What Does Kraft's Takeover of Cadbury Mean for Fairtrade Cocoa?

take-over bid.photo

Image from the Guardian

Kraft Foods takeover bid of Cadbury Chocolate has been followed with great fascination by the business world and great trepidation by the Fairtrade community. The manoeuvring has been going on for months, with Hershey Chocolate in the bidding at one point as well.

Just last month, Cadbury's CEO urged shareholders to hold tight and go for sustainability because he believed that the company's strong ethical code was of significant value to both investors and consumers. That time is past, now that Kraft has upped their offer. The big question is whether Kraft will honour Cadbury's commitment to use only Fairtrade cocoa beans for its Dairy Milk brand.

Cadburys Dairy-Milk.photo

Image from the Guardian

Cadbury's sells 300 million Diary Milk chocolate bars a year in the UK and Ireland so this is a very important issue to developing countries and the Fairtrade community.

According to the Guardian, "the Fairtrade Foundation has begun urgent talks with Cadbury's executives to see if the company's agreement to buy all its cocoa beans for Dairy Milk direct from the foundation's farmer-led co-operatives will continue after the takeover."

The official position of the Fairtrade Foundation is the following:

"The Fairtrade Foundation is very proud of our relationship with Cadbury, and what we have achieved together, including the conversion of Cadbury Dairy Milk to Fairtrade in the UK and Ireland in 2009, now being extended to three other international markets - Canada, Australia and New Zealand. This has had a tremendously positive public response, and is delivering major benefits to cocoa farmers in Ghana, quadrupling the amount they are able to sell on Fairtrade terms in 2010, compared to 2008. The Fairtrade Foundation and Cadbury have a shared vision for the future, and there are contractual commitments in place, which will form part of any intellectual property transfer between Cadbury and Kraft in any takeover. We believe that the progress we have made together in strengthening cocoa farmers to deliver long term sustainability of the cocoa supply chain, along with a fast growing level of consumer demand for Fairtrade products, not just in the UK but globally, present a unique and compelling case for continuing to pursue the Cadbury commitment to their Cocoa Partnership and to Fairtrade, and taking it even further in coming months and years."

All of a sudden no one is happy with the outcome. Politicians are getting into the act now. Where were they when all of this was happening in the past months, one might wonder. Apparently, Jack McConnell, the former first minister of Scotland, tabled a motion in the Scottish parliament urging Kraft to honour the fairtrade part of the deal . He said "There have been concerns expressed for many years that Kraft has never shown any enthusiasm for fair trade and therefore this must be under threat as a result of the takeover."

In London, at the House of Parliament, a Labour MP raised a similar motion in the Commons.

Warren Buffett isn't too keen now either. Discussing the CEO of Kraft, he said "She thinks this is a good deal, I think it's a bad deal." Mind you, he is probably not worrying about the fairtrade aspect. Cadbury's 6,000 UK workers are also worried.

Kraft has not been seen as embracing the fairtrade movement; it criticized campaigners for only dealing with "an extremely small number" of companies, claiming it was too small scale for its needs. Kraft has signed up with the Rainforest Alliance to use cocoa beans from Rainforest Alliance Certified farms for its Côte d'Or and Marabou lines. This would amount to almost 30,000 tons of beans by end of 2012.

But Oxfam has accused Kraft of undermining attempts to treat small farmers fairly, defending the fairtrade scheme as "the only system that guarantees farmers a price that allows them a good return [whilst] at the same time working towards a sustainable future."

black and green.photo

Image from www.slashfood.com

Green & Black's chocolates were bought out by Cadbury in 2005. Its former owner, and president, Craig Sams, had this to say on the deal.

"If Kraft screwed up with Green & Black's it would damage their reputation and cast a shadow over their competence. But there is no reason to expect them to goof. They have converted US household names like Oreos and Ritz crackers to organic and even do an organic macaroni-and-cheese dinner....I have no idea if Kraft will ask me to stay on as president, but if they don't that could be your canary in the coal mine."

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