Direct Sourcing, Community Development Paving Paths to Sustainable Chocolate

We all know that chocolate has a dark
side.
Since the early 2000s, revelations about the prevalence of child and forced
labor in cacao
farming — driven primarily by low prices — has created challenges for brands;
and while brands such as Tony’s Chocolonely have based their entire business model around producing 100% slave-free chocolate, many have been largely unable to change conditions in their supply chain for
various
reasons.

The sad truth is that over the past few decades, rising global demand for
chocolate and other cacao products has, quite simply, failed to improve
livelihoods for
farmers
in the main cacao-growing regions of West Africa, Latin America and
Southeast Asia. It is clear that the traditional model is not working, and
that efforts such as fair
trade
and other sustainability
certifications
have not scaled up enough to have a broad impact.

The answer? Brands need to do more to know exactly where their cacao is coming
from — and ensure that farmers are both getting paid a living wage and also have
the resources and skills to farm
sustainably.
In fact, some are looking to address this by going far beyond sourcing — to
working in communities to address the root of the problem and ensure sustainable
livelihoods.

One company taking an innovative approach to this is
Luker — a small, 115-year-old,
family-owned chocolate manufacturer based in Colombia working to make a
difference in its home country, which is a small but growing producer of
cacao.
Luker’s goals: increase farmers income and sustainability, and make cacao
farming appealing to future generations.

“We involve farming families as partners and not beneficiaries,” Julia Inés
Ocampo
Duque,
Luker’s VP of cocoa sourcing and sustainability, told Sustainable Brands®.
“To be responsibly sourcing, you have to be working with the family, so that
they can have better income and better living conditions.”

Through a multi-year effort called The Cacao
Effect,
Luker worked with over 1,500 cacao-farming families — focusing on providing both
technical assistance to increase productivity (by 42 percent), as well as
psychological and social support to increase school attendance and
entrepreneurship by farmers. This forced Luker — which supplies chocolate to
brands and retailers for private-label products —to change its model and put the
farm at the center.

“In this project, the community are partners,” Ocampo said. “Because it’s not
only cocoa farmers; we were inviting everyone — including non-farmers — to
design the project together.”

The results have been positive so far — with not only increased productivity,
but also more women entrepreneurs, stronger farmer associations, and — perhaps
most important — more children going to school.

While notable, Luker’s effort is a drop in the bucket — considering there are an
estimated 5-6 million cacao farmers around
the world. In the
traditional model, most users of cacao purchase their raw material via major
trading companies — which collect cacao from countless farmers, often via a
network of traders. This means there is often limited visibility into their
supply chains.

In Indonesia, the world’s third largest cacao-producing country,
Rikolto — a Belgium-based non-profit — has
been taking a similar approach to Luker, focusing on finding innovative ways to
help farmers generate additional income.

One project focuses on training farmers to ferment cacao — a higher-value
product used in more gourmet food production. Rikolto is also trying to help
farmers get better income through the use of agroforestry and intercropping —
training farmers on how to grow cacao beans alongside other fruits, spices, or
even wood crops — which can provide both income and sustenance for farmers.

“We’re working with farmers to intercrop cassava, spices, durian and jackfruit
in between cacao,” said Peni
Agustijanto, Rikolto’s
cocoa manager in Indonesia. “The goal is that farmers get better income.”

Like Luker, Rikolto’s work is long term — requiring time to build community
relationships, and invest in training and capacity building. In order to expand
its impact or scale up its efforts, Rikolto wants more brands to be involved —
especially the big players.

“At the moment, a lot of the private sector are considering inclusive models,”
Agustijanto said. “We want to share our experience with other stakeholders and
duplicate our success.”

For Luker, too, its potential impact is limited by its relatively small size and
the smaller cacao industry in Colombia. But the company hopes that the industry will
learn from its efforts and explore different sourcing relationships with farmers.

“I think the biggest learning for the whole sector is that you can increase
productivity with very simple practices,” Ocampo said. “When you increase
productivity, you increase income and reduce deforestation.”

There are also other benefits of taking a sustainability-first approach. The
European Union, the world’s largest chocolate-consumption market, recently
passed new
regulations
mandating that anyone exporting cacao-related products to Europe must prove that
there is no link to deforestation. Not a problem for Luker.

“We already have all the information, and we don’t have deforestation,” Ocampo
asserted. “We’re fulfilling the regulation and aligned with it, but we didn’t
mean to do it.”

With more
markets
looking to adopt mandatory environmental and human rights due-diligence
requirements,
sustainable commodity sourcing may soon no longer be a choice. And it will be
brands that are invested and have built relationships with farmers who will be
the winners.