Shortening the Supply Chain: How Taza Chocolate’s Direct Trade Benefits the Chocolate Industry

The supply chain which governs the production of chocolate is full of complex relationships, blind spots, and middle men.  With these issues, inefficiencies and exploitative practices run their course throughout the chain.  Fixing these problems is not a one man or company job, but a change that must start with a small step.  This step has come with Taza Chocolate.  With Taza’s certifications, specifically its one concerning Direct Trade, and its “Bean to Bar” philosophy, they have shrunk the cacao/chocolate supply chain to take out these inefficiencies and harmful, exploitative practices in order to benefit both the growers and the consumers.

Launched in 2005 in Somerville, Massachusetts by founder Alex Whitmore, Taza strives to create “unrefined, minimally processed chocolate” with an incredible flavor (About Taza, 2015). Not only does their chocolate taste great, but it is ethically sourced.  This means they partner directly with the cacao farmers they buy from and pay a premium above the Fair Trade price for their cacao (About Taza, 2015).  Additionally, they only partner with farmers who “respect the rights of workers and the environment” (About Taza, 2015).  Taza uses a “Bean to Bar” philosophy, which utilizes their Direct Trade certification.  The video below gives you a sense of what “Bean to Bar” means to Taza, its partners, and workers.

Direct Trade ensures that Taza workers partner directly with the growers and maintain a face-to-face relationship with their farmers.  Additionally, Taza pays well above the market price for cacao beans, which currently stands around $1800 per metric ton. (Nasdaq: Cocoa, 2017).  To showcase how this buying works, Taza puts out an annual Transparency Report that highlights their program, prices, and key statistics.  Click here to view their 2016 report.  As you navigate this page, be sure to examine particular partner reports as they emphasize this program’s price benefits, stability, and room for farm improvement.

Their “Bean to Bar” and Direct Trade practice has shrunk the supply chain significantly.  The only non Taza or grower related dealer is the import company, which ships the cacao beans to Taza.  A typical supply chain for Taza can be seen below.

Screen Shot 2017-05-03 at 11.49.44 AM
Typical Taza Chocolate Supply Chain

This chain comes specifically from Taza’s partnership with the Alto Beni Cacao Company from Bolivia.  As you can see, Taza uses Atlantic Cacao as their importer and has developed a relationship with them such that they are used for all imports coming from the Caribbean and Central American region.

So, how does the chocolate supply chain look for a chocolate producer or retailer that does not operate as Taza does?  The answer is it is a lot longer with more independent players.  Below is an image depicting what this supply chain might look like.

Screen Shot 2017-05-03 at 12.18.26 PM
Typical Chocolate Supply Chain*

Throughout this chain, there are many actors with varying roles and profit margins.  The proportion of a final bar price for some individuals in the supply chain is as follows: farmers receive 3%, cocoa buyers receive 5%, manufactures receive 20%, and retailers receive 43% (Martin, Lecture 1).  This highlights a major inefficiency and exploitation that occurs during chocolate growing and production.  With little pay received by the growers, there is essentially no money left after operating expenses have been paid.  This means less money is put into the farm to improve the crop and harvesting process.  Additionally, apart from the growing and harvesting itself, no money is left to improve the lives of the farmers and their families.

This lack of money feeds into an even larger problem, which has become a topic covered extensively by media and activists, child labor.  There is certainly a negative side to this sort of labor, but it is very much a part of the African culture.  It is very typical for a young son or daughter to accompany his or her parent to the farm and help with simple tasks such as carrying food or lesser manual labor (Ryan 45-46).  This is generally deemed acceptable if the child does not miss out on schooling that will help him or her with their long-term career.  This is often not the case.  With the poverty and small income that come with being a grower, there is a benefit to having one’s child work on the farm.  With fewer employees to pay, there is a lower cost associated with family labor (Berlan 1093).  However, this mentality breeds an even worse form of child labor, trafficking and debt bondage.

