The demand for organic cocoa products is growing at a very strong pace, as consumers are increasingly concerned about the safety of their food supply along with other environmental issues.
Global sales for organic food products are currently $63 billion compared with $6 billion for fair trade, in a $14 trillion global food and beverage market.
About 25,000 organic businesses in more than 120 different countries around the world sell organic foods.
In the United States, organic products are available in more than 20,000 natural stores nationwide and in 73% of all conventional grocery stores.
Organic certified cocoa beans represent less than 1% of the worldwide cocoa crop of 3.8 million metric tons. About 75% are produced in Latin America, with the Dominican Republic topping the list.
Smallholder farmers receive a minimum price for their product. The minimum price must never fall below the market price.
The minimum price is set to cover the cost of sustainable production. If the market price for that product is higher than the minimum price, then producers should receive the market price.
A premium on top of the minimum price to invest in business or community projects including schools, transport, health care, sanitation, better business equipment and practices, is paid.
Farmers are offered between $150 to $500 in premiums per metric ton on top of local or international market prices for fair trade cocoa and coffee.
Cooperatives are required to pay an initial certification fee in addition to an annual fee. Most farmers cannot afford the costs associated with certification which is $5,000 on average.
It is common for buyers in developed nations to pay for the cost of the certification. However, companies paying for the certification “on behalf” of the farmers, “own” the certificate. Under such arrangements, farmers may not sell their products to other companies.
Producers must meet social, economic and environmental standards set by the certifying organization.
Traders, brand-owners and retailers pay an annual fee and or license fee of 2% of the net wholesale prices in order to use the fair trade organization’s trademark on their products.
Alternative Trading Organizations (ATOs), are purely dedicated to trading fairly and have been doing so for many years before fair trade certification was established.
Produce accounts for 43% of U.S. organic food sales, followed by dairy (15%), packaged/prepared foods (11%), beverages (11%), bread/grains (9%), snack foods (5%), meat/fish/poultry (3%), and condiments (3%).
Most organic sales (93%) take place through conventional and natural food supermarkets and chains.
- More than 72% of generation X and Y are likely to buy organic foods as well as 59% of baby boomers.
- Organic food buyers tend to be better educated (61% have at least some college education, compared with 54% for non-organic shoppers).
- Six in 10 U.S. foods shoppers (60%) believe that organic foods are better for their health.
- Conventionally grown products generally cost less, but is organic food safer or more nutritious?
- Fair trade certified products are not necessarily also certified organic.
- Unlike fair trade certified cocoa, the premium for organic cocoa is not fixed.
- Higher prices of organic food are due, in part, to more expensive farming practices.
Can the premiums justify the fair trade and organic certifications?
Ask the farmers themselves, the “real experts”.
Certification is important because it ensures farmers receive a higher market price even if prices for their coffee beans drop.
For example, current prices for Fair Trade Certified coffees include:
- Non-Organic Coffee: $1.40 per pound
- Certified Organic Coffee: $1.70 per pound
- Community Premium: buyers also pay a community premium of 20 cents per pound for each coffee used to protect the environment, benefit the community, and improve business.
Before export or import takes place, here is the to do list:
- Get your company’s FDA REGISTRATION here for $99.00 annual fee.
- Arrange to have your labels reviewed or updated before your next shipment. For your information, Canadian, Mexican, European, Asian food labels are not FDA compliant.
- File a Prior Notice.
A DUNS Number is required and is issued only by Dun & Bradstreet Corporation and related companies around the world.