Mars and cocoa sustainability

Cocoa supply chain

The journey from cocoa bean to chocolate bar.

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Research

Historically, cocoa has not benefited from large-scale investment in research, but we are working to change this. Mars is leading extensive research programs into plant breeding, pest- and disease-control, quality improvement and good farming practices.

We share our learning with farmers through our Cocoa Development Centers (CDCs) and Village Cocoa Centers (VCCs) by showing best practice in action. These centers also conduct applied research that takes our understanding out of the laboratory and into the field, and the findings are fed back into our research programs.

Partners

The cocoa supply chain is not solely about the journey the beans take from farm to consumer. There are a number of organizations not part of the physical production process that still play important roles.

Among these partners are non-governmental organizations (NGOs) that train farmers and help them to organize themselves more effectively. Other NGOs offer education, literacy and health programs. Our certification partners provide a set of standards for best farming practice, cocoa quality, pricing and environmental stewardship and work to make sure that these are met.

In addition, organizations like the World Cocoa Foundation (WCF), International Cocoa Organization (ICCO) and Cocoa Producers Alliance (COPAL) have an important role in creating and encouraging partnerships. They allow exporters, processors, manufacturers and cocoa-producing countries to work together to ensure that everybody does their part to the support the industry as a whole.

Partnerships have also been behind breakthroughs in cocoa research. For example, the mapping of the cocoa genome was a collaboration between government agencies, academic institutes and private companies.

Governments

The role governments play in the cocoa industry varies greatly from country to country. Some actively regulate cocoa, setting fixed farm-gate prices, providing services to famers and establishing quality standards. Others have a more hands-off approach, letting the market determine prices and allowing private companies to check quality.

In Africa, Mars has signed a Memorandum of Understanding with the Ivorian government for long-term collaboration and investment in cocoa. We also work closely with the Ghana Cocoa Board (COCOBOD), the Brazilian National Research Center (CEPLAC) and the Indonesian Ministry of Agriculture.

CDC

Mars has set up a number of Cocoa Development Centers (CDCs) within cocoa-producing regions as demonstration and training hubs for sustainable cocoa farming. They showcase best practice, conduct applied research and build capacity within the region. Most importantly, they allow farmers to see for themselves what a successful cocoa farm looks like.

CDCs in Indonesia have demonstrated how successful this model can be. In some cases, farmers' incomes have increased 500% as a result of their interaction with their regional CDC.

VCC

Mars has helped farmers establish Village Cocoa Centers (VCCs) in villages to demonstrate best practice in action, give advice and supply higher-yielding plants to local communities. VCCs receive training and plant materials from the regional CDCs but operate independently.

VCCs are run as businesses by farmers selling products and services to other farmers. One of the advantages of this decentralized approach is scale, and a typical VCC reaches around 100 farmers.

Farmer

Most cocoa is grown by individual cocoa farmers and their families on plots smaller than five acres (two hectares). There are more than five million cocoa farmers working in rural parts of West Africa, Asia and the Americas. The large number of individual farmers means it is difficult to trace the cocoa beans from the start to the end of the supply chain.

Cocoa is harvested by hand rather than machine because pods ripen at different rates and have to be individually selected. After harvesting the pods, the farmers break them open to reveal the beans, encased in a sweet pulp. These are fermented with the pulp to create the "chocolate" flavor and then dried to avoid mold before being sold to local buyers.

Certification

Certification provides a set of standards to guide farming practices, cocoa quality, pricing and environmental stewardship. These standards are set by organizations such as UTZ, Rainforest Alliance and Fairtrade. While certification organizations don't train farmers directly, they partner with local NGOs to deliver training and use independent auditors to confirm that their criteria are met.

Certification helps raise standards across the supply chain and allows cocoa to be traced throughout its journey from regional origin to factory gate. Cocoa manufacturers can't have direct agreements with each individual farmer but certification enables them to know that the cocoa they buy on the open market is just as good as the cocoa they are helping farmers produce directly. Mars has pledged that 100% of our cocoa will be certified by 2020.

Local Buyer

Local buyers collect cocoa beans from many farmers, either just after harvest or after they have been dried and/or fermented. Buyers vary in size and complexity from region to region. They can be individuals with a truck, private enterprises, farmer cooperatives or belong to an official cocoa board.

Some buyers play an important part in the post-harvest process, collecting "wet" beans and fermenting and drying them. They may also provide farmers with information, training and materials such as fertilizers. Whatever form they take, local buyers play an important part in ensuring quality and organizing farmers for both certification and training.

Local buyers carry out the first quality check on the cocoa beans, measuring them for moisture, color and quality before they make an offer to the farmer. In some countries the price paid is fixed by the government, but in general the quality will affect the price. The buyers then blend and sort the beans according to size and quality. Because cocoa from many different farmers is mixed together, tracing cocoa back to its origin is difficult.

When the buyers have gathered together enough cocoa beans, they sell them to an exporter.

