CorpComms Magazine

Benjamin Atiemo is not a household name, but the Ghanaian cocoa farmer's conversations with Todd Stitzer, the chief executive of Cadbury, one of Britain's biggest and best-known companies, have shaped its corporate responsibility strategy and produced the biggest fillip to the Fairtrade Foundation since its launch 15 years ago.

Every bar of Cadbury's flagship Dairy Milk brand sold in Britain and Ireland now carries Fairtrade certification. The move, which involves 300 million bars of Dairy Milk chocolate every year, will boost the annual value of Fairtrade sales from £700 million to about £900 million.

Atiemo, 49, is already seeing the benefits of the move. A Fairtrade social premium worth more than £500,000 is already being dispersed to Ghanaian villages, such as Adjeikrom in the eastern region of Ghana, where Atiemo works the land that his father worked before him.

But, as he explained to Stitzer, his sons are unlikely to follow the family tradition. Instead, like many of their contemporaries, they have moved to find work in the capital city of Accra, a three hour bus ride away, and have no current plans to return.

It is a major socio-economic problem. The younger generation in Ghana is disenchanted with cocoa farming and an industry that has been beset by inadequate investment, ageing trees and dwindling yields. Atiemo's farm had last been fertilised ten years ago.

Research by the Institute of Development Studies in Sussex and the University of Ghana, which was funded by Cadbury, found two years ago that the average production for a cocoa farmer in Ghana had dropped to just 40 per cent of potential yield.

And when the confectionery company surveyed 125 Ghanaian school children on their ambitions, every single one laughed out loud at the idea of becoming a cocoa farmer.

Farming difficulties

It became easy to understand their amusement when further research indicated that one quarter of cocoa farmers produce just six sacks every year.

With families averaging seven or eight children, it was obvious that many cocoa farmers in Ghana are suffering severe hardship. Their plight was in complete contrast with their counterparts in India where cocoa is a valued cash crop and yields are 300 per cent to 400 per cent higher.

The harsh economic realities of cocoa farming in Ghana - where the average age of a farmer is 51 - had other implications for Cadbury.

Every year it requires about 15,000 tonnes of cocoa beans to produce brands such as Wispa, Crunchie, Milk Tray and Dairy Milk, which sells 571 bars every minute in Britain. More than 70 per cent of its supply comes from Ghana.

From a pure business point of view, it became vital to ensure that cocoa production in Ghana was both sustainable and also had the potential to grow. The confectionery market is growing by about six per cent per annum, while growth rates in emerging economies, such as India, are tipping 20 per cent.

'The interests of Cadbury and the farmers aligned,' concedes global corporate affairs director Alex Cole. 'And the farmers were not living as they could be.'

As Stitzer puts it: 'Benjamin's worries and our own are not in conflict. Our interests are the same. Without farmers like him, there are no cocoa beans. And quite simply, if there are no beans there are no bars.'

Long-standing tradition

It may have been easier to have sought out alternative cocoa sources, but Cadbury's links with Ghana go back 101 years when William Cadbury, grandson of the founder, switched production from the Portuguese territories of Sao Tomé and Principé after it emerged that slave labour was being used on the farms. While not owning the farms, Cadbury was instrumental in developing Ghana's cocoa industry.

'The decision was rooted in value, and there was no way to create the supply that we require,' adds Cole. 'There was value in our existing supply chain.'

There is also the belief that cocoa from Ghana is the highest quality in the world, as the country is the ideal distance (within 20 degrees either north or south) from the Equator and has perfect humid conditions to grow beans.

To mark the centenary of Cadbury's decision, the confectionery company launched the Cadbury Cocoa Partnership in January 2008. Established in partnership with the United Nations Development Programme, non-governmental organisations, such as Voluntary Services Overseas, CARE International and World Vision, and the Ghanaian government, Cadbury committed to invest £45 million over ten years to improve farmers' incomes by helping increase their crops' yield and quality, develop communities by supporting educational and sanitation projects and build partnerships with the farmers to decide how funding should be spent and how to turn plans into reality. It works with 100 communities, involving an estimated 10,000 farmers.

'We are not a development organisation,' explains Cole. 'We needed to work in partnership with organisations who work within the countries and with local communities. They understand their hopes and dreams, and recognise what these communities want to achieve.' The organisations are working with villages to develop ten year action plans, such as diversifying crops or improving educational facilities, and make these achievable. The model is about empowerment.

