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Chocolate Forever 10 Other themes and some reflections

Certifications, training, and efforts geared at organising farmers are key approaches for mitigating the risks for supplier. But they are not the only issues, and they do not provide the ultimate supplier solution. For example, without having access to the adequate inputs (plant material, fertilizer, and pesticides) farmers will not be able to apply what they have learned. Adequate inputs have to be available and accessible at affordable prices. Only the combination of training and access to inputs will lead to inproved yields and in turn increased farmer income. Clearly this also entails costs. At the moment the industry is shoulderong a large part of these costs, but in the long run farmers will by themselves have to secure bank loans for purchasing inputs. Financing is another key theme taht is important for safeguarding the supply of produce.
These are different financing options that can be explored, of which some are already in place, for example, the company Wienco makes it possible to purchase inputs ‘inputs on credit’ in Ghana. It is worthwile to look at already existing successful initiatives and exploring other suitable (financial) institutions that can provide loans. This effort would face a number of barriers. Because cocoa producing countries (especially in West Africa) are considered as high-risk and low yield areas, financial institutions are generally not interested in investing in agriculture and providing loans to farmers. Generally speaking agriculture is risky business; farmers depend on a lot of factors for having a succesful harvest: the timing of preparing plots of land, sowing, applying inputs and harvesting are crucial, as are climate and weather. But the problem is not only related to the creditworthiness of farmers, it also has to do with the existing lack of trust that farmers have in local banks. A recent book of Royal Tropical Institute on Value Chain Finance gives a number of practical examples on how farmers that are embedded in a value chain can get access to finance.

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Even if the cocoa farmer’s access to financing could be improved, there are no guarantees that the farmers will actually invest this additional income in their own farms and communities. Will they spent their money on fertilizer, irrigation systems, or will they pay of their other debts, buy a television set or spend money on entertainment? Can investments in their local community be stimulated? How can this be done? What partnerships are needed? What are the drawbacks of such initiatives?

Another issue that requires some reflection is the issue of inclusion vs. exclusion. Although the aim is to certify, train, and as many farmers as possible, it is inevitable that in the end some farmers will receive training as well as financed planting materials and fertlizers, whereas other will not. It is essential to examine the principle that will guide this decision making: Which should be preferred, the least developed areas or places where a number on conditions are met (e.g., adequate transport and training infrastructure)? Ideally, vibrant local entrepreneurs would be involved, but can they be located? What are the future expectations that such decisions evoke?

The issue of inclusion and exclusion is also relevant for looking at extent to which ‘sustainability’ is a shared agenda. Max Havelaar and TCC respond to this concern by involving farmers in multistakeholders agreements, which help them organise and also strengthen their joint voice.

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Final observations: Supplier failure is one of the main drivers for industry to invest in sustainable sourcing of cocoa. Due to increase risks that cocoa farmers in the future might not be able to produce the required quantity and quality of cocoa, it becomes increasingly important to make on-farm investments. To assure that increased quantities of cocoa are available on the market, cocoa farming has to be lucrative for farmers. The main themes in this context are certification schemes, training farmers, and organising farmers. The questions posed by Dutch actors in the cocoa chain vary from vary from how the costs of training schemes can be lowered to how successful initiatives can be scaled up.

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next time: Remarkable sustainability initiatives.

 

 

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Chocolate Forever 8 Certification

Certification is a way to improve the farmers state of affairs, by providing them with additional (or at least stable) income and other privileges, conditional on their compliance with certain requirements. Such requirements are outlined in documents called standards or codes of conduct, which are used by auditing committees to randomly check farms. The certified product, which eventually finds its way to the shelves of supermarkets, informs the consumers with information, certificates also provide marketing opportunities for companies involved in branding of cocoa products.

AfbeeldingAt the moment there are four labels for sustainable cocoa and chocolate (not mentioning DIRECT CACAO here*) These are EKO, for organic cocoa; Max Havelaar, for Fairtrade cocoa; Rainforest Alliance, for nature conservation; and UTZ Certified, for farmers support. Each of these certifiers focuses on different aspects of sustainability and its own unique standards and approaches to rewarding farmers.

