Jon Walker Senior Advisor Cocoa at Fairtrade International and Yanick Lhommel and the team of Max Havelaar Switzerland were interviewed by SWISSCO’s Executive Director Christian Robin about the following study:
Your recent "Cocoa Farmers Income" study with a focus on Côte d'Ivoire indicates that the goal of enabling cocoa farmers in West Africa to earn a living income has been approached significantly. Were you surprised by the positive results?
The increase in household income between the data collected in 2016/17 and 2020/21 was indeed very welcome news. Yet, since the increase in household income depends on so many and so complex factors it was indeed impossible to predict accurately where we would land this time. But that the overall income increased by 85% between the 2 studies is really very encouraging and it demonstrates that we are on the right track.
Fairtrade’s objective in carrying out the comparison research in two time periods is to try and monitor changes in household income. Provisionally we plan to carry similar research in 2024/25. Prior to then we hope to be drawing further data from our living income pilot projects which are currently in parallel running with various Commercial Partners in CH and EU.
The increase in household income collected from USD 2670 in 2018 (data collected 2016/17) to USD 4937 in 2021(data collected 2020/21) is very striking: how much of this can be explained by actual improvements and indicates a sustainable positive trend? What role have special factors played in this?
The researchers identified a number of areas where differences in the data seemingly impacted household income. These were an increase in number of trees planted per hectare, increased yield and increased income from diversification – both on and off the farm.
The researchers also identified that farmers would have benefited from the safety net of the Fairtrade Minimum Price when the volume was sold as Fairtrade. The Fairtrade Minimum Price is currently set at $2,400 per ton at FOB, this value is on top of the Fairtrade Premium of $240 per ton.
Our recent companion external evaluation of Fairtrade’s cooperative strengthening programme, the Fairtrade West Africa Cocoa Programme showed that participating cooperatives were incorporating diversification of their farmer members’ income into their work.
Discussions around Living Income often revolve around the issue of price or the level of price and the mechanisms of price setting. Do the study results confirm the importance of the price issue or do we need to look at this factor in a more differentiated way in the future?
We asked the researchers to carry out modelling on two of Fairtrade’s price interventions, the mandatory Fairtrade Minimum Price and the voluntary Fairtrade Living Income Reference Price. The modelling shows clearly that price matters.
Mandatory Fairtrade Minimum Price, using the 2019/20 main Ivorian harvest as the reference point the researchers found that if the farmers’ sold all of their volume on Fairtrade terms that average household income would have increased by 9%.
Fairtrade Living Income strategy, the researchers modelled two elements of Fairtrade’s Living Income strategy, price and target productivity. The Fairtrade Living Income strategy has a defined living income reference price at Ivorian farmgate of $2,200 per ton. The target productivity rate is 800kg per hectare.
The Fairtrade strategy then combines these factors with household size, farm size, farm and coop efficiency and strategic investment of the Fairtrade Premium.
Modelling of different price and yield scenarios show that if all farmers were paid the Living Income Reference Price and reached the target cocoa yield set in our living income model, almost all farmer households would be out of extreme poverty.
However, increased yield and Fairtrade Living Income Reference Prices alone cannot lift all farmers to a living income if those farmers do not have adequate land sizes. The study also shows us the importance of diversification which is an important element of the Fairtrade Living Income Strategy. There is no one solution to ensure that farmers earn a living income but rather several best practices to follow.
To what extent are the study results now also useful for the further development of your "sector strategy"? What conclusions does Max Havelaar/Fairtrade draw from the study?
The research shows us the importance of the Fairtrade Minimum Price safety net at times of low prices and how price needs to be part of a wider holistic strategy for living income, something we are currently piloting with commercial partners through our Fairtrade Living Income Strategy.
The topic of Living Income is also prominently featured in our recently adopted Roadmap 2030 "Tackling the Challenge Together". What other thoughts and tips would you like to share with the members and partners of the Cocoa Platform?
We are indeed very pleased to see this critical topic being prominent in SWISCO’s Roadmap 2030. It is essential that we achieve this goal jointly across the cocoa sector and mobilize resources to fight against poverty and thereby get cocoa farmers also more resilient towards climate change.
Fairtrade farmers tell us the single most important thing they want is to sell more of their production on Fairtrade terms – benefiting from the Fairtrade Minimum Price and Premium. Anyone who wants to engage in a Living Income project or program should reach out To Max Havelaar, some key partners have already done so however we need others to join the challenge.
More information:
Website of Fairtrade International
Website of Fairtrade Max Havelaar Switzerland