Child trafficking has become an all too familiar phenomena on cocoa farms.  In 1998, UNICEF wrote a report that described how the transactions of children work out.  “Recruiters” will seek out children at bus stops of busy cities who have left home seeking work that will bring in more money for them and their family (Off 130).  The transporter then receives money from the farmer who uses this fee as overhead for the child’s contribution on the farm; thus, the child receives no money from working (Off 130-131).  Conditions for the worst kind of child labor are quite grim as they may work at gunpoint, eat little, sleep in bunkhouses that are locked at night, and are subject to horrible sores on their backs from carrying heavy bags of cacao beans and from being beaten (Off 121).  The image below showcases how grueling this labor can be and the types of dangerous tools children use while working.

Child Labor
Child Cutting Cacao Pod

One area of tension that arises when chocolate producers and organizations talk about exposing and ending child labor is the possibility of a boycott from a growing area.  For many African countries, a boycott on their cacao beans would be devastating to the economy as most depend on jobs in the cacao industry (Off 142).  Firms and larger chocolate companies and producers have attempted to eradicate this problem, but their efforts have been mostly ineffective.  Put in place in September of 2001, the Harkin-Engel Protocol was an attempt to solve this problem:

Cocoa beans and their derivative products should be grown and processed in a manner that complies with International Labor Organization (ILO) Convention 182 Concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labor (Harkin-Engel Protocol).

This objective would be accomplished with the help of governments, global industry, cocoa producers, organized labor, non-government organizations, and consumers (Harkin-Engel Protocol).  Many big chocolate companies such as Hershey’s, Mars, and Nestle supported this protocol and hoped to solve the problem of child labor in cocoa farms by 2005 (Martin, Lecture 8).  While having big companies backing this program promises a source of funds, they have continued to push back the deadline and now have it stand in the year 2020 (Martin, Lecture 8).  So, perhaps a large-scale, top-down approach is not the best solution to the problems plaguing the chocolate supply chain.  While I have digressed from Taza, now is great time to return to their company approach, as they work a more effective grass-roots style.

As seen in the diagram above highlighting Taza’s supply chain, there are fewer players at work in the production of their chocolate.  To tackle how their process is more efficient and beneficial compared to that of a larger company with a longer, more complex supply chain, we shall examine the benefits and even some of the drawbacks seen within the growers, in the production process, and with the consumers when Taza chocolate hits the shelves.

Starting with the grower, the benefits seen with Taza’s partnered farmers compared to the conditions seen on farms of those who supply to larger companies all stem from Direct Trade.  With Direct Trade, Taza can form a long-lasting relationship with farmers.  By traveling directly to the farms, Taza buyers can see who they are buying from and the conditions of the workers and those living on or near the farm.  This eliminates the poor labor practices that may take place on farms that supply larger companies, as these big companies are unable to see the conditions of their cacao growers.  In fact, Taza is so in touch with their partners that they share on their website profiles of these farms and their workers to showcase this relationship and the benefits it provides.  Here is a link to a profile on Maya Mountain Cacao that tells you a bit about their farm and the fermentation and drying facility built by Taza.

In addition to the relationships formed with the farmers, as published in their report, Taza pays a premium for the beans purchased from suppliers.  It has been noted by many scholars that the key problem the chocolate industry faces is poverty among primary producers, yet no large-scale programs have been implemented to address this issue (Off 146).  By paying a premium for their cacao beans, Taza is attempting to address this economic issue.

Apart from these benefits, there are some faults with Taza’s model.  The first is the small scale and limited reach of direct trade.  In 2016, Taza purchased only 233 metric tons of beans (Taza: 2016 Transparency Report).  This pales in compassion to the millions of metric tons purchased by the chocolate industry each year.  A second issue can be identified in the types of farms Taza partners with.  The beans that Taza purchases are high quality, fine cacao beans, which tend to be more expensive to grow.  Therefore, some of these farms are more wealthy, and Taza is in fact not benefitting the farms in dire need.  Of course, these negatives do not outweigh the positive work Taza does in the chocolate industry.  To start a change, small steps must be made, and Taza’s Direct Trade is a step in the right direction.

Turning to the production of Taza chocolate, their process is vastly different than those of larger companies and this difference is directly influenced by Direct Trade.  There is a high degree of care and precision that goes into crafting each bar of chocolate.  Taza strives to limit the amount of processing involved in production to “let the bold flavors of (their) organic, Direct Trade cacao shout loud and proud” (Our Process, 2015).  A diagram of their production process is presented below and highlights the easy to follow and minimalistic process used by Taza.