Dutch cocoa processors and cocoa chocolate manufacturers utilize these different schemes. Currently the focus is very much on UTZ Certified, which launched its Cocoa Program in 2007, with a focus on certification, training and farmer organisation. Through UTZ Certified, mulitnational corporations aim to realize their sustainable sourcing objectives. Many complicated elements surround certification. One burning issue, repeatedly mentioned in interviews and at multi-stakeholder meetings, is harmonisation of standards.

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Harmonisation of standards Each label has its own specific attention points, its own standards, its own system of rewards, its own traceability systems, and so on. The fact that there are several certificates, which all opetare differently, can cause confusion in the actual meaning behind a specific, label and the differences between the various labels. Moreover, it is unclear whether these labels can actually realise the claims they make. It is nessary to have such variety of labels for certifying more or less the same product and process?

The push to combine the efforts of EKO, Max Havelaar, Rainforest Alliance, and UTZ in issuing certificates to farmer organisations originates from different actors: the Tropical Commodity Coalation, the Dutch Initiative for Sustainable Trade, and from industry players, such as Cargill. The certifiers gave indicated that they are interested to collaborate in the pre-competitive stage of certification (the producer side), where there are lot of similarities (e.g., how auditing takes place, or yheir involvement in capacity development for farmers). By joining forces the certifiers can, at the same time, invrease the efficiency of the certification process and improve their credibility. Joining forces in the marketing of the produce is more complicated, as certifiers sill seek to protect their commercial interests. Within this context, the fair trade organisation Max Havelaar shared this concern regarding competition among certification schemes:

Because every certifier wants to safeguard its own supply, there is a danger that ther will be a new competition between the certifiers about who will actually get the certified cocoa.

This quote illustrates the prevalent fear that UTZ CERTIFEID will eventually attract the farmers and their produce, because they enjoy the support of industry. This is not an unrealistic fear as the supply of certified cocoa is lagging far behind demend. Another issue of concern is whether farmers will be able to select the certification scheme for which they want to produce their cocoa.

Questions regarding harmonisation It is sad that the different labels for sustainable cocoa have an 80% overlap in their social and environmental criteria. Several questions often arise in discussions on the harmonisation of standards, for example: How can the different certification schemes be integrated? How can the four certifiers operate collectively, in order to certify as many farmers as possible? What are barriers or disadvantages involved in harmonisation? Does harmonisation of standards lead to weak compromises? Are there no alternative form of certification available that could make the process faster and cheaper? Should they be actively sought out?

…In order to cope with some of the challenges that the use of certification schemes generate, the different actors involved in the cocoa sector also build upon experiences with certification in other sectors. UTZ CERTIFIED builds upon its experience in coffee, where it is among the biggest certification programs in the world. Other learned from the research conducted on sustainable biomass. For example, Fair Food has used a document prepared by Cramer (2007) for testing a framework on sustainable biomass to explore alternative (cheaper) ways of certifying cocoa. In this document three different certification systems were compared: the track and trace system, the mass balance system, and negotiable certificates. Currently, the Fairtrade Labelling Organizations are considering the mass balance system as an alternative way of certifying Fairtrade products. This system prescribes to stop the practice of segregated processing of Fairtrade cocoa and conventional cocoa. UTZ CERTIFIED allows both mass and segregation for certified cocoa.

Limits of certification Because certification is not sufficient for guaranteeing sufficient supply, it is combined with investments in farmer training, this called certification+

The concept of Certification+, introduced by Solidaridad and Mars, states that the premium provided by Certification is not meant to guarantee a living wage for farmers. By improving productivity and quality, farmers should be able to earn more for their cocoa and invest in improving their liveihood, especially in West Africa wher cocoa production is concentrated. Therefore, these parties claim to go beyond certification by improving productivity through providing better plant material and fertilizer, training, and financing. In addition, Solidaridad is improving support to farmers in producing countries by lobbying and by working to strengthen civil society.

NEXT TIME: Farmer training

 

 

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