The Chocolate Life

Discover Chocolate and Live La Vida Cocoa!

FAIR TRADE AND ORGANIC CERTIFICATION FROM THE EYES OF A PRODUCER

In 1995 I closed a profitable business in the USA, sold a very nice house, packed some shipping containers and moved to Brazil to become a cacau farmer. The radical change of lifestyle was taken because my Brazilian born wife, youngest of a family of nine, was the last hope for saving a 2500 acre cacau farm that had been abandoned by other family members.

Our new enterprise consisted of +-60 workers, 26 living with families in free farm residences. There was no residence for the owners since it was customary to live in a distant city and rely on the farm administrator to deal with the disorganized mess. We moved into an 800 sq foot house intended for the guy that milked cows. Since all the cows had "vanished" due to disease, theft and slaughter, there was no cowboy.

There were no written documents that listed workers, water was taken from a river that passes through the farm, telephone service was unheard of and hand tools consisted of one broken point screwdriver. The administrator, 60 years old, born in the farm property, had been feuding with family members for more than 20 years.. A real mess.

Today, the farm operates with 26 workers, has water and indoor sanitation in each house, has been completely mapped using GPS and Autocad, maintains a repair shop that is not equaled for 500km and electrical power has been installed in every residence, shop and work area. With no exception, each farm residence has parabolic antennas, color television, refrigerators and in some cases washing machines. In 2000, I designed and constructed a farm owners residence, installed radio link telephone and satellite internet. We have begun to feel like it is a true home. We are in residence at the farm and have been since 1995.

The workers are by Brazilian law, registered and receive all the benefits legislated by the Federal Government. Includer are:
* 44 hour work week
* 1-1/2 premium for extra hours
* double time for hours worked Sunday
* 30 days per year vacation with 33% bonus for the month
* 1 additional month salary called 13th month salary each year
* each child under 14 years receives a monthly salary equal to 5% of the worker
* each worker has government retirement plan which is paid monthly by the farm valued at
10% of gross salary
* each year the worker receives an additional month salary deposited for severance, if and
when it occurs
* a primary grade school is maintained in the farm at farm owner expense
* government managed medical care is paid for from a 5% salary deduction

The current salary is R$480.00 which equates to USD 220.00. Considering all the legislated benefits and the fact that the worker has 30 days vacation, 10 legal holidays and 1-1/2 days per week off....the hourly salary comes to something in the order of USD 1.80 or USD$ 15.00 per day worked. Failure to meet these obligations result in legal actions which can result in the farm being auctioned to meet the "AGRICULTURAL REFORM LAWS".

I was fortunate enough to have timed my arrival in the farm with that of "Witches Broom". The devastation caused by the disease is almost incalculable. In 1980 our farm produced 270 tons of beans. The year of 2000 closed with 30 tons. The application of technology, planning and very hard work, we closed 2008 with 60 tons and prospects of a similar harvest in 2009. Our farms are considered to be a model for management, social awareness and ecology...BUT...not a single cent of profit has been recognized and personal out of pocket prop up loans have mounted to something on the order of USD$300K.

Is there someone with more need for FAIR TRADE, I would like to meet them. I;ve had untold meetings and proposals from organizations SELLING certificates for FAIR TRADE, ORGANIC, RAIN FOREST ALLIANCE. Each has been turned away because it provides absolutely nothing towards the production of cacau, welfare of workers or ecological stability of our 500 acre Atlantic rain forest.

In an attempt to more fully understand the world of cacau, I made a trip to Ghana, Nigeria and Ivory Coast. The squalor and poverty I witnessed certainly did not substantiate the claims made by third party certification agents. Most of the small farms were hand to mouth existence and the only prosperity was achieved by 3rd party buyers that collected rural production. This production ultimately settled in the warehouses of multinational giants and finally on to the shelves of shops across Europe and the USA.

The web is filled with discussions regarding FAIR TRADE but most of the authors have not an inkling of the issues that prohibit FAIR TRADE. As long as commodity buyers in London and New York and Chicago control cacau prices and movement....FAIR TRADE ARE ONLY TWO WORDS!!!

Views: 408

Reply to This

Replies to This Discussion

Hi Jim,

You have blown me away once again with you scope of vision. To elaborate as requested: the list of players I mentioned above is what I would expect for us (Tava) buying cocoa in Vanuatu and selling beans on to the whole food industry here in this country. The chain could be longer, but is unlikely to be much shorter. Sam and I try to make direct sales to the customer where possible to eliminate the last two links in the chain (we act as the manufacturer in that scenario).

