In 2016 the Pricing Unit of Fairtrade International will carry out a review of the Fairtrade prices for cocoa to be able to determine the Fairtrade Minimum Price (FMP) and/or Fairtrade Premium (FP). As part of this price review for cocoa, Fairtrade International wished to look into the sustainable costs of production of Fairtrade cocoa (COSP).
Fairtrade International asked NewForesight to help prepare the COSP-study and provide a detailed insight into the cost items related to Fairtrade production of cocoa. Part of the assignment is to provide advice on the data collection approach for each of these cost items.
To enhance understanding of the different cost items, and contribute to insight in the relevance of those cost items under different circumstances NewForesight is developing a dynamic cost model. The model can be described as a comprehensive and flexible cost framework that enables data collection under different scenarios. An extensive list of fixed and variable cost items is included in the model, as well as different conditions under which cocoa production takes place.
Using this model Fairtrade International can collect data on costs of sustainable cocoa production in different Fairtrade regions. This input will help determine the Fairtrade Minimum Price (FMP) and/or Fairtrade Premium (FP).