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Today we had a group of cacao growers from Santo Domingo, Ecuador.  The discussion was about how they get paid.  Typically growers take their cacao to centers where they sell their cacao.  They said that they get paid the same price for Nacional (fine aroma cacao), than they get paid for CCN-51, the clone that is taking over both Peru and Ecuador.  It also doesn't matter whether they ferment their beans or not, or if they put monilla(rotten cacao) along with good cacao.  What they are looking for is a partner in countries that process the cacao into chocolate and are willing to buy the good cacao for a higher price than CCN-51 or cacao that has not been selected.

As a group, we should find a solution for these farmers, we need to let them know that if they produce excellent cacao, they should get paid a higher price.  That way the heirloom varieties can be preserved.

 

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Ivan thanks for your response.  However you paint a very grim picture of the state of the farmers in Ecuador.  You are right to certain extent, but the majority of farmers that I have met are much more optimistic and informed.  They also see the big picture, if they change some of their practices, they can improve their lot.  Not all are living from hand to mouth.

What we have to realize here is that as producers of chocolate (I consider myself a very small producer) we are looking for the best cacao we can find.  We can’t all grow our own cacao.  Over 90% of cacao is grown in small lots 1 to 2 hectares, by individual farmers.  That is the reality.  They can grow exceptional cacao if given the chance, but it won’t happen unless they earn more for their troubles.  I have met with them, seen their farms, they want to change.

I am also in a very unique position; I have a place in Ecuador.  I do all my post harvest process in Ecuador in my property.  I buy the cacao en baba and ferment and dry on my site.  I also show the farmers how they can do the fermentation and drying.  At this time I don’t trust anyone to ferment and dry for me, but that can change.

Just like cacao is produced in very small lots, the small chocolate maker is making some of the best chocolate.  The small chocolate maker or craft chocolate maker doesn’t really know where to buy their cacao.  However they know a few things that they want.  They want good quality cacao, they want organic cacao, and they want to know that the farmer is being compensated fairly; they are smart enough to know if the supply chain breaks somewhere, the cacao will cease to come.

Some of the larger craft chocolate makers have invested in finding the right farmers and buying a large portion of their harvest.  Also they educate those farmers and give them parameters that they have to meet.   Others have found a good supplier that they trust. 

The world of chocolate is changing and fast.  The demand for good chocolate is very strong.  All that is needed is to tweak things a little.  

Unfortunately, if we want to be objective, we must make the case for most small farmers of cocoa, of course there are small groups trying to get ahead based on improving both its production and handling of it, but I'm talking about the vast majority of those that both their economic and intellectual, not allowed to use these mechanisms.

As I said earlier, the involvement of exporters and multinational chocolate manufacturers in improving the techniques of planting and harvesting cocoa, more permeated with the farmer training, logically supported by investment and recognition of higher prices, are the guidelines to be followed to achieve a better cocoa bean quality is obtained and the farmers to improve their living conditions.


I am currently working with cocoa growers' association interested in improving their production, making longer periods of fermentation and technicians, which might achieve the aroma and taste that requires a quality cocoa, but that can only be achieved by paying more their product, supporting them in their projects, since otherwise much work to achieve the same market prices only serve to discourage and allow everything to remain as before. I think here is the opportunity to start work as discussed in this forum, that people or companies that buy cocoa back to look at these people, allowing payment by a more just and financial support for their projects, the vindication of their aspirations and this is the beginning of a more equitable relationship between producer and manufacturer, because most people want to get their land to produce more at the expense of the quality of cocoa, as the price is the same.


Those wishing to have a permanent high quality grain in time, paying a price that will encourage the farmer can contact me for my coordination and agreements, to get from Ecuador, under my warranty, quality cocoa that will benefit both the producer and the manufacturer.

This is the first step we must take if we want any change in the future.

I am glad that there is good interest in this topic.  My mail motivation for posting this was to try to come up with some solutions, mainly to the problem of the farmers not having more choices for selling their product, but also to find solutions for all the small chocolate makers that are beginning to appear everywhere.

Good quality cacao is hard to come by.  Good post harvest practices are almost nonexistent in this part of Ecuador.  Educating the farmers is key.  The good thing is that they are willing to do whatever  it takes to improve their product, as long as they are being compensated for doing so.  The other good thing that is happening, at least in the US, is that customers realize that good quality has a premium price and they are willing to pay for it.  Also I have noticed that my customers in the US care deeply about the farmers and that they get fair, or even generous compensation.

