NEW YORK (Reuters) - Fair Trade USA will increase the floor price and fixed premium it requires companies to pay cocoa farmers under its certification system, the organization said on Tuesday.
The increase is designed to improve livelihoods in a sector that has long grappled with farmer poverty, child labor and deforestation
The nonprofit will increase its minimum price for conventional cocoa to $2,400 per tonne from $2,000. For organic cocoa, the price will be $300 over this minimum or the market price, whichever is higher at the time. The premium, which is used to fund community projects, will increase to $240 per tonne from $200.
The new pricing structure will take effect on Oct. 1, 2019.
The 20% increase in prices puts Fair Trade USA in line with the minimums set by Europe-based Fairtrade International in December, with these newly announced minimums impacting U.S.-based brands and manufacturers.
In 2018, over 22,000 tonnes of cocoa beans were sold by Fair Trade certified cocoa farmers, according to the press release. Nearly 4.8 million tonnes of cocoa were produced worldwide in 2018/19, data from the International Cocoa Organization shows.
Representatives from Ivory Coast and Ghana, the world’s top cocoa producers, are meeting in the Ghanaian capital of Accra on Tuesday and Wednesday to discuss farmer incomes. The two countries are working to better harmonize their pricing systems.
For the 2018/19 main crop, Ivory Coast set its guaranteed farmgate price at 750 CFA per kilogram (about $1.29 per kg, or $1,290 per tonne) while Ghana set its guaranteed price at 7.6 cedis (about $1.41 per kg, or $1,410 per tonne).
On Tuesday, New York futures prices settled at $2,539, an 11-month high for the contract, but prices have fallen to as low as $1,901 this year.
Reporting by Ayenat Mersie; Editing by Lisa Shumaker