Kraft Foods’ Cadbury Dairy Milk plain chocolate is the first major brand in South Africa to be certified Fairtrade, an initiative that will improve living and working conditions for small-scale cocoa farmers in West Africa and make the brand more appealing to socially conscious upper income consumers locally.
Mike Middleton, the marketing director for Kraft Foods South Africa, said yesterday that in terms of Fairtrade certification, Kraft would pay cocoa producers in Ghana and the Ivory Coast a minimum of $2 000 (R13 440) a ton of cocoa beans or the current world market price, whichever was higher. This was based on analysis of the average price of cocoa over a base period.
This meant participating small scale farmers would make a sustainable living and not be at the mercy of volatile cocoa prices, which in recent years have fluctuated between $1 500 and $3 000 a ton.
Bloomberg reported that cocoa for July delivery dropped 0.4 percent to £1 772 (R19 590) a ton on NYSE Liffe in London this week, having earlier fallen to £1 765, the lowest price since August 2009.
Kraft will also pay a $200 a ton Fairtrade premium that will be invested in socioeconomic projects to support sustainable agricultural practices and health care for farming communities. This will be administered by Fairtrade.
Fairtrade represents more than 500 000 small-scale producers and farmworkers in Africa supplying international Fairtrade markets in 23 countries.
Michael Nkonu, the executive director of Fairtrade Africa, said problems for small farmers included access to markets and the terms they had to accept to sell their products. Fairtrade organises farmers into co-operatives and helps them establish the cost of production to determine a floor price.
Farmers have to comply with International Labour Organisation standards and sustainable agricultural practices, among other criteria.
Companies that want their products certified have to use key ingredients that are from Fairtrade-certified sources and pay a licence fee to use the logo.
Nkonu said the Fairtrade certification of Cadbury was important for intra-African trade as the cocoa was from west Africa and the chocolate was made in Port Elizabeth.
In South Africa, Cadbury Dairy Milk plain is the biggest chocolate brand and this year it is expected that 1.4 million slabs will be eaten.
The brand targets consumers in the living standards measure 7 to 9 bracket that are increasingly aware of the impact of purchases on the environment.
Middleton said consumers were getting more involved and preferred products that were sustainable. They would be able to buy Fairtrade-certified Dairy Milk plain from the last quarter of the year.
The Fairtrade certification follows the brand’s certification in the UK, Ireland, Australia, New Zealand and Canada. The intention is to extend certification to other Cadbury brands.
A few smaller brands have Fairtrade certification, such as Bean There coffee and 15 wineries, including those that make Thandi and Fairhills. In 2009 Fairtrade sales globally rose 15 percent to about R33 billion, while in South Africa sales were about R5.7 million, rising to R18.7m last year.
Boudewijn Goossens, the executive director of Fairtrade Label South Africa, said Fairtrade was in negotiations with other major food producers, but he would not disclose who.
He added that it was important to get Fairtrade products into mainstream food stores.
Retailers that stocked Fairtrade products included Pick n Pay, which was considering if any of its private label items could be certified as Fairtrade. - Business Report