Screen Shot 2017-05-04 at 5.14.15 PM
Taza Chocolate Making Process

Lastly, in regards to their process, ingredients used are source known, which is a direct benefit of Direct Trade.  When you flip over the wrapper to read your bar’s ingredients, there are simple, organic ingredients that can be easily traced back to their origin.  This allows for confidence in consumption and in knowing ingredients come from a sustainable, humane farm.

The last component of the supply chain involves the consumer.  Taza certainly plays on a feel-good sensation seen by a consumer when they purchase a bar of Taza chocolate.  This feeling stems from the smart, ethical sourcing associated with Direct Trade.  When a consumer picks up a bar and sees the Direct Trade certification, they feel that they are helping tackle many of the problems in the chocolate industry.  Is this an ethical practice for Taza or are they preying on the gullible emotions of consumers?  With Taza’s small-scale production relative to the chocolate industry, it is acceptable to question whether you are actually making a difference when you buy a bar of Taza chocolate.  However, you are contributing to their mission.  Taza has ambitious goals, but is also thinking about the well-being of all cacao farmers.  They may not be helping all of them, but they are trying to make a difference.

In conclusion, Taza’s Direct Trade does mean something and is making a difference. By shrinking the supply chain seen with larger chocolate companies, Taza is eliminating many of the exploitative labor practices and economic inefficiencies seen in a typical supply chain.  So, next time you are craving some chocolate, head to the store and grab that Taza bar.

 

* Process information found on http://businesscasestudies.co.uk/bccca/creating-a-sustainable-chocolate-industry/the-supply-chain-for-chocolate.html; image made in PowerPoint

Works Cited:

“About Taza.” Taza Chocolate, 2015, https://www.tazachocolate.com/pages/about-taza. Accessed 3 May, 2017.

Berlan, Amanda. “Social Sustainability in Agriculture: An Anthropological Perspective on Child Labour in Cocoa Production in Ghana.” The Journal of Development Studies, vol. 49, no. 8, 2013, pp. 1088-1100.

“Cocoa: Latest Price & Chart for Cocoa.” Nasdaq, 2017, http://www.nasdaq.com/markets/cocoa.aspx. Accessed 3 May, 2017.

“Harkin-Engel Protocol.” Chocolate Manufacturers Association. 19 September, 2001, http://www.globalexchange.org/sites/default/files/HarkinEngelProtocol.pdf. Accessed 3 May, 2017.

Martin, Carla D. “Lecture 1: Mesoamerica and the “food of the gods”.” Aframer 199x. CGIS, Cambridge, MA. 01 Feb., 2017. Lecture.

Martin, Carla D. “Lecture 8: Modern day Slavery.” Aframer 199x. CGIS, Cambridge, MA. 22 Mar., 2017. Lecture.

Off, Carol. Bitter Chocolate: The Dark Side of the World’s Most Seductive Sweet. The New Press, 2006.

“Our Process.” Taza Chocolate, 2015, https://www.tazachocolate.com/pages/our-process. Accessed 3 May, 2017.

Ryan, Órla. Chocolate Nations: Living and Dying for Cocoa in West Africa. Zed Books, 2011.

“2016 Transparency Report.” Taza Chocolate, 2015, https://www.tazachocolate.com/pages/2016-transparency-report. Accessed 3 May, 2017.

Picture and Video Source:

“Boy Cutting Cacao Bean.” Google Images, Accessed 3 May, 2017.

“Creating a Sustainable Chocolate Industry.” Business Case Studies, 2017, http://businesscasestudies.co.uk/bccca/creating-a-sustainable-chocolate-industry/the-supply-chain-for-chocolate.html. Accessed 3 May, 2017.

“Taza Chocolate Making Process.” Taza Chocolate, 2012, https://cdn.shopify.com/s/files/1/0974/7668/files/Taza_Chocolate_Making_Process.pdf?10043542871181577895. Accessed 3 May, 2017.

“Taza Chocolate “Bean to Bar”.” Taza Chocolate, 2012, https://vimeo.com/33380451.

“2016 Partner Report.” Taza Chocolate, 2015, https://www.tazachocolate.com/pages/2016-partner-report-alto-beni-cacao-company. Accessed 3 May, 2017.

 

 

 

 

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s