The Supply Chain for Cocoa Beans: Insights & Risks
The cocoa beans supply chain is complex and not free from issues. Also, you might not know that one can taste the most bitter hiccups along the first mile of the cocoa value chain rather than at its end. In this post, Farmforce will bring you back to the cocoa roots to unveil its sustainability challenges.
The Cocoa Supply Chain Architecture
Obvious as it sounds, the life of a chocolate bar starts at the cocoa farm. However, the cocoa supply chain structure changes based on which country you are in and how smallholder farmers deliver cocoa beans (i.e., dry or wet).
Every country has its own way of arranging the cocoa supply chain. For instance, in Côte d’Ivoire and other West African states, farmers are generally members of a cooperative. With up to 3,000 members, coops are the key link between growers and purchasers. In Latin America, coops have fewer farmers yet larger farms. Just to give some perspective, Côte d’Ivoire farms are around 2 ha, while in Brazil they can be up to 10 times as large.
On the other hand, Ghana is a typical example of a state-driven value chain. Here, the government-led organisation Cocoa Board (COCOBOD) controls the whole stream and is the only exporter from Ghana.
Dry Beans vs Wet Beans
West African countries usually go for a dry beans cocoa value chain setup, where smallholder farmers ferment and dry beans in-house. After harvesting the wet cocoa beans from cacao trees, growers lay them in a wooden box with holes at the bottom to drain away from the pulp juice. As cocoa beans ferment, they reduce their bitterness while developing their flavor. After 5 to 7 days, farmers let the beans sun-dry over tables or mats for up to 10 days. By turning them regularly, they allow beans to dry evenly, and, once reached a moisture level of around 7%, they pack them in 60 Kg jute bags.
When leaving the farm, the cocoa beans’ journey varies depending on the country of origin. For instance, in Côte d’Ivoire, cocoa producers carry the dry beans to the village warehouse, a.k.a. section, where a delegate deals with the purchase of the cocoa beans.
At this point, the cocoa beans have already traveled the agricultural first mile. Being dried, they can sit in the section for a long time without losing their freshness. However, once at least 30 bags have piled up in the warehouse, a small truck picks them up for the so-called primary evacuation. This is just the transit between the section and the coop warehouse, where bags are usually reweighted.
As the number of bags in the coop warehouse approaches 600 units or so, you’ll have your first lot. Based on the International Trade Centre guidelines, a lot is defined as the minimum amount to be traded in a contract, which is 10 metric tons for cocoa. In Côte d’Ivoire, a cocoa lot usually amounts to between 30 and 40 tons.
Cooperatives and local traders register each lot in an online system, which is the Conseil du Café Cacao (CCC)’s SICOPS in Côte d’Ivoire. After entering the lot’s data, they can then generate a consignment number, a.k.a. connaissement. This is an official document reporting the amount and the origin of the cocoa lot. It’s then all ready for the secondary evacuation when a bigger truck transports cocoa beans to the export warehouse.
Instead, the wet bean approach is typical in Latin America. 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 beans bags to a coop warehouse or a trader-owned center, where operators unpack beans and mix them together for processing. To be more specific, coop or trader personnel put cocoa beans in a fermentation box for 3 days or so. After that, they lay the beans on the tables to dry. Finally, they bag the dried product before sending it to the exporter.
The Banana Skins of the Cocoa Beans Value Chain
Unfortunately, the cocoa supply chain bears some bitter fruits.
Cocoa beans are one of the crops driving deforestation. Over 50% of the world’s tropical forests have been ravaged since the 1960s, with 80% of them leaving space for livestock grazing and agricultural land. To counter this issue, the European Union has just released a new regulation to promote the consumption of deforestation-free products only. In the wake of this new law, tracing cocoa beans to the farm level becomes paramount.
Besides depriving our planet of invaluable carbon captors, cocoa farming bereaves kids of their childhood. According to the International Cocoa Initiative (ICI), child labour affects 1.56 million children in Côte d’Ivoire and Ghana alone.
You now have a better vision of how cocoa beans sourcing works and which are the key problems to tackle. The next step is to find out how Farmforce food traceability software mitigates deforestation and child labour at the farm level.