As governments increasingly implement human rights and environmental due diligence and deforestation regulations, supply chain traceability becomes essential.
When considering the implementation of traceability systems in the cocoa industry, there are two major aspects to take into consideration:
The structure of the supply chain
Every country organizes its cocoa supply chain in its own unique way. Farmers in Côte d’Ivoire and other West African countries are often members of a cooperative. With up to 3,000 members, cooperatives serve as the primary link between producers and buyers.
Cooperatives in Latin America have fewer farmers but larger farms. For comparison, farms in Côte d’Ivoire are around 2 hectares in size, while farms in Brazil can be up to ten times bigger. Ghana is a typical example of a state-driven value chain. The government-led Cocoa Board (COCOBOD) oversees the entire supply chain and is Ghana’s sole exporter.
How smallholders deliver their beans
West African countries usually go for a dry beans cocoa value chain setup, where smallholder farmers ferment and dry beans on the farm. However, in Latin America, you typically see the wet bean approach. The main difference, in this case, is that fermentation and drying processes happen at an external center rather than on the farm. This implies a production traceability gap, which is the major drawback of this model. That’s because farmers deliver their wet cocoa bean bags to a coop warehouse or a trader-owned center, where operators unpack beans and mix them together for processing.
In 2019, the Fairtrade Cocoa Standard required that all its certified coops must use an Information Management System (IMS). These systems’ purpose is to collect data on member’s farms (production, sales,…) and improve the “first mile” traceability. By doing so, it becomes easier to manage risks, identify areas of improvement, and tackle issues such as deforestation.
The initial IMS did not find great success among the coops. Fairtrade thus partnered with the digital solutions provider Farmforce to improve their systems. The pilot launched in 2020 with three Fairtrade-certified cocoa cooperatives in Cote d’Ivoire. Last month, they announced they were scaling the project up to twenty-five cooperatives.
“Our digital solutions provide organizations with the confidence to secure sustainable sourcing, improve farmer quality of life, and protect the environment. Together with Fairtrade we are giving the cooperatives the ability to own their data and professionally manage the information they share with their customers.”
-Anne Jorun Aas, Farmforce CEO
With the current setup, economics of the chocolate system results in the farmers being structurally poor. For many of them, there’s really only one obvious solution to poverty: grow more cocoa. Desperate farmers supplement their crop by growing cocoa trees in a protected forest where the uncultivated soil is more fertile. Stolen land is also free of charge. Better traceability will improve cocoa farmer’s bargaining power and ensure they get paid for their work.
PC: 2022 @Tarcision Shnaider/Shutterstock — Study Shows Deforestation for Cocoa Continues Despite Promises to End It