As a businessman, I also know that for me to support my employees and myself, I have to make a profit.  So,  customers have to be happy with the product that we provide, employees have to be happy with their work,  suppliers have to be happy with their compensation.  And we have to be happy with our compensation.  A win, win, win, and win for all of us.

The beginning of the solutions has been expressed by your posts:

Sebastian said “A solution for those interested in long term supplies of high quality beans is to invest in the farms and take an active role in its operations. Any takers?”

Brian Horsley said “as Jim says, the only way to have growers interested in growing fine cacao, organic cacao, fermenting and drying, or doing anything other than low quality high volume, is to make it more profitable for them by paying a premium price for beans. And the only way to do that is to have a high end market to sell the higher priced beans to”

Clay Gordon states “Sebastian brings up a very interesting point, which is that maybe it makes more sense for small chocolate makers to get together into a PURCHASING co-op rather than forcing the growers to organize. By doing so, the purchasing co-op drives larger volume purchases, which can start driving the critical mass of volume necessary to move away from commodity market pricing to specialty market quality, and the higher prices quality can command.”

I would like to hear from some of the small or new chocolate makers and get their opinions.

This summer Dominican cacao farmers are earning US$145 for a 100 lbs. (quintal) of dried Sanchez beans.  They earn about US$158 for fermented, Hispanola.  I paid $190 for a quintal of dried Hispanola beans from a cooperative to make into paste.  The tree type seems to be of little importance because the price is the same.  What is a fair price for the farmer for premium beans?  People in the campo tell me a tarea (X 6 to get an acre) produces from 1up to 3 quintales.  Medium sized farms are usually between 300 and 1000 tareas and rarely their only source of income.  Small parcels can be any size and many times managed by others due to the owners lives outside the country.  So someone with 300 tareas (50 acres) of cacao probably has at least US$500,000 worth of land, and at least $45,000 in revenues a year and maybe $30,000 in cacao profits if it is Sanchez.  You raise you revenues $4,000 minus additional costs by fermenting.  Those of you who know more, please adjust or add to anything I have posted.

 

Few farmers have fermentation boxes and when they do ferment, it is with plastic tarps.  In recent years, cooperatives and the larger buyers are purchasing the beans wet from the farmer and they do the fermentation.  Not sure about how they price it.  

 

I have not seen any incentive to produce higher quality beans for the farmer.  Just produce more or maybe ferment.  I am told there is an $800 differential per ton in premium cacao prices and the commodity price in the DR.  If that is the case, that would the the $.40 difference per pound I paid at the cooperative.  I do not know if individual farmers are getting more $$ for select beans or the cooperative takes the difference.       

I'm not going to get into any financials, but think about what can be done from a marketing perspective to drive value.  If the codex regulations set mold levels at 5%, differentiate your product by setting yours at 3% (you are purporting to deliver on flavor, right?  if so, perhaps 1% mold by cut test should be the goal. or 0).  Flavor is a tough thing to specify - how will you address that?  Perhaps create a new class of beans - instead of ASE, you create a 'select' grading, using separate export bags with a unique logo to set it apart from the rest.   The demand is there, the supply is there.  It's just fragmented.  People will pay for quality.  Most people simply don't know what quality is.

This is a fantastic discussion. 

I am interested in working with both the farmer/cooperative as well as other smaller chocolate makers that would be interested in group purchasing.  I would like to focus on beans from South and Central America with delivery to Seattle.  Full (or at least half full) containers will result in transportation cost savings that could be used to offset the costs of distribution from Seattle as well as towards a quality premium for the beans/farmers.

 

I have had some discussions with a few smaller chocolate makers that may be interested in group purchasing, but have not gotten firm requirements (including quantities, specific qualities, etc.) or commitments (for quantities or money).  Feel free to contact me again if those I have spoken to before are still interested.

 

If there were enough interest, it would be ideal to have several origins and deliveries throughout the year.  This would help reduce storage costs for interested parties as well as diversify offerings (and reduce overall impacts associated with drops in availability from any one source).

 

Interested parties (i.e. farmer/cooperative and chocolate makers and not bean brokers, middle men, etc.) should feel free to reply and/or send me a message.  Please indicate where you are located, if you are a farmer and/or buyer, what quantities of beans you are interested in/have available, and timing for those quantities (such as twice a year beginning in October, etc.) as well as what your requirements are (quality of beans, etc.).  

 

Thanks

Some very interesting thoughts here.  I definitely agree that very few people know how to differentiate between a poor quality bean and a high quality bean.  There are so many factors that determine the final flavor.

