Chocolate is a sweet treat, but the cocoa from which it is made is often associated with extreme poverty, human rights violations, child labour and deforestation.
The cocoa sector is the perfect example of an hourglass shaped market. While consumers worldwide count chocolate among their favourite sweets, cocoa beans are primarily produced by millions of smallholder farmers who depend on the crop to secure their livelihood and mostly operate at or below the poverty line. On the flip side, market power remains concentrated in the hands of a few large companies. As a result, the distribution of value along supply chains is extremely unequal.
The lack of living incomes for farmers is a serious and structural issue, as earning a living income is a human right in itself but also a pre-condition for the fulfillment of other basic human rights such as the right to food, education or access to healthcare. Furthermore, the lack of living income feeds the vicious cycle of extreme poverty, which is known as one of the root causes of many global social and environmental challenges, such as child labour or unsustainable farming practices, prevalent in the cocoa sector.
WHAT HAS BEEN DONE SO FAR?
As the cocoa industry faces increased pressure, a number of voluntary initiatives, such as third party voluntary standard certification schemes, companies’ own programmes, multistakeholder initiatives, have emerged in recent years, but it has become clear that these are far from enough to bring about the much-needed structural change to life.
The introduction of a new pricing mechanism called the living income differential, to be paid on top of the market price, by the governments of Cote d’Ivoire and Ghana – two major cocoa producer countries – in July 2019 was a significant step forward. This created a unique opportunity to address the issue of prices and start working on a real paradigm shift.
Given its economic weight as the largest importer of cocoa and a major consumer of chocolate, the EU bears a specific responsibility to catalyse progress within the sector. In the context of its political ambition under the EU Green Deal and a “zero tolerance approach” to child labour, the European Commission launched multi-stakeholder dialogue in September 2020, bringing together representatives from Ghana and Côte d’Ivoire, from EU institutions, EU Member States, cocoa farmers, companies as well as civil society members, with the goal of improving the sustainability of cocoa production and trade. In parallel, similar national dialogues have been organised in Ghana and Côte d’Ivoire and were launched in Cameroon.
The issues are complex and require a multifaceted response as well as the engagement of all stakeholders involved in cocoa supply chains. Business as usual is no more an option. In light of the current global crises, it is more important than ever to adopt a truly holistic approach that puts economic, social and environmental sustainability on equal footing.
For the FTAO, the priority is thus to recognise that allowing farmers to earn a living income is one of the key entry points to effectively address the cocoa sector’s sustainability issues.
A smart mix of measures is needed, combining inter alia:
- Ambitious and smallholder inclusive EU legislation (e.g., upcoming Sustainable Corporate Due Diligence Directive as well as EU Regulation on deforestation-free products) that foresees robust due diligence obligations for companies as well as support measures to help smallholders’ just transition towards more sustainable agricultural practices – For more information about these two legislation and our related work, please visit our dedicated webpages.
- Partnership agreements and strengthened cooperation mechanisms with producer countries to support them in developing an enabling environment and preparing for the effective implementation of upcoming EU legislation. The key here is to ensure a participatory and inclusive approach, involving local civil society and farmer representatives.
- Greater transparency to ensure that companies’ sourcing strategies and purchasing practices are consistent with their public sustainability commitment.
- Redesigned trade tools, practices and pricing mechanisms that put farmers’ incomes at the core of their concerns.
- Economic incentives to develop a business case for sustainable cocoa that is free of child labour and deforestation.
- A greater coherence and complementarity among the current and emerging landscape of legislative tools and voluntary initiatives.
FTAO strongly welcomes the new Alliance for Sustainable Cocoa endorsed in June 2022 by the EU, Côte d’Ivoire, Ghana and the cocoa sector. Based on the main conclusions of the thematic Roundtables held since 2020, it outlines an ambitious roadmap aimed primarily at halting deforestation and child labour, as well as improving the access to living income for farmers in West Africa. FTAO is pleased to see that the issue of prices as a means of providing decent incomes to smallholders has been prioritized among the Alliance’s action points.
Together with our partners, FTAO remains committed to continuing to contribute to this process, specifically ensuring that the Alliance effectively delivers on its objectives. Furthermore, in a recent statement issued by the EU Cocoa coalition, FTAO urged stakeholders to positively respond to the recent proposal by the governments of Ghana and Côte d’Ivoire for an Economic Pact on Sustainable Cocoa, describing the latter as a great opportunity to scale up action.
FTAO will continue to pay close attention to the interconnections and complementarity of these processes with upcoming EU legislation and existing multi-stakeholder initiatives.
- Statement. European Parliament agrees on game-changing rules to drive down deforestation while ensuring a just transition for smallholders, September 2022
- It is urgent to assess the needs of smallholders and communities in the Global South to respond to the EU regulation on deforestation-free products, June 2022
- NGO letter calling for EU strategy on supply-side measures to complement EU regulation on deforestation-free products, April 2022
- Cocoa Coalition joint position paper. The proposed EU regulation on deforestation, 23 March 2022
- Recommendations for a smallholder-inclusive EU Regulation on deforestation-free products, March 2022
- EU Deforestation proposal released: A landmark legislation for EU supply chains, but will it deliver on the ground?, November 2021.
- Joint position paper on the EU’s policy and regulatory approach to cocoa – Human rights and environmental due diligence, October 2021.
- Briefing paper – Including smallholders in EU action to protect and restore the world’s forests, September 2021.
- EU-Cote d’Ivoire-Ghana dialogue on sustainable cocoa production and trade, September 2021.
- Joint position paper on the EU’s policy and regulatory approach to cocoa on partnership agreements, June 2021.
- Joint NGO discussion paper: Key Elements for an Agreement Between the EU and Cocoa-Producing Countries, to Ensure Sustainability in the Cocoa Sector, September 2020.
- Joint Position Paper on the EU’s policy and regulatory approach to cocoa – Partnerships Agreements
- Cocoa Barometer
- Comparative Study on the distribution of value in European Chocolate chains, by Le Basic.
- Promoting Living Incomes in the Cocoa Sector: policy options for consumer countries, Duncan Brack.
- FTAO and FERN Report – Towards sustainable cocoa supply chains: Regulatory options for the EU, June 2019.
- Fairtrade Foundation Report – Craving a Change in Chocolate, February 2019.