From October, the cocoa for KitKat will arrive from the same farms under Nestlé’s own cocoa sustainability programme, Cocoa Plan, certified with the Rainforest Alliance while the sugar will mostly come from the UK, with some sourced from France.
The confectioner is departing from the Fairtrade Foundation, after a decade. Fairtrade certified products and ingredients as meeting standards and paying farmers an improved price than they would have received without it.
The farmers have been trading due to the involvement of Nestlé to buy Fairtrade over the past ten years. Readers of Bartalks will know that we have had some criticism of the effectiveness and availability of the fairtrade model to farmers who need it the most.
However, Nestlé taking away their support will potentially have an enormous impact as the notice period gives the farmers little time to forge alternatives. Nestlé’s Global Technical Manager, Simon Billington stated.
“We are aware that the move will have an impact on some farmers, and we are working hard to mitigate this.”
Nestlé, who reported global profits of more than £10bn ($12.5bn) last year has put aside £1.5m over two years to help with the shock of the transition.
Reports have been made that farmers asked for Nestlé to continue sourcing from them on Fairtrade terms. Nestlé said that they’re willing to source from them, but not on Fairtrade terms.
Under Fairtrade, cocoa farmers earn a minimum of approx. £1,900 per tonne for their cocoa beans sold on Fairtrade terms, with the potential to make more if the market price is higher, in an attempt to protect them against global market volatility.
Under Nestlé’s Cocoa Plan, farmers will gain a premium of just £47.80 per tonne, set by the Rainforest Alliance, which last year would have equated to a disparity of £1.57m.
According to recent estimates, cocoa farmers generally earn around 5 percent of the price of a chocolate bar, with the highest parts of 40 percent going to brands like Nestlé and 35 percent to retailers.
While Bartalks has argued in favour of the Direct Trade model, there are reasons why Fairtrade still makes sense for some farmers. Big buyers like supermarkets and large retail chains like the brand-enhancement that goes with carrying products with recognisable ethical and sustainability credentials.
In the UK Fairtrade chocolate adds only about £0.02p ($0.03) to a bar of chocolate, making it an affordable choice for even cash-strapped consumers who want to make ethical choices.
Nestlé’s reasoning for ending the agreement is that they wish to get behind a single initiative, and they chose the Rainforest Alliance. Or as their slick management communications expert put it:
Our successful partnership with Fairtrade is ending as we harmonise our certification for sustainable sourcing internationally