As a manufacturer we receive beans in 60kg hessian sack. The beans are pretty clean, but we still have to process them to remove dust, broken beans, any small beans that crept through the grading in Vanuatu and any extraneous matter like placenta material that may have made it into the finished product. From what you say and the photos that you posted I can see that you are aiming to reduce these requirements to zero, or as close as possible, which is great! This is value adding, something that most farmers (even in the first world) don't understand, or even care about.

As a manufacturer, Tava produces and sells cocoa in all forms: raw beans, roasted beans, raw nibs, roasted nibs, bulk cocoa liquor (just ground cocoa), and finished chocolate.

A wholesaler adds no value to the product, but they serve as an easy supplier for retailers and resteraunts who only want to deal with one or two suppliers. We have found it very hard to get retailers to deal with us direct. So the wholesaler is difficult to avoid rather than a necessary player.

I think that you are absolutely doing the right thing in having your own export license. Not being at the mercy of buyers is one of the key factors if getting a better price for cocoa - as you are well aware and have mentioned. Given that you can manage transport and export yourself you can offer manufacturers a lot of security and stability in their bean supply. And confidence in quality and ethical standards.

You are spot on about providing an example through what you do for small growers. One of the (very) long term projects that we are looking at is helping grower communities in the South Pacific by building business centres with them. A business centre would provide education and information about cocoa processing and production (to help improve quality and quantity), education about the industry that they supply (so that they understand where their cocoa goes and what happens to it), communications via Internet, phone, and fax (to give them access to pricing information, customers etc) and more. I think that what you are doing can serve a similar purpose for growers in your area too.

I don't know if I have answered your questions above, just let me know if I haven't.

Langdon
Dear Mr. Lucas,
we are about to start a small chocolate manufacturing business (bean to bar) in Croatia/Europe. We have been working towards this end for the last six months, and have managed to make chocolate which people like, but only in small quantities. Our final goal is the production of cca. 40 kg per day, i.e. around 1 T per month.
We would be happy to support you in your efforts to run your farm in the way you have described. Obviously, the best way to do this would be buying cocoa directly from you.
So if you are interested in selling cocoa to us, please send us some information about your cocoa and, of course, your prices.
We are interested in best quality cocoa only, preferably Criollo or Trinitario with a significant amount of Criollo blood (with very low acidity and astringency). If you can offer such cocoa, we would like to try it out first, so we would need you to send us some samples.
In any case, we want to congratulate you on everything you have done for your employees so far and wish you and your employees success and prosperity in the years to come.
Greetings from Croatia and best wishes,
Walter Zufic and Lilli S. Perisic
I'm glad this thread was started. Thanks for sharing, Jim.

I've been interested in working through the ethics of chocolate. The trouble is that the chain is not terribly transparent. Chocolate exchanges many hands before it finally reaches the consumer. I think as Sarah points out, consumers are willing to make the leap for ethically produced food.

Langdon, you have an interesting point; however, I'd also like to see fair/ethical trade to all within the chain as well. It would be interesting to know what costs are required along each step of the way. Certainly, it seems that the farmer is the one who is getting the short end of the stick in your certification process example - the costs (especially for a higher flavor product) seem higher at this step. Many thanks to Jim for providing information regarding the farming step.
Hi James, I tend to ignore the other players in the chain as many of us are first world, or wealthy/educated third world companies or individuals (therefore we should be able to look after our own interests). However your point is taken. The supply chain should be fair for all involved.

I really love the thought of brining the story of the farmers out and making it a part of the product. Jim's story is awesome. I may never get to visit his farm, but I feel like I have had a small holiday just hearing about it and seeing the photos. As consumers we have so little knowledge of where our food comes from these days. I would love to see the farmers being given the credit that they deserve.

Langdon
Langdon:

A trip to Jim's farm is one the locations I am looking into traveling to in 2010. I know that there is a lot of interest in Bolivia ... hmmmm I wonder if I can do the two of them back-to-back?

:: Clay
Interesting thought Clay. If we manage to make it to Bolivia, then perhaps we could do both. No guarantee though as money is always the issue.

Langdon
Langdon:

I have a question about the mechanics of the top-down process ... how do you envision getting retailers to agree to pay premiums and then how do you see the mechanism for getting those premiums to the farmer? While the bottom up approach returns less to the farmer, in theory it should be easier to get the money to the farmer (though in practice, as we know, it's not).

I could imagine it working in the case of a private-label chocolate for a large chain like Whole Foods, but I can't imagine how it might work for a manufacturer selling to hundreds of outlets.

I have always been a fan of Shawn Askinosie's approach but I don't see how it is scalable to hundreds of thousands or millions of farm families.

