Together with Fairtrade we set cocoa industry standards
Together with Fairtrade, we worked on a new standard for the industry last year: the Living Income Reference Price (LIRP). That's a mouth full. Don’t worry, we'll explain below what that mouth full means.
Fairtrade, you know the name, and Tony's share the mission of making a livable income possible for farmers. You also know that poverty is the root cause of all problems in the chocolate industry. And without, among other things, paying a higher price (in addition to the other four cooperation principles) for cocoa beans, there is no way for farmers to get out of this poverty trap. Together with Fairtrade, we worked on a new standard for the industry last year: the Living Income Reference Price (LIRP). That's a mouth full. Don’t worry, we'll explain below what that mouth full means.
cause of the problem
For that we first have to go back to the beginning of the cocoa chain. Extreme poverty is the root cause of the biggest problems in the cocoa chain, such as modern slavery, illegal child labor and deforestation. Fairtrade announced in December 2018 the need to increase its minimum export price for cocoa. The data on which Fairtrade based this was not yet available for calculating our Tony's premium, which we calculate each year for the start of the new cocoa season (October 1). All those numbers .. that made it confusing. In the past year we’ve looked at how we can work together on a unified calculation. We know what is needed for a livable income for cocoa farmers and offer the industry one standardized reference price for a livable income. And here it is..
LIRP
The Living Income Reference Price (LIRP). That's the price a farmer should receive for one kilo of cocoa beans to enable him or her to earn a living income. The price is based on complicated calculations, taking into account productivity, country and family size and diversification of income. We thing the cocoa industry has a responsibility to pay this reference price for a livable income. You too..?
What is that reference price then ..?
In this collaboration with Fairtrade we paired our insights with benchmarks prepared by the Living Income Community of Practice , which advocates economically stable rural communities in food chains worldwide. And boy are we happy! The results? A new reference price of $ 2.20 per kg of cocoa for Ivory Coast and $ 2.10 kg of cocoa for Ghana. What’s more, these countries produce 60% of the world's cocoa supply. So if all chocolate makers were to pay this price, a livable income would be realistic for all these farmers. And that is exactly where the bar should be raised considerably..
.. industry, take your responsibility!
Fairtrade and Tony's call on all chocolate makers to take their responsibility and make a living income the norm. Pay that higher reference price and raise the bar for a livable income for cocoa farmers!
step by step
Starting on October 1st 2019, the Fairtrade minimum price and premium will increase by 20% as a first step to move the industry towards the reference price. We calculate the additional Tony's premium each year before the start of the cocoa season (October 1st) to bridge the gap to the reference price. In this video we will explain the following: