Memorandum submitted by the Biscuit Cake
Chocolate & Confectionery Association (BCCCA)
THE COCOA
MARKETPLACE
There are a number of well established Fairtrade
chocolate brands in the UK, in addition the major cocoa processors
also offer a Fairtrade option. A recent review (2005) by the International
Cocoa Organization estimated that Fairtrade chocolate accounts
for less than 0.1% of cocoa tonnage (See appendix 1[61]).
Industry figures suggest that the Fairtrade market for chocolate
is growing against a static market.
In development terms key questions are impact
and scaleability. Fairtrade is one model for development and certainly
brands such as Divine and Green & Blacks continue to have
positive impact on communities in West Africa and Central America.
Moreover both companies drive positive consumer perceptions of
ethical trade.
In addition, the chocolate industry has developed
a number of initiatives as part of its commitment to sustainable
agricultural and ethical souring. These demonstrate how public-private
partnerships can be an effective:
1. Labour Certification—a system to
monitor, track and drive labour practice in the cocoa sector has
been established in West Africa. This has been developed by the
global chocolate industry in partnership with West African governments
and NGOs.
2. Producer Networks—co-operatives
and producer networks have been successfully established through
the Sustainable Tree Crops Programme (STCP) (www.treecrops.org).
Income gains have been seen by the farmers who participate. This
has been funded by industry and through other Government donors.
3. Knowledge Generation—investment
in knowledge generation via Farmer Field Schools has for the cocoa
sector resulted in income gains at a farmer level. The global
industry has re-committed to further investment in Farmer Field
Schools via the STCP.
4. Company Initiatives—individual companies
invest in programmes which support sustainable development and
poverty reduction. These include:
— Access to potable water
— Social development programmes
(See appendix 2 for further information on these
initiatives)[62]
IDC INQUIRY
In addition to reviewing the future impact of
Fairtrade, we believe the IDC should consider reviewing:
1. How the wider food chain has developed
ethical trading policies. Are there learnings from Fairtrade model
which can be applied to the wider food chain and vice versa?
2. What other models such as public-private
partnerships are applicable to particular market sectors?
QUESTIONS
The BCCCA has answered the following questions
within the context of the chocolate and cocoa sector.
1. What has been the impact of donor funding
for fair trade?
Donor funding has certainly helped to establish
fair trade brands in the UK.
It is clear however that monetary input is only
one of the factors for the success, and the commercial expertise
brought to the brands by the companies involved has also been
critical.
Monetary input could bring scaleability to brand
development; this could be achieved via donors or by the private
sector.
2. How best can donors help to develop fair
trade consumer markets in both developed and developing countries?
Developed Countries
It needs to be considered if the role of the
donor community is to influence trading environments or if this
expertise lies with the business community.
For example, the chocolate markets in the Europe
and North America are very mature with growth coming from premium
brands. While there are ethical consumers who will choose foods
because of a particular set of principles or guidelines, it is
added value and quality which represent the market opportunity.
3. How can aid be more effectively mobilised
to help producers improve the quality of their produce in order
to access fair trade markets?
The cocoa sector has a number of established
cocoa quality programmes. The principles for success include:
(a) Establishing or working with local organisations.
For example:
— Labour standards are a fundamental
to the supply chain and a network of local experts has been established
to conduct labour Certification activity.
— The sector works with the already
established Cocoa Research Institute of Ghana to better understand
cocoa quality and productivity.
(b) Creating a flow of communication from
global experts to the village level. For example:
— A global network has been established
to share cocoa research and best practice.
— Agricultural techniques are communicated
at village level via the STCP programme.
(c) Applying developed world principles appropriately.
For example:
— The labour Certification system brings
modern statistical methods to an agricultural setting—this
has to be a robust system for the developed world but implemented
within the framework of the developing world and with the support
of local governments.
4. Is there a role for donors in helping to
develop the interests of producer communities in developing countries
(for example, the Ethiopian coffee trademark dispute)?
Geographical Indicators are being used effectively
by the developed world. In the EU a number of member states including
the UK continue to protect brands via this mechanism. It is critical
that Geographical Indicators do not become another barrier to
trade for the developing world.
Where the donor community could potentially
play a role is to enable countries in the developing world to
identify products which could have this status.
In the cocoa sector this has already taken place.
Ghana cocoa is seen to be of a high quality and therefore commands
a premium in cocoa markets. There is also a growing opportunity
for "origin" cocoa—just as we `have seen in the
coffee and wine markets.
5. How does the international trade system
impact on ethical and fair trade production (for example, the
impact of changes in the EU tariff regime for bananas on small
developing country producers)?
The impact of the trade system is neutral for
Ghana and Cote d'Ivoire, as in the EU there is no tariff escalation
on cocoa or cocoa products from these countries.
Cote d'Ivoire and Ghana (the principle providers
of the world's cocoa) both supply substantial cocoa products.
In both countries there are good examples of state-of-the-art
cocoa processing factories not only bringing local employment
but also helping to prevent the "brain drain" often
seen in the developing world.
While full scale chocolate manufacturing for
export is more of a challenge, there is the potential for chocolate
production and sales for local markets in West Africa.
The barriers to growth are not tariff related.
Establishing a base for economic growth is as fundamentally important
as an equitable trading system—so for example: stable governments,
good governance structures and transparency along with investment
in infrastructure and education.
6. Do existing government guidelines on procurement
of ethical and fair trade products provide an enabling environment
for the development of this market and the opportunities for producers?
The support for Fairtrade by Government departments
is an excellent example of policy into action.
However, it must be noted that the recent DfES
guidelines on food in schools prohibits the sale of any chocolate.
This has taken away not only an important route to market for
Fairtrade brands but also education opportunities through young
enterprise initiatives.
7. What is the role of supermarkets, retailers
and businesses in supporting ethical and fair trade production?
Businesses
Commercial realities need to be applied to any
model—for it to be effective, sustainable and scaleable.
The activities funded by the global chocolate
industry demonstrate the role business can and will play in driving
sustainability and ethical standards.
However, the role of the business community
is often over looked by the development community. The BCCCA supports
the response made by Business Action for Africa to the recent
DFID white paper on Eliminating World Poverty which states: "After
all, it is only private-sector led growth that can finally and
forever make poverty history."
8. How can trade unions help to ensure that
the drive for cheaper produce does not undermine social and environmental
standards in developing countries?
The recent experience of developing a labour
Certification system demonstrates that trade unions are one group
that can help to drive standards. The continued success of the
certification system is based on partnerships, with the most critical
partners being West African governments. Trade unions and other
NGOs have provided expertise.
The cocoa and chocolate industry has also established
a foundation—the International Cocoa Initiative. This organisation
demonstrates how industry and the NGOs, including the trade union
sector, can work together towards a common goal.
9. In an increasingly crowded ethical marketplace
how can consumers be supported to distinguish between different
fair trade brands, labels and codes?
One rationale for providing brands and labels
is to help establish a price premium.
While this may be appropriate for some areas
of the ethical marketplace there is a need for other approaches.
For example, the global chocolate industry believes that the issue
of labour standards is pre-competitive. The labour Certification
system developed for the cocoa sector aims to set and drive standards
for the sector as a whole. Therefore a labelling system is seen
to be inappropriate.
Any labelling system must not become an administrative
burden for small or medium sized businesses. As the ethical consumer
becomes more sophisticated there is the opportunity to develop
more specialist and niche products such as single origin chocolate.
February 2007
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62
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