Closer Connection: Chocolate buyer to Farmer??

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Permalink Reply by Jeff Stern on November 23, 2009 at 3:08pm

This is an interesting model that I find challenging to implement, unless one is buying large quantities of beans (several tons or even containers at a time). Some small producers are organized into cooperatives, allowing them to consolidate their production to meet volume. However, at least here in Ecuador, most small producer still sell to "patios" or brokers who consolidate harvests from surrounding areas, and in turn sell beans on either directly to large MNCs (who often have theiro own buyers/brokers on the ground in-country), or to large commodity firms who then sell on to the major players.

It's tough to buy directly from a cooperative or association of producers for shipment overseas unless they already have the infrastructure and logistics system in place to get the beans all the way to your door. I say tough because you need infrastructure to consolidate all those beans, pack them in a container, and ship them, along with all the logistics management. I say tough but not impossible, though (and again, I speak for Ecuador), most co-ops or associations don't have the capacity to do this. Kallari has been the one exception, but only because of generous financial and technical support. In some countries, you may even need an export company set up to export the beans, since commodities are often regulated by the state.

Another model, which we use, is to buy directly from the farmer on the ground. We also have special circumstances that make this possible. First of all, we are here in a cocoa growing country. We work with one single farmer who has large production, and is able to manage everything from harvest to processing of the cacao into chocolate in-country. He charges a premium for high quality beans, as well as a premium for the chocolate he produces locally. In turn, these premiums allow him to provide such things as trained staff on hand for medical care, decent worker conditions, etc. One advantage of buying from a large grower is that we know all the beans are properly fermented post-harvest and treated properly throughout the entire production process. When buying from cooperatives or other associations, there can be differences in post-harvest processing from farm to farm, which can hurt quality. It's expensive and impractical to have someone on the ground year round, or even only at harvest time, to make sure quality controls are in place for beans sourced from a number of farms.

I will watch this story closely and look forward to seeing how they end up implementing the model.

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Permalink Reply by Frank Schmidt on November 23, 2009 at 3:43pm

Yes, Jeff,

If , by "how they implement the model" you mean the Askinosie model, that has already been implemented and Shawn does travel to the country of origin, seeks out the grower and buys beans from him. I have never heard of a coop being involved in his business transaction.

From the photos on Askinosie web site, he then delivers a check to the grower representing a percent of profits from the sale of chocolate bars made from the grower's beans.

Is it profitable to the manufacturer ? I have never looked at Askinosie's books to see if in the long run the company is making money. It does seem like a lot of work and travel for very small scale production.

You're right, post harvest pre-shipment treatment of the farm product is crucial to the relationship.
Quality control, especially fermenting must be difficult to ensure. I think this is what the students are now evaluating in the African project.

I also will be watching this story as I have an interest in Panama beans for my own plan.

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