TAZA CHOCOLATE DIRECT TRADE CERTIFIED CACAO
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We are chocolate pioneers. Taza makes stone ground chocolate that is seriously good and fair for all. From farm to factory, we do things differently. We do things transparently. It starts with Taza Direct Trade. We said no to predatory middlemen and abusive labor practices. We created the chocolate industry's first third-party certified Direct Trade cacao sourcing program, to ensure quality and transparency for all. We have real, face-to-face relationships with partners who respect the environment and fair labor practices. They provide us with the best organic cacao, and we pay them prices significantly higher than Fair Trade. In fact, you can see exactly what we pay them, right here in our 2016 Annual Cacao Sourcing Transparency Report. Taza Direct Trade means more money for our partners, the best cacao for us, and seriously good chocolate for you.
THIRD PARTY CERTIFICATIONWe’re serious about transparency and trust. To guarantee the integrity of our Direct Trade program, our five Direct Trade claims are independently verified each year by Quality Certification Services, a USDA-accredited organic certifier based in Gainesville, Florida. See our five verified claims here. |
YEAR IN REVIEW: LET'S TALK PRICE
By Jesse Last, Taza Chocolate Cocoa Sourcing Manager | October 2016
 shapes and sizes growing on farms in northern Haiti Friends, There are many reasons I enjoy sourcing cacao for Taza Chocolate. Evaluating the harvest in tropical countries while my colleagues suffer Somerville Snowmageddon is one of them. Building relationships with some of the industry's most impressive cacao growers and processors is another. Surviving precarious mountain roads and sizable frogs under my pillow is an oddly exhilarating third. Yours in Transparency,
Jesse Last |
5 STEPS TOWARDS UNDERSTANDING PRICE:
1. TRUST AND VERIFY ⌵
Taza’s partners in Belize, Bolivia, Haiti and the Dominican Republic collect cacao from hundreds of farmers, ferment and dry the beans, and export them to Taza. I know how much we pay our partners for this demanding work because as part of our Direct Trade program, we negotiate the price together each year. However, until several months ago, I knew little about how our partners paid the farmers for their raw cacao. My first step toward understanding price was to collect this information.
Our cacao beans are grown on over 2,000 small farms spread across four countries in Latin America and the Caribbean. If my job consisted exclusively of speaking with farmers about price, I might be able to conduct several hundred interviews before beginning again with the next harvest! Moreover, prices often fluctuate based on changes in supply and demand. If I stopped by a farm on a random week, I could easily find a much higher or lower price than the average one.
A more efficient and accurate approach would be to ask our partners to report on the average price they pay over the course of the season. They already collect this data as part of running their businesses. Still, I asked myself, couldn’t they just report a higher price to Taza, figuring that this is what we would want to see? I decided to trust and verify.
First, I updated our Direct Trade Agreement to include a commitment by our partners to “provide documentation demonstrating the compensation paid to farmers and / or employees, as well as facilitate conversation between farmers” and Taza. Our partners did not hesitate to sign the contract. Second, during my farm visits with each partner, I asked farmers about the price they received. I did not uncover any discrepancies.
Admittedly, my solution to collecting reliable data is an imperfect one. If a partner of ours wanted to mislead Taza, they could forge documentation or bribe a farmer. In fact, I suspect some of this behavior plagues audit-based trade systems. Taza Chocolate’s Direct Trade model depends less on inspections and more on collaboration. Our intention is to build relationships based on trust and transparency that difficult questions do not break.
2. ORIENTING AMID THE NUMBERS ⌵
As I began gathering data on what individual farmers were paid for their cacao beans, I ran into a second challenge: making sense of the numbers. My first thought was to calculate the percentage of Taza’s price to its partners that ended up with the farmers. After running the numbers, I found a wide range that stretched from 51 to 76%.
But what did this mean? If a partner paid 70% of the total price to farmers, were they receiving a good price, a bad price, or something in between? Without context, I had a bunch of data but lacked useful information. I found a reference point at Cocoa Barometer, a group of non-profits that evaluates the sustainability of the world cocoa industry. Its 2015 report estimates that globally, the average cacao farmer receives 68% of the price paid to the origin exporter.
This benchmark seemed like it should shed light on how good or bad a price farmers were getting, but I wondered how much the percentage earned ultimately mattered. With most of the world’s cacao farmers living at or below the poverty line of $2 per day, maybe the important number was not the percentage they received but the absolute dollar amount.
So, I calculated 68% of the average world market price per metric ton of cacao between July 1, 2015 and June 30, 2016. I used the result -- $2,111 -- as a new benchmark to compare the the total dollar amount our partners paid farmers to a global average. This felt more relevant, and I was glad to discover that all but one of our partners were paying more than this price, some of them by nearly two times.