There was also an elegant symmetry to the decision to launch the Partnership. After he switched production to Ghana, William Cadbury gifted a hall to Achimota College in Accra, which encouraged integration of both races and sexes. The current president of Ghana, John Atta Mills, attended. 'He remembers sleeping in bunk beds provided by Cadbury,' says Cole. 'The history of the company and our heritage in Ghana meant that we could start conversations in different places.'

Fairtrade initiatives

The cocoa industry in Ghana is unlike that in other countries. It is the world's second biggest producer of cocoa beans, and, in recognition of the sector's vital role in the economy, the government plays a major role. There are rigorous quality controls, and it is possible for customers to follow the beans from the farm to the port. There are also no middlemen. There are 20 licensed buyers who, using a price set by the government, deal with the farmers. 'Cocoa from Ghana is recognised as the highest quality in the world,' says Cole. 'The government sets the price and everybody knows that. It is the only certainty that farmers have.'

But there have been problems with smuggling and other social issues when the official government price has, on occasion, failed to reflect the prevailing world price.

The Cadbury Cocoa Partnership recognised that Fairtrade certification for the cocoa farmers was the logical next step to transform local communities. 'It is about establishing trading terms,' explains Cole. 'There is a belief that trade is better than aid.'

But the process is long and complicated. Firstly, the communities have to agree to participate. They must agree both to work together and also on how the additional Fairtrade income will be spent. Some have already agreed on installing toilet blocks; others on new trees and sprays.

'Fairtrade is an international standard,' adds Cole. 'There are set ways in which farming communities must agree to be organised, along with farming methods and social lessons.'

In Ghana, for example, it is illegal for children below the age of 18 to work - which is not to say that it does not happen! Communities wishing to participate in the Fairtrade scheme had to ensure that children would not be put to work, but also had a say in the action plan. About 70,000 farmers in Ghana are operating under Fairtrade principles, against 40,000 when Cadbury began this process. These communities will be audited on an annual basis to ensure that they adhere to the Fairtrade standards.

Cadbury was also put through a Fairtrade audit. For a product to receive Fairtrade certification, it must source all possible ingredients from a Fairtrade supplier. With Dairy Milk, for example, it was not enough that the cocoa beans were Fairtrade, the sugar supplies needed to be too. (Cadbury identified farmers in Costa Rica with sufficient supplies.) However, the British milk suppliers - producing a glass and a half for each half pound bar - were unscathed as Fairtrade has yet to certify dairy farmers.

As Cadbury rolls out Fairtrade accreditation across its product range, it will need to source nuts, fruit, spices, such as vanilla, and honey from Fairtrade suppliers. Cadbury in Canada, Australia and New Zealand has already completed the process and will soon produce Fairtrade certified Dairy Milk bars.

Customer care

But perhaps, more importantly, Cadbury had to identify cost savings in its supply chain that allowed the confectionery company to offer Fairtrade Dairy Milk without increasing its price.

It committed to maintain its price, at 50p for a 49g bar of Dairy Milk, while paying a social premium to Fairtrade for its cocoa beans.

Its Fairtrade pledge means that Cadbury has agreed to pay a minimum price of $1,750 (£1,068) per tonne for cocoa, a figure based on the Fairtrade minimum price of $1,600 plus a $150 (£91) social premium. The minimum price, which acts as a guarantee, is paid to the farmers, while the social premium is paid to the community. Obviously, the price will fluctuate according to market conditions but will never fall below this floor.

'We have treated this partly as a marketing initiative,' says Cole, adding that some consumer offers and costly supermarket displays have been deferred to ensure that the Fairtrade initiative proves cost-neutral.

But Cadbury has also been keen not to alienate existing customers, and to strike an ethical balance that does not appear 'preachy'. While the taste has not altered - the ingredients derive from the same regions and, in many cases, suppliers - Cadbury carried out customer tests to ensure that the initiative had not changed their perceptions. All marketing also stresses that the taste and price are unchanged.

Stitzer adds: 'Fairtrade is at a tipping point for consumers... and we want to help. We're providing mainstream consumers with an easy, everyday option. From our perspective, the signs are pretty good for a tipping point. This partnership has really touched a nerve within the company. A tipping point in supply...with more farmers benefiting. A tipping point for consumers... with more people choosing Fairtrade. And a tipping point for business... with more people choosing Fairtrade.'

'It is still capitalism,' adds Cole. 'But it is a model where it is possible to improve the lives of others and empower their communities.'

From seedling to supermarket shelf

• A cocoa tree starts to blossom between three and five years after planting
• Each tree produces about 70,000 blossoms along the trunk
• There are two crops per year
• Each crop produces around 70 pods
• Each pod produces between 30 and 50 beans
• The annual crop of one tree is needed to make one pound of cocoa

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