I went with Shawn on his first bean-buying trip to Soconusco and to Venezuela and I can tell you from personal knowledge (and I think you'd agree based on the time you spent with us in Ecuador) that he is totally sincere and committed to the health and welfare of the farm communities he buys his beans from. In Shawn's case, Askinosie Chocolate practices open book accounting both in the factory and with the farmers. Shawn visits the communities where he buys his beans once a year and shows them how much money he made from the sale of chocolate made with their beans and then write a check for 10% of the profit. Farmers get paid for the beans when they are shipped and they receive a bonus. When I was in Soconusco with him, I also heard him make two additional offers: 1) He would pay the equivalent of a US$600 (about 6000 Mexican pesos at the time) bonus on signing the contract that would be put toward improvements in the co-op's fermentation facility and that could be used for all of the co-op's beans not just the ones they were selling to him; and 2) He offered to buy an option on a crop that would not be available for two years - he wanted the right of first refusal to buy none, part, or all of the crop and would pay for it now, no strings attached.

But sometimes the culture of the cacao farmer in a country can get in the way of making things better for the farmer. Immediately after leaving Soconusco Shawn and I traveled to the Barlovento region of Miranda State around the town of Rio Chico. Not far from there we met with a farmer to negotiate for beans. The terms the farmers wanted were FOB the farm, in other words cash before we load your truck. We tried for hours over the course of two days to see if they would accept other terms - terms that here in the States we would jump at - if they would allow us to get the beans to port in order to assess their quality as Shawn did not have an agent in the country. In the end, he offered 50% upon signing the contract (six months before the beans were to be picked up), 25% on pickup, and the rest when the beans checked out okay and before they left the country - plus a bonus on signing the contract to build a drying pad and shed.

The answer was always no, 100% cash on pickup. Even getting the farmer's pastor involved did not change the farmer's mind. We left marveling at the difference in sophistication of the groups we were negotiating with. One understood the worth of an option contract, the other couldn't conceive of any form of financing - even when the financing worked to their advantage.

This brings me to one of my major disappointments about certifications like Fair Trade, Fair for Life, Rain Forest Alliance, et al - they are culturally insensitive. They impose the same set of rules everywhere in the world, the same commodity-based pricing structure everywhere in the world. In my mind, this is one of the reasons these programs will never be as successful as they need to be in order to offer meaningful benefits to a meaningful number of farmers.
Hi Clay, I will post a couple of replies as there are a few issues to address in your post. You asked:

"how do you envision getting retailers to agree to pay premiums and then how do you see the mechanism for getting those premiums to the farmer?"

The answer that our friend here in Sydney has developed is that his organisation handles both ends of this problem. He buys the beans at world price (so the status quo is maintained through the supply chain). He then arranges shipping, distribution etc. When he sells beans, his customer (as part of the sale contract) agrees to hold back a percentage for the grower.

The top-down margin money then goes into a trust fund from which his organisation returns some to the growers as cash and more in developing services like schools, local infrastructure, business and agriculture education.

This is something of a simplification, but that is the basis of how his system works. The "top-down" premium doesn't always come right from the top (retail), but every step in the chain that the premium skips can return more dollars to the farmer.

It is a novel approach, and one that requires more effort to implement than a bottom up certification. However it has the added advantage of allowing for transparency along the whole supply chain.

What this system does not do is make any provision for inherent agricultural, or ethical standards (as organic and Fair Trade do). That is another longer term goal of the project to pick up those aspects as well to try to address the problems that Jim has pointed out.

You could say that the aim of this project is to combine the (financial) power of Trade with the ethical goals of NGOs. It has the potential to be very effective system in my opinion.