However, there are a few people that have been travel the world looking for high quality beans.  I have found many farmers that are already doing fermentation and drying themselves and are willing to "custom" ferment and dry for me.  I have sources from several countries where I am doing this and I have tried to group purchase.  As mentioned before, several fine chocolate makers do not want their sources known so it has been rather difficult getting the bigger players to cooperate.  I definitely understand this.  A friend of mine who makes very fine chocolate, had to stop putting the origins on his chocolate because, the next year, his prices would be higher due to the increased demand on an origin that he had made a name for.  Once that happened, the producers, stopped the superior techniques they had implemented because their beans were going to be purchased one way or another and they no longer needed to spend the extra time and money making superior cacao.

 

it is a very difficult game and I am happy to see so many people trying to find solutions.  I just got back from Venezuela and Ecuador where i met with a few farmers about processing some beans to my specs.  However, I will be paying more than twice the typical amount they would get from the local coop so they are more than willing to spend the extra time and effort for me.

 

It would be interesting to hear how guarantees for quality, processing specs, etc. are made binding, so that whoever is buying knows they're getting what they've paid for. I bring this point up because it is difficult, if not nearly impossible, to control post-harvest activities of a farmer or even more so farmers-in the case of a coop or association-here in Ecuador. People will make promises, will tell you this or that can be done, but when it comes to the final product, how would/could a buyer or buyers coop insist and ensure they are getting the quality they want? I know that offering better pricing is an incentive, but it's not a guarantee. With the lack of transparency in the trade here, as well as no clear standards for grading beans across the board (both in Ecuador and internationally) how do you ensure your quality standards are being met?
Repeat business.  If you don't deliver what you agreed to, there won't be a 2nd order.  The trade model used today by large folks wouldn't work for this, as i'd previously noted it would require a partnership (education on quality, how to get there, etc) which means working closely with a fixed group, and having mutually beneficial terms.  Does it guarantee there will never be problems?  Absolutely not - i guarantee there will.  However, it certainly will be better than how 80% approach it today 8-)  The other 20% already have figured this out.

Enjoying the discussion, I can tell you that in Ecuador there are some farmers and several Asociaciones- the word used for co-op- that are getting a premium for their beans, which is around $450-500 per ton.  Of course this is based on quality, and post-harvest process.  It would be great if the fine chocolate makers get into a buyers  coop, but it is great too that at the other end of the chain, the farmers negotiate as a group and see themselves as business people.  

There are some inspiring cases, and I prefer to be an optimist and believe that they will resist problems and live for many years.  One is the Kallari Asociacion, in the Amazonian province of Napo-Ecuador. They are 850 families producing Nacional beans, with a centralized collection center where fermentation and drying is properly done.  Their beans are used by top chocolate makers in Europe.  And to add value to their crops,  they have decided to make their own chocolate.  

I know them for many years and these days I distribute Kallari chocolate in the UK, and I have witness huge changes and improvements in their community.  Of course there has been external support from foreign aid, the Ecuadorian government, and NGO´s, but they started from scratch.  It is a process.

Very interesting discussion. I run a cacao post-harvest processing and export center in southern Belize that is focused around ethical, direct trade and connecting specialty chocolate companies to smallholder farmers. We were founded basically to address the problem this forum has been addressing through the lens of social enterprise.

We seek to establish direct relationships between chocolate companies that deeply value the work of cacao farmers and the farmers themselves, allowing for an exceptionally high-quality product and a growing source of quality income for the farmers. We're just entering our second year of operation, but if you're interested in checking us out visit: mohocacao.tumblr.com. We are working with a solid line-up of specialty chocolate makers that have a sincere interest in connecting with cacao farmers. I'd be happy to chat directly with anyone who wants to learn more, and I'd also love to hear from anyone else doing a similar thing in other countries--


Cheers,

Emily 

emily[at]mohocacao.com

Emily, I am so glad that someone else is doing what I want to do.  I am in Ecuador.   Me and my wife have a chocolate company( we make chocolate) it is called Mindo Chocolate Makers.  Recently I have focused on trying to help the small farmers by finding small chocolate makers that are interested in using extremely good cacao.  I want to train the farmers to do the fermentation and drying.  We want to do an inspection after they are done with the dry cacao.  They are only using the Nacional variety.  The idea is to have the chocolate makers meet the farmers and start a relationship that would be beneficial to both of them.  We in turn would qualify the beans and set up the shipping to the US via ocean boats.  If enough chocolate makers can be found we can ship one container at the time.  Containers are usually 20 tons.  I have met with many farmers so far, they are all interested.  So as far as the farmers are concerned, there are enough of them.

If there are any chocolate makers out there that may be interested, please email me.  Joemeza117@gmail.com

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