Ev 2011 - Sustainability Case Study: Fairtrade Cocoa

Sustainability Case Study: Fairtrade Cocoa

Chew Yi Cong

13212807

James Cook University, Singapore

Dr. Colin Macgregor

EV2011 – The Case for Sustainability

Bachelor of Business Management and Environmental Science

8th November 2015

Sustainability Case Study: Fairtrade Cocoa

Introduction

Cocoa, a key ingredient in the production of a delicacy appreciated by all ages, chocolate, has been predicted to become unaffordable in the near future (Gerrie, 2010).

While there are many reasons why cocoa prices are skyrocketing, one of the main reason is due to fact that farmers are not paid sustainably.  In order to curb this issue, Fairtrade sales was introduced. However, to what extent is Fairtrade actually effective? This case study will be split into three parts, the unsustainable payment to farmers, the contribution and effectiveness of Fairtrade, and last but not least, the implications of Fairtrade and other recommended solutions.

Sustainability in Growing Cocoa

Over the years, costs of living and production have been increasing whereas payments farmers receive for cocoa, has been falling. Additionally, most cocoas produced comes from family farmers that farms at a small-scale; they are unable to invest in expensive farming equipment to aid in cocoa production (Goodyear, 2014). This meant that farmers are unable to mass produce and increase their profit margin.

        With the increase in costs of living and production coupled with reduced payments to the farmers, farmers may be unable to replant old cocoa trees and make ends meet (Tawiah, 2015). This may then eventually force farmers to recognize the unsustainability and unprofitability in growing cocoas, and then force them to enter other profitable cash crop industries.

Effectiveness of Fairtrade Sales

        Upon realizing the cocoa production crisis, Fairtrade sales and other measures have been taken by companies, to salvage the situation (Goodyear, 2014).  The premium generated from the sales would then be used to help cocoa farmers in their businesses (Galandzij, 2014).

        However, Fairtrade sales, in reality, may not be as effective as it sounds. First and foremost, due to the high upkeep of the organization structure and the amount of money invested in creating social awareness and branding, in estimation, only 5% out of the total Fairtrade premiums generated, reaches the hands of the farmers (Chambers, 2009).

        To add on, there is a loophole in the Fairtrade sales policy, allowing chocolate companies such as Cadbury to exploit, misleading consumers into believing that the chocolates they purchase, are made from pure Fairtrade cocoa, when in actual fact, only 20% of the cocoa used comes from Fairtrade cocoa (Leontiades, 2013). Although Fairtrade sales do help improve sustainable cocoa farming to a certain extent, it might not be as effective as what many may deem it to be.

Implications of Fairtrade and Other Recommended Solutions

        Firstly, the Fairtrade system does not solve the root problem and it is not able to pull poor farmers out of their poverty and ineffective farming methods. It only at best delays the problem. By guaranteeing prices and encouraging farmers to use their old inefficient ways of farming, it prevents farmers to seek new ways of income. Keeping the farming families always in poverty, and barely able to survive from the minimum premiums provided.