Langdon
Hi All,

The idea that I proposed (that we generate a certification system of our own) would need thought but might work in a similar way that Tripadvisor does with hotels. Visitors can add comments to a listing, for example. Some points:
- transparency. If I buy your produce I want to be able to ask questions about it, possibly in detail. I may wish to have links to your company on my web-site, I may wish to share your answers, I may wish to say that I think what you are doing is not ethical or that your chocolate is nasty.
- peer pressure/approval. If I were to buy beans then I would be asking first if the people who I know take the issues of quality and ethics seriously, to see if they could fill my requirements. If we had a list of suppliers each with (hateful phrase!) a mission statement then we could try and fit our needs to those of the supplier. In a different context, if you were investing in "green" shares you might not want to invest in an arms company but be less bothered about cigarettes - there are always shades and differing definitions.
- if I buy beans from Jim and then find out that he actually has no farm at all and just ships cheap beans from the next-door farm then I post this and he can't edit. He can reply saying "look we had a disease attack I have no production for 2 years and I'm changing the farm next door round to working in a decent way" and we apply our judgement.
- there is no reason to apply this system solely to suppliers. Think of it as the web/chocolate equivalent of a farmers' market. Each company stands there proud of their produce, enthusiastic and ready and willing to ask questions. Again, I can try something and write in to say it might be organic, it might be ethical but it tastes horrible so they need to change something fast.
- this might/should encourage to start publishing their supply chain on their web-site. It will add the "story" and lead to a greater awareness of what goes on and what the issues are.
- people buy organic and fair trade because it is one of the very few ways that you feel that you can send a very small signal out that some people do care and are willing to pay a little extra.
- it would all be based on trust which you assume is a given until someone takes the mickey. Some will get through the net and some will get caught. If we make it all too rigid then we end up trying to recreate the "organic" and "fair trade" labels that we suspect are only the first step in raising consumer awareness of the complexities involved in supporting sustainable agriculture. The internet is a powerful tool. If the forum is recognised as having certain good qualities and the postings support a product or suplier then it will be used to promote the product or supplier. Then peer pressure/approval becomes more desirable and then, I guess, people will start trying to hoodwink us!
Is this feasible? Is this forum the right place? I'd like to know more about all producers anyway!

Duffy
Duffy:

This is an interesting idea, but you need to take it a step further, which is how does the benefit the farmer in Ghana - or wherever? It's easier to see how a system like the one you outline above works where everyone has electricity, Internet access, and computers, but that covers only a very small fraction of all the cacao farmers in the world.

In the end, money and/or goods have to change hands and there has to be a mechanism for reliably getting the benefits to the farmers. As I mention in the comment on my experience in Venezuela, there are many cultural challenges to overcome and they will vary from country to country and region to region. You also have to keep in mind that farmers have heard it all before and are tired of promises that never get kept. There's a lot of well-deserved mistrust out there.

About two years ago I started noodling around with what I thought of as a "Direct Trade" certification using a group I created - the New World Chocolate Society - as the vehicle. I did get a bit of interest from several quarters but I was not able to figure out how to finance the effort to get it started. [One thing people may not know about Fair Trade (as in FLO - the Fair Trade Labeling organization) is that it is not (or has not been at least was not until recently) self-sustaining. In other words it did not cover its overhead costs through licensing fees: They relied (and may still rely) on corporate and other forms of support.]

One element of Direct Trade that people seemed to really like was that "voluntourism" was a key component of being certified. Certified Direct Trade growers/co-ops had to provide a way for outsiders to come and work on their farms in order to be able to witness first-hand what was going on. My feeling is that having a couple of hundred eyeballs a year spread out over many months is a more "effective policing effort" than relying on a single visit by a single inspector once every year or two. Besides, volunteers would pay the farmers for the opportunity to voluntour, making it, in effect, a revenue stream for the farmer/co-op.

I still think that there is room for a "fair" alternative to "Fair Trade" and there is no reason why - given the membership of this group - that we can't figure something out, including how to finance the startup costs.
Well, I know that you are all trying to find a way to globalize the true "Fair Trade" efforts and I applaud your efforts, however, that is something that will never come to pass due to the large players involved. Keep trying though and hopefully we can at least improve it. I buy cocoa beans from 19 countries now and 37 farmers or coops. Most of these are not fair trade sources so unfortunately I am unable to sell "fair trade" cocoa beans. Many people are only interested in that stamp regardless of what it means and like you have all said, in most cases it means nothing.

What I do is make sure that each source I buy from gets better than fair trade prices for their beans. I may not be certified but I every source I buy from, farmer or coop, gets better than fair trade price. It may be a small start but it is something I can do and many of the chocolatiers I work with are all trying to do the same thing. Hopefully, our efforts will not go unnoticed even though we are not "fair trade certified"

I am watching hopefully. Maybe some uniform system can be devised that is fair for all involved. One quote I have from a great friend of mine who buys only fair trade beans and pays a premium for them about fair trade is this "Everyone wants fair trade, stores, farmers and consumers. Where's the "fair trade" for the chocolate maker?" :-)
Here's to Fair Trade for chocolate makers, too.

RSS

Member Marketplace

Promote TheChocolateLife

Bookmark and Share

Follow Clay on:
Twitter :: @DiscoverChoc
F'Book :: TheChocolateLife
F'Book Group :: LaVidaCocoa
Paper.li :: @DiscoverChoc

Badge

Loading…

© 2014   Created by Clay Gordon.

Badges  |  Report an Issue  |  Terms of Service