Sustainability: Paying farmers and preserving forests

by Jeff Gelski
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Cocoa and palm oil suppliers advance their sustainability practices.

Grain-based foods companies looking to communicate positive sustainability messages to consumers have options in regard to sourcing cocoa and palm oil. Companies may turn to cocoa and chocolate suppliers trying to improve farmer livelihoods and communities in cocoa-growing regions. For palm oil, companies may wish to source from suppliers who steer clear of deforestation.

Keeping farmers in business

A Cocoa Barometer report issued in March and published by a European consortium of civil society groups zeroed in on the plight of cocoa farmers. In Cóte d’Ivoire, some farmers need to earn four times their current income to reach a global poverty line of $2 per day, according to the report.

“Unless the cocoa sector fundamentally changes, there will be no future cocoa farmers,” said Antonie Fountain, co-author of the Cocoa Barometer and managing director at VOICE Network (Voice of Organisations In Cocoa in Europe).

The report contained positive news in that certified sustainable chocolate production increased to 16% of global chocolate sales in the 2015 Cocoa Barometer from 2% in the first Cocoa Barometer in 2009. The report said challenges remain as improvements are needed in certification, the quality of auditing and premium payments.

Barry Callebaut, Zurich, Switzerland, issued its own sustainability report for 2013/14, which found 60% of cocoa farmers in Cóte d’Ivoire are living below the poverty line. Barry Callebaut pays a premium for “sustainable beans,” which it defines as being produced either according to a certification scheme such as Utz Certified or Rainforest Alliance or to Barry Callebaut’s own Quality Partner Program.

Under the Cargill Cocoa Promise, farmers receive a premium by selling Utz, Rainforest Alliance and Fair Trade certified cocoa beans, said Taco Terheijden, sustainable cocoa manager for Cargill Cocoa and Chocolate. Under the Cargill Cocoa Promise, $19 million was paid to farmers in Cóte d’Ivoire, Brazil, Cameroon, Ghana and Indonesia in 2014.

“The premium farmers receive from producing certified cocoa beans could increase gross income in the range of 5% to 10%,” Mr. Terheijden said. “However, we believe the real benefit of improved practices is improved economic, social and environmental systems. The premium provides a short-term cash incentive, which we believe will drive transformation as the smallholder cocoa farmer and across the supply chain.”

Under the Cargill Cocoa Promise, farmers receive a premium by selling Utz, Rainforest Alliance, and Fair Trade certified cocoa beans.

Education might have a positive effect. In Cóte d’Ivoire, 71% of children working in cocoa production attended school in 2013-14, which was up from 59% in 2008-09, according to a report released July 30 of this year by Tulane University in New Orleans. However, the number of children in hazardous work in cocoa production in the country increased 46% to 1.15 million in 2013-14 from 790,000 in 2008-09. The U.S. Department of Labor funded the Tulane University study.

Literacy rates in rural areas of Cóte d’Ivoire are less than 50%, according to Barry Callebaut. Through the first six months of this year the company had inaugurated three projects in Cóte d’Ivoire and one project in Ghana to provide access to school facilities for about 2,500 children and youth at the kindergarten, primary and secondary school levels.

Cargill in Cóte d’Ivoire is working with the Conseil du Café-Cacao, CARE and farmer cooperatives to improve education and health care in 14 cocoa-growing communities. The public-private partnership is investing $1.9 million to build 11 new schools and 3 new health centers that will provide access to education for more than 1,650 children and access to health care for 25,000 people. The first facilities opened in June.

McDonald’s stance

The move to end deforestation gained a prominent supporter this year. McDonald’s Corp., Oak Brook, Ill., said its intent is to eliminate deforestation through its entire supply chain no later than 2030.

“While we recognize regulations exist in certain areas of the world which address the deforestation issues outlined, through this commitment we can ensure we are consistently sourcing responsibly globally,” McDonald’s said.

McDonald’s said the commitment does not intend to curtail agricultural production in accordance with appropriate land use management practices. To guide its work, McDonald’s said it will acknowledge the World Wildlife Fund’s definition of deforestation: “Deforestation is the process whereby natural forests are cleared through logging and/or burning, either to use the timber or to replace the area for alternative uses.”

The fast-food chain listed priority products as beef, fiber-based packaging, coffee, palm oil and poultry. McDonald’s uses palm oil in restaurant frying oil in many of its Asian markets. Palm oil also is used to par-fry McDonald’s chicken and potato products by direct suppliers in certain markets, and in small quantities as an ingredient in some baked foods, sauces and confectionery items.

The Consumer Foods Forum recommends companies identify where palm oil is used in their products and seek sustainable palm oil certification through the Roundtable on Sustainable Palm Oil or equivalent standards.

The goal is to help C.G.F. members achieve “zero net deforestation” by 2020 through the sourcing of sustainable commodities.

“‘Zero net deforestation’ can be distinguished from ‘zero deforestation,’ which means no deforestation anywhere,” the C.G.F. said. “It acknowledges that some forest loss could be offset by forest restoration. Zero net deforestation is not synonymous with a total prohibition on forest clearing. Rather, it leaves room for change in the configuration of the land‐use mosaic, provided the net quantity, quality and carbon density of forests is maintained. It recognizes that, in some circumstances, conversion of forests in one site may contribute to the sustainable development and conservation of the wider landscape (e.g. reducing livestock grazing in a protected area may require conversion of forest areas in the buffer zone to provide farmland to local communities). However, zero net deforestation is not achieved through the conversion of primary or natural forests into fast growing plantations. Such conversion would count as deforestation in assessing progress against the target.”

The Roundtable on Sustainable Palm Oil this year said there were 12.65 million tonnes of certified sustainable palm oil, or about 20% of global palm oil.

The Consumer Goods Forum is a global industry network that brings together executives of about 400 retailers, manufacturers, service providers and other stakeholders across 70 countries.

The Roundtable on Sustainable Palm Oil this year said there were 12.65 million tonnes of certified sustainable palm oil, or about 20% of global palm oil. The not-for-profit association unites stakeholders from seven sectors of the palm oil industry: oil palm producers, palm oil processors or traders, consumer goods manufacturers, retailers, banks and investors, environmental or nature conservation non-governmental organizations (N.G.O.s) and social or developmental N.G.O.s.

As of April, 35% of the palm oil sourced by IOI Loders Croklaan was certified by the R.S.P.O. and traceable to the mill and plantation level, according to the company, a palm oil supplier and R.S.P.O. member with a North American office in Channahon, Ill. IOI Loders Croklaan added 96% of the palm oil and 65% of the palm kernel oil that it sources is traceable to the mill level.

Archer Daniels Midland, based in Chicago and an R.S.P.O. member, issued a commitment to no-deforestation this year. The commitment includes no deforestation of high carbon stock or high conservation value areas, no development of peatlands, and no exploitation of people and local communities.

Bunge and Cargill also are R.S.P.O. members.

Bunge has a global palm oil sourcing policy that involves the protection of high conservation value areas, the protection of peat areas, and the prohibition of forced and child labor.

Cargill provided an update on supply chain traceability for the first half of 2015. Cargill has completed 9 of 11 planned supplier field assessments in its palm oil supply chain. The Forest Trust conducted the field assessments. The goal is to achieve 100% traceability to the mill by December of this year and to provide palm oil that is 100% traceable to sustainably managed plantations by 2020.

“The world has changed dramatically since Cargill began operation in 1865,” the company said in its 2015 corporate sustainability report. “Today, global agriculture and food businesses are being challenged to do two things at once: produce more food for a world that is becoming more urbanized and affluent while also using land and water responsibly, and satisfy consumers who increasingly care about the health and sustainability dimensions of the food they eat.

“Companies like Cargill are responding and bringing their best strengths to bear on issues like deforestation, food security and nutrition. For the past 10 years we have focused our civic engagement, our philanthropy, our partnerships and our expertise on these large global issues. We are making progress and are committed to playing a leading role in the changing landscape.”

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