3. COMPARING APPLES TO ORANGES ⌵
While the Cocoa Barometer provided a useful reference point, it could not explain the large differences in prices paid to farmers across origins. For instance, while two of our partners paid farmers more than $4,000 per metric ton, another paid slightly under half that amount.
How was this possible? What explained the significant difference?
As I looked more closely, I came to realize that price is only truly useful information when understood in context. Every enterprise that buys, processes and exports cacao confronts its own set of circumstances, and comparing the price they pay without taking these realities into account is like comparing apples to oranges.
For instance, our more established partners that ferment and dry a higher volume of cacao benefit from economies of scale, while fledgling operations are burdened with large startup costs and logistical challenges. Meanwhile, in areas where farms are particularly small or unproductive, a partner must invest in a larger farmer network than a partner buying from bigger or more productive farms. Finally, some of our partners operate in countries with well-maintained roads, developed cacao industries, and stable governments; some do not. Processing and exporting cacao is not easy anywhere, but it is undeniable that some of our partners face a more daunting set of challenges than others.
In other words, there is no single supply chain story. Each of our partners must navigate a unique and constantly evolving environment, and it is impossible to understand how pricing works without appreciating the different challenges and opportunities that they face.
4. VALUE BEYOND PRICE ⌵
In looking at our partners’ operations, I also realized that the price they pay for cacao is not the only value they provide to their farmer networks. All of our partners drive to producers’ farms to pick up the cacao in its unfermented form, a service that reduces the time and cost a farmer would otherwise spend fermenting, drying, and transporting the heavy beans themselves. Several of Taza’s partners provide producers with healthy and high-yielding cacao seedlings that improve a farm’s productivity and therefore farmers’ income. Others provide agronomic training and outreach that helps increase production as well as manage pests and diseases.
Our partners also develop unique services that meet local needs. One of our partners has developed a microfinance program that provides young farmers with the money they need to buy farms of their own. Another offers food, housing and even immigration support in addition to the wages it pays the employees who work on its medium-sized farm.
Other benefits are less obvious but just as valuable. The world market for cacao is marked by high price volatility. Small-scale producers end up at the mercy of market forces entirely outside their control, resulting in boom and bust cycles that at best discourage farmers from investing in growing more cacao, and at worst, bankrupt them entirely. Some of our partners offer farmers much needed stability by paying a fixed price for their beans, well above the world market price, which is set at the start of the harvest and guaranteed through the season.
Another subtle but meaningful way in which our partners deliver value involves improving a region’s, and in certain cases an entire country’s, reputation for producing high quality cacao. This can be especially impactful in countries that historically have exported lower quality, commodity grade cacao. By carefully fermenting, drying and exporting beans, these partners increase the price paid for the country’s cacao, a benefit that often extends beyond the immediate farmer network to cacao producers throughout the country.
5. SERIOUSLY GOOD AND FAIR FOR ALL ⌵
In looking to answer the question, “How much of the money we pay our partners makes its way to individual farmers?,” I learned a great deal. In collaboration with each of our partners, I documented the average price paid to farmers this last year, the percentage of the price paid by Taza that this number represents, and how these numbers compare to global averages. Equally importantly, I realized that this data is far more meaningful when understood in its local context. All of this information is reported as faithfully as possible in the 2016 Partner Reports that follow.
Ironically, I learned just as much about what price cannot tell me. The price paid for cacao, I came to understand, does not necessarily reflect the full value that farmers receive from working with our partners. Services such as subsidized seedlings, agronomic training, and price stability represent other benefits that farmers may receive in exchange for their beans.
I also came to appreciate the limitations of my original question. The price paid for cacao matters, but it needs to be multiplied by the volume of cacao produced in order to reveal a farmer’s total income. Similarly, income tells only half the story (or less, if the farmer gets additional money from growing coffee or other work), because if a producer sells a lot of cacao but spends a fortune on fertilizer to grow it or logistics to transport it, they may end up losing money. And all this before considering a place’s cost of living! Clearly, the more I learned, the more questions arose.
Still, I do not dismiss the importance of paying a good price for cacao. I continue to believe that Taza’s Direct Trade program, including our commitment to paying at least $500 per metric ton of cacao above the world market price, contributes to better livelihoods for our partners and farmers across Latin America and the Caribbean. And this, I realize now, is what I actually wanted to understand from the start - how to make chocolate that is seriously good and fair for all. From farmer to consumer, I hope that we all will continue to work together to achieve this mission.
OUR PARTNERS
2016 PARTNER REPORTS
Bolivia
ALTO BENI CACAO COMPANY
ALTO BENI CACAO COMPANY
Haiti
PISA
PISA
Belize
MAYA MOUNTAIN CACAO
MAYA MOUNTAIN CACAO
Dominican Republic
ÖKO Caribe Cacao
ÖKO Caribe Cacao
Dominican Republic
Finca Elvesia
Finca Elvesia
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