Exporter

Exporters buy cocoa beans from a network of local buyers and prepare them for international shipping and processing. An exporter could be a local marketing company, a global commodity trader, an international agricultural business, a cocoa processor or a government. Some exporters also buy cocoa directly from farmers and may provide services similar to local buyers, like post-harvest fermentation and drying.

Exporters form important relationships with the local buyers and farmers with whom they do business. In particular, they can provide support for quality improvement, farmer-training programs and certification by giving clear price signals and incentives for high-quality, sustainable cocoa. The more access farmers have to exporters, the more easily they can find a market for their crops and understand how volume and quality affect the price.

If an exporter is buying certified cocoa, they will receive a series of physical or electronic "certificates." These indicate where the cocoa was produced and against which standard – like Rainforest Alliance, UTZ or Fairtrade – the group of farmers was certified. Currently it is not possible to track cocoa all the way back to an individual farm because certificates are issued to groups of farmers, like cooperatives, rather than individuals.

Exporters are responsible for the second quality check on the cocoa. If necessary, they will clean or dry the beans before packing them into bags. Before the cocoa leaves the exporter, it undergoes another quality check, this time by an independent third party. Often this is a government agency but sometimes the inspection is carried out by a private company. The bags are then taken to a local processor or shipped abroad to large processing plants.

Cocoa
Processor

Processing transforms cocoa beans into the cocoa products that can be used in manufacturing. These include cocoa liquor, cocoa butter and cocoa powder. Most processing occurs away from the countries where cocoa is grown because it is more efficient to process and manufacture the products close to where they will be consumed. On top of this, it's easier to store the cocoa beans and maintain their quality before they're processed.

Some processors also act as exporters and local buyers, but this varies from region to region and from processor to processor.

What happens during processing has a direct effect on the flavor and qualities of the resulting chocolate and helps tailor the cocoa to suit a particular product or market. Processors also play an influential role in the rest of the supply chain. Because of the large volumes they purchase and their close links to branded product manufacturers, they can encourage significant industry change by setting standards for things like quality and certification and by insisting on transparent pricing for farmers.

Chocolate
Manufactr.

The taste and texture of a particular chocolate product depends on the manufacturer's individual recipe, a closely guarded secret. The manufacturer uses different types and proportions of cocoa liquor, cocoa butter and other ingredients such as milk and sugar to make a product consistent with the brand. The finished chocolate product is then packaged and sent to distributors ready to be enjoyed by consumers.

While consumer choices determine demand throughout the cocoa market, it is the manufacturer that meets this demand directly and so sets standards that affect the whole supply chain. Having such an influential role means manufacturers have a duty to ensure that the supply chain supporting their products operates in a responsible and sustainable way. As the most visible part of the supply chain, they can make commitments that will set a precedent for the processors and exporters with which they work. If manufacturers are not willing to take the lead, the process of change will take longer and be more complicated as those outside the industry try to understand its challenges and develop appropriate solutions.

Although they cannot have direct relationships with every individual farmer, by choosing to use certified cocoa in their products, manufacturers can enable industry-wide improvements in productivity, incomes and sustainability. On top of this, by putting the well-being of the industry and of struggling individuals ahead of their own competitive advantage in developed markets, they can support significant change for the farmers who need it most.

Consumer

Chocolate is one of the world's favorite foods and its popularity is rising. Satisfying that demand will involve every part of the cocoa supply chain.

Training and/or Materials

Training and access to improved materials empowers farmers, giving them the skills and tools they require to improve the performance of their farms and invest in their futures. To enable this transfer of knowledge and technology, Mars is setting up a network of centers where they are most needed. Cocoa Development Centers (CDCs) are applied research hubs within cocoa-producing regions and VillageCocoa Centers (VCCs) work within local communities.

Finance

Like many commodities, cocoa is sold under a variety of local conditions, so understanding whom is getting paid for what and how much is very difficult. However, by focusing on whether or not farmers are able to make enough income to live above the poverty level and further invest in their businesses and communities is a good general measure of whether or not money is flowing through the system in an acceptable way.

Certification

Certification means the cocoa has been produced in a specified way and allows cocoa to betraced through the supply chain. By creating a set of standards against which cocoa farming is measured, certification allows changes to be made across the whole supply chain on a much wider scale than would otherwise be possible. Mars has pledged to certify 100% of its cocoa as sustainably produced by 2020.

Research

Improved farming practices come directly from research in the laboratory and in the field. Mars is leading the way in cocoa research to make up for years of under-investment, and this research will help us improve the quality and performance of cocoa plants and better control pests and diseases. The result will be amore secure, more efficient cocoa supply chain that benefits the industry as a whole.

The Cocoa Supply Chain

The cocoa supply chain includes everybody who plays a part in producing chocolate. Even simplified, this is a long list, from local governments to international certification organizations and multi-national manufacturers. To achieve meaningful change, all of these groups must collaborate effectively and prioritize farmer benefit at origin over competitive advantage. By putting farmers first with programs to provide tools and training, Mars is helping to strengthen the supply chain as a whole and to move towards a more sustainable cocoa economy.