shed some light on the chocolate company's claims and maintain the fact that Fair Trade is the only way to empower farmers and communities.
A Fair Price
The company is correct when it says that the world market price is above the Fair Trade minimum. The world market price today (Jan 2014) is $2,964.65 per metric ton and the Fair Trade price is guaranteed to be no lower than $2,000 per metric ton. The Fair Trade price meets the world price and adds a $200/MT Fair Trade premium (community investment fund) per metric ton.
You will have received a complicated, almost algebraic formula showing how increasing yields actually increases farmer incomes. In the short term this is no doubt true. For the long run there are a few things to consider:
- The market price will fluctuate, especially if the yields increase. Companies are hoping that farmers will double their yields with new more scientific growing methods and farmer training, better seeds and chemical inputs. Many cocoa companies claim there will be a 20% shortage of cocoa beans by 2020 and are hoping to mitigate this problem with better production. If they are successful at doubling yields there will be 30% over-production leading to a much lower market price. The farmer will be stuck with the costs of the new inputs (fertilizer, pesticides, labor, more water) without assurance that the price paid can support them. In any case, increasing yields will always help the companies even if it is only temporarily helpful to the farmer.
- The $200/ton social premium/community investment fund mandated by the Fair Trade certification is indeed paid to the cooperatives or farmer’s associations rather than individual farmers. These groups democratically decide how to invest the premium. 25% of it is recommended to be used to improve productivity, but the rest can be spent in anyway the farmers’ agree to – it could go to building schools, health clinics, accessing water or to pay-outs to individual farmers. There is no requirement that it be spent on certification. In contrast, Lindt/Ghirardelli is only paying the government mandated premium of $30/ton and making its own decisions about what is important for farmers based on their own evaluations.
Benefits of Fair Trade Certification
According to a study commissioned by the Cocoa Industry for the Cocoa industry (ICCO) a group called the KPMG out of the Netherlands evaluated the benefit of certification to cocoa farmers.
The overall findings were:
- On average, farmer incomes increased $129/ton in Ivory Coast and $417/ton in Ghana after Fair Trade certification (a little more than Rainforest Alliance and UTZ.
- Buyers benefited too with increased cocoa supplies as yields roughly doubled as a result of certification.
No one claims to guarantee that no children work instead of going to school. All of the certifications and the Lindt/Ghirardelli company agree to make every effort to eliminate child labor by 2020. The difference is the way they hope to do it.
Fair Trade labeled products work on a child and community centered approach to eliminating child labor. They will report, insist on transparency, work with communities and farmers to identify the issues and alternatives to bringing children into production.
Just making child labor illegal isn’t enough – you also have to make sure that families and communities are financially able to send their kids to school rather than being dependent on the income they bring in or being without child care. You have to look at both root causes as well as having a child labor policy.
Why the label
The company claims there are many ways to strive for sustainable and ethical sourcing practices and that, Lindt (the owners of Ghirardelli) have chosen to build up its own sourcing model which it proudly asserts is 100% traceable to the community level using Source Trust as the vehicle.
The company is proud of its investments in social projects aimed at improving the livelihoods of the farmers and their communities. We say hurray!! (with caution)
Here’s the caution!
Lindt/Ghirardelli does not own cocoa farms. It does not control the farms or the whole supply chain.
Lindt’s job is to turn the beans into chocolate. Transparency in and of itself guarantees nothing more than that you know where the beans come from -- it doesn’t guarantee that no child labor is used, it doesn’t guarantee that standards are being met or a fair price is being paid – for this you need third party verification.
Ghirardelli buys its beans from a trader called Armajaro, now owned by E-Com the largest cocoa bean trader in the world. Source Trust is an NGO which is set up by the trading company to assure traceability. This is an obvious conflict of interest; when you use your own system to monitor yourself, the verification is meaningless. That’s why we want the label!
By setting up their own system, even if it is based on the best of intentions in terms of farmer livelihood and sustainability (and we don’t know because there are no standards available for review), Lindt is creating redundancies that are a burden for farmers. Why set up another system when there is already one that works?
Farmers and companies have agreed upon systems of certification so that you know what it means when you see the label. By creating its own set of standards, Lindt has added an extra burden of work for farmers without any clear benefit. What are the standards that they are measuring farms against?
It’s a simple thing that we are asking.
Show us the label. We want to know what standards you are holding farmers accountable to and who is auditing against those standards, as well as celebrating the progress being made.
There is already a developed system for this, an internationally shared system that can do just this without costing much more than the company already pays.
Ghirardelli’s revenues are about $384million. It buys 4,000-5,000 metric tons of cocoa, and certifying all of that as Fair Trade would only cost them $0.8-$1million… that’s a quarter of a percent of their revenues! It’s peanuts.
By comparison, the CEO of Lindt Sprungli, Ghirardelli’s corporate parent, makes $7.5 million. It would cost almost about a tenth of their CEO’s salary to transform the lives of the 4,000-5,000 cocoa farmers (and their families).
We’re sticking with our request: Show us the label!
Do you need talking points for your neighbors and friends?:
- We’re glad Ghirardelli’s cocoa is traceable but that doesn’t mean that farmers are treated well.
- Ghirardelli's third party verification isn’t really objective since the NGO, Source Trust, which traces the cocoa, is owned by the trading company, Armajaro the buyer of the cocoa beans.
- The community investment (social premium) is only $30 per ton mandated by the Ghanian Government for traceable cocoa versus the $200 per ton set by Fair Trade.
- This social premium focuses on increasing yield, a benefit for the company rather than on the democratically determined needs of the community and the farmers.
Now that you know the Fair Trade facts, get your friends to take action with you urging Ghirardelli to put a Fair Trade label on it!
Together, we will get Ghirardelli Chocolate to put a Fair Trade label on it!
Director of Organizing