Following the adverse reaction to its decision to cease Fairtrade certification for the KitKat brand in the UK and Ireland, Nestlé has sought to defend the controversial move. Darrell High, the head of Nestlé’s Cocoa Plan sourcing programme, and Cheryl Allen, head of sustainability and nutrition, health and wellness for the Swiss giant’s confectionery business in the UK, spoke with Ben Cooper about the decision and the company’s approach to building a sustainable cocoa supply chain.
In the seven weeks since Nestlé announced it would be ending Fairtrade certification of its KitKat brand, more than 280,000 people have added their names to an online petition calling on the company to reverse its decision.
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Faced with adverse media coverage and public opprobrium, the world’s largest food company has been keen to set out the rationale behind the move and how it fits into its broader sustainability plan for cocoa.
The move to end Fairtrade certification for KitKat stems from Nestlé’s intention to align the Nestlé Cocoa Plan (NCP) sustainability platform with one certification body, Rainforest Alliance.
Cheryl Allen, head of sustainability and nutrition, health and wellness for Nestlé confectionery in the UK, believes the adverse publicity and consumer reaction has stemmed primarily from the change being characterised more in terms of what farmers are losing, than any benefits the transfer to Rainforest Alliance certification may bring.
Allen contends the way the Fairtrade Foundation has presented the decision has been a significant factor in this becoming the prevailing narrative. “It’s been quite important to us to try to put that right, to create a balanced understanding for people of what the changes actually mean,” Allen tells just-food. “Fairtrade have talked extensively about farmers losing the Fairtrade Premium, which is of course true if we’re no longer procuring cocoa under Fairtrade terms. However, what they haven’t reflected in any of their communications is the fact that, because we’re transferring from one certification standard to another, the farmers and cooperatives will take and will benefit from the Rainforest Alliance Premium.”
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By GlobalDataAllen’s assertion about the Fairtrade Foundation is inaccurate, however. While the Fairtrade Foundation has actively communicated what it believes will be the negative consequences of this decision for cocoa and sugar farmers, in an FAQ section on its website, it discusses the comparative benefits of the two certifications, with reference to the changes Rainforest Alliance announced in July and to the Rainforest Alliance Premium.
While the Fairtrade Foundation has asserted farmers will lose out financially because of this decision, Allen states categorically Nestlé is not making this decision “as a means to take money out of farmers’ pockets”. That is “absolutely not the objective of what we’re trying to do here,” she says, “which is why we have put in place the mitigation measures, why we are transferring from one certification standard to another, still with premiums being paid to farmers for good farming practices, for good quality cocoa, and with the additional investments we’re making as well, to ensure that what the farmers potentially would have received in Fairtrade Premium is more than compensated for.”
It is perhaps not surprising there has been some confusion over what the farmers will gain from Rainforest Alliance certification in comparison with what they receive from Fairtrade. The two systems have important differences so are not directly comparable. Rainforest Alliance certification is linked to the attainment of higher agricultural standards by farmers, while Fairtrade includes a guaranteed minimum price. Fairtrade also has a defining emphasis on farmer empowerment, an important component of which is paying the Fairtrade Premium without conditions, allowing farmers to decide on their own priorities.
In transferring farmers to Rainforest Alliance certification, Nestlé has stated it is “expecting” to spend GBP3.9m (US$5.1m) over the next two years, versus the GBP2.7m it would have spent on the Fairtrade Premium. The GBP3.9m will cover the Rainforest Alliance Premium, transitional support and community projects including the Living Income Pilot. However, as Rainforest Alliance does not set a minimum price, the company concedes it cannot say categorically farmers will be paid the same for their cocoa next year as under Fairtrade certification. Also, the GBP2.7m in Fairtrade Premiums were entirely unconditional commitments.
Rainforest Alliance incorporates the UTZ certification organisation following the merger of the two bodies in 2017. Nestlé had worked with UTZ since it launched its standard, and its recent decision underlines the Swiss company’s closer affinity with the UTZ/Rainforest approach.
Darrell High, the head of Nestlé’s Cocoa Plan sourcing programme, suggests the difference between the three certification bodies, which have now become two, are not that extensive but each has a different “accent”, and it was the emphasis on improving agricultural standards which drew the company to UTZ. “UTZ had this accent towards good agricultural practices, improving yield and so on. Rainforest was slightly tougher on the environment aspects but you’re talking nuances more than anything and Fairtrade obviously has the farmer democracy aspect,” High says. “We’ve been working primarily with UTZ for the previous ten years. What we’ve found is that the Rainforest Alliance is well aligned with what we want to achieve in the Cocoa Plan.”
While recognising the value independent certification can bring in terms of “third-party eyes” and consumer confidence, High also stresses how it can help farmer groups to “professionalise”. While his unvarnished description of the organisational competence of some cooperatives is jarringly candid, it serves to illustrate an important but less discussed benefit of certification programmes.
“A lot of these co-ops when you start working with them, they don’t even have a decent list of their farmer members,” High says. “They’re good at buying and selling cocoa but they don’t do much more than that. They’re not adding any more value. As you start working with them, in the framework of a sustainability programme, you start building these things up. And, with certification, it does ensure that they have proper records and so on.”
Allen stresses engagement and consultation with farmers has been an important priority for Nestlé following its decision on Fairtrade. “The decision itself was not something we would have entered into consultation with individual cooperatives and farmers on,” Allen says. “But, having made the decision, what we have made significant efforts to do, is to engage on an individual basis with each of the cooperatives affected by our decision and talk to them about the mitigation plan.”
High may view the strong farmer empowerment element in the Fairtrade system as only an “accent”, but his response when asked why Fairtrade farmers have requested to remain with the organisation underlines how crucial a distinction it is, and the value impoverished farmers place on empowerment.
“They liked the Fairtrade system in that it gives them money which they are free to spend but, given the time to explain how we saw our future with them, how we wanted to help them through the transition and continue to be a long-term partner with them, then they are happy to continue with us on that journey,” High says. “So, that takes a bit of explaining, a bit of working through. It’s best done face to face, and that has been a bit challenging in Covid times.”
In summarising Nestlé’s efforts to mitigate the impact on farmers, Allen also makes reference to the pandemic. The company has put in place a “wrap-around plan” accompanying the transfer of certification “to support the farmers through a challenging time both from the transition but also coupled with what we are seeing happen in the world this year with Covid”.
A key reason for the adverse public reaction has been Nestlé’s decision to go ahead with its plans during the global pandemic. Allen suggests the six-month notice period it had to give Fairtrade meant Nestlé “set in motion the termination of the contract with Fairtrade before the impact of Covid was fully understood”. According to Allen, the letter was sent to the Fairtrade Foundation at the end of March, by which time Covid-19 deaths in Italy had topped 9,000.
This reason Nestlé provides for not at least delaying its decision is unlikely to do much to restore faith in the company among the 280,000-plus signatories to the online petition. They may be equally unimpressed by Allen’s response when asked whether this experience had provided any lessons regarding how it engages with cocoa farmers.
Allen says it has emphasised the importance of the relationships Nestlé has built with farmer groups and in the communities, but says explicitly this episode vindicates what the company has been doing rather than offering any insights into how it might do things better.
“I think it emphasises how important that [building relationships] is, which is something that we have been doing and are committed to doing,” Allen concludes. “And that is part of the reason why the farmers want to continue selling their cocoa to Nestlé. It’s because we have spent the last decade on the ground talking to them, listening to them, and trying to make some good interventions to help those farmers. So, I think it underlines the approach that we are taking. I wouldn’t say that, from this, there is anything that we would do materially differently.”
