Over the last five years, the cocoa industry has been completely transformed by a wave of corporate commitments to sustainability and supply chain investments. The Cocoa Improvement Programme 2008-2012 (CIP) by Solidaridad, UTZ Certified and the Sustainable Trade Initiative IDH contributed beyond what was expected to that transformation. These are some of the conclusions of a new study by KPMG of the results of the CIP.
Sustainability has become a license to operate
The purchasing power of the companies involved in CIP (together accounting for over 40 percent of world trade in cocoa), the financial commitment, the use of a certification standard and the pooling of knowledge and influence were key factors for success. A survey carried out in 2012 among stakeholders in the cocoa sector, found that the overwhelming majority of respondents agreed or strongly agreed that sustainability in cocoa production has effectively become a license to operate.
Private funding exceeds public
Cumulative funding of CIP amounted to over € 12 million by 2012. The proportion of the programme funded by the private sector has increased from 20 percent at the start of CIP in 2008 to 58 percent at the end of the programme. In the last year private investments exceeded investments from the public sector.
More farmers than expected certified and apply better farming practices
The number of producers and total UTZ certified volume by 2012 exceeded the original objectives of CIP by approximately 150 percent and 220 percent respectively. From 2008 to 2012, about 151,000 farmers were certified for sustainable cocoa farming with care for people and the environment, contributing to better living conditions for them and their families. Approximately 414,000 tons of sustainable cocoa were produced in this programme, and UTZ certified cocoa is now sold in 86 countries around the world. The KPMG survey and in-depth interviews indicate that CIP has helped to make producers more professional. The longer the producers were involved in CIP projects the better they applied sustainable farming practices.
Premium paid in Côte d’Ivoire
If it is assumed that the average premium reported by supply chain actors is representative for all UTZ certified cocoa and if this is applied to the average price reported to be paid by those traders, then in Ivory Coast alone a total of $ 19 million in premium was paid from 2009-2012. Premiums play an important role in attracting new farmers to the programme. Once in the programme farmers understand quickly that raising productivity and cost efficiency have far more impact on their incomes.
Challenges ahead include understanding the differences between produced, certified and traded volumes, high costs of multi certification, reliability of controls, poor organization of farmers as well as lack of agricultural infrastructure and need for diversification of crops to mitigate production and market risks. New follow-up programmes by IDH, UTZ Certified and Solidaridad are geared to address these issues.
In 2012 IDH initiated the Cocoa Productivity and Quality Programme to ensure widespread productivity improvement and quality, as well as farmer professionalization. Thanks to CIP the business case for certification has been proven so IDH chose for CPQP to only invest in “beyond certification” initiatives with private match funding. Solidaridad has several new programmes in Ghana and Ivory Coast that deal with food security, new farmer organization models and far better productivity through better access to inputs and the rehabilitation of old cocoa farms. UTZ Certified adresses the issues in its current Code Revision Process and is developing targeted projects for multi-certification, further outreach to less organized farmers and to improve the overall robustness of its programme.