Fairtrade International, a non-profit organization says they will raise the floor price and fixed premium it requires companies to pay cocoa farmers for their beans under its scheme.
The certification group will increase its Fairtrade Minimum Price for conventional cocoa by 20 percent, from $2,000 to $2,400 per tonne. The new pricing structure will take effect on Oct. 1, 2019, this is according to Reuters.
The fixed premium that farmers receive on top of the base price – used to fund business and community projects – will also increase from $200 to $240.
The changes come as certification bodies face criticism for not doing enough to address issues such as poverty, child labour, and deforestation in the cocoa supply chain.
A Fairtrade study this year found that in top grower Ivory Coast 58 percent of cocoa farming households certified by the scheme earned incomes below the extreme poverty line.
“The challenges in the West African cocoa sector are huge,” Fairtrade said in a release. “The new Fairtrade Minimum Price will allow average Fairtrade cocoa-growing households to earn above the extreme poverty line.”
Ivory Coast and Ghana, the world’s top cocoa producers, also have floor prices for farmers but they are adjusted each season depending on the world price, which leaves farmers exposed to fluctuations.
Fairtrade is the only major certifier that requires buyers to pay a minimum price and a fixed premium. It says its pricing model provides a crucial safety net for farmers when prices drop, although it has inspired some big companies to move away from Fairtrade.