Sustainable cocoa farming – the supplier response: Olam

25 Sep 2017 --- After the controversies that were recently highlighted in an investigation into so-called “dirty cocoa” beans, FoodIngredientsFirst examines how the major players are working towards a sustainable supply chain. There may be many unanswered questions, but what we do know is that the industry is working hard to improve the sustainability of cocoa farming on all levels. 

Earlier this month, UK national newspaper, The Guardian, published an expose about what it describes as “dirty cocoa,” following an investigation which involved a visit to the Ivory Coast, where much of the world’s cocoa grows. The article says that the world’s chocolate industry is “driving deforestation on a devastating scale in West Africa” and that “illegal product” is mixed in with “clean” beans in the supply chain, making the point that it’s extremely difficult to know in which products “dirty cocoa” may end up.

FoodIngredientsFirst investigates how suppliers work towards sustainable cocoa farming, some of which will be featured later in the week. Firstly, Olam responded to the Mighty Report here.

What makes this pioneer stand out? “We are not a consumer product manufacturer and we do not produce chocolate or chocolate products. Instead, we support our customer’s needs by offering cocoa products and value-added services that do not compete directly with their interests,” Alistair Davis, Olam’s Head of Cocoa Sustainability tells FoodIngredientsFirst.

“We believe in creating a fully sustainable cocoa supply chain, in focusing on traceability and the proper measurement thereof, in order to ensure supply chain integrity, and in building a framework of international policies and best practices that provide cocoa farmers and their communities with long-term, positive support.”

“Our cocoa products are prized for their ability to provide consistent flavor and color characteristics and are utilized in finished product applications worldwide.”

Olam has been carrying out sustainability work for many years with a back catalog of landmark initiatives that spans more than 15 years. 

In 2003/4, Olam’s first sustainability initiative, GrowCocoa, started in Indonesia as a joint venture project with The Blommer Chocolate Co. Sustainability programs now spans Africa, Asia and South America, supplying traceable, certified and sustainable cocoa beans to the global cocoa and chocolate industries.

Alongside having its own stringent requirements within its cocoa supply chain and strict adherence to all applicable national and international labor laws and regulations, Olam is a Board and founding member of several multi-stakeholder groups including World Cocoa Foundation (WCF), CocoaAction, and the International Cocoa Initiative (ICI). “Further support includes our continued work on improving access to schools in cocoa growing communities by refurbishing existing schools or constructing new schools,” explains Davis. 

“Between 2009 and today, we have partnered with branded chocolate confectionery companies and sustainability partners to construct 18 new schools in Côte d’Ivoire. Additionally, with a co-financing grant from Conseil Café-Cacao (CCC), 42 teacher residences were constructed at seven schools and solar panels and medical equipment provided for eight health centers at an investment of US$950,000.”

Accelerating progress towards 100 percent sustainability targets for 2020
Olam’s journey to revolutionizing seed to shelf supply chains through its sustainability framework involves a commitment to continually examine all steps of the value chain.

“We aim to bring prosperity to farming communities by building long-term relationships based on fairness and trust. We also seek to transfer skills and knowledge through partnerships and through the OLC Principles of Finance, Improved Yield, Labour Practices, Market Access, Quality, Traceability, Social Investment, and Environmental Impact,” Davis continues. 

“Cocoa sustainability projects and initiatives can only gain OLC status when they address all principles of the charter.”

In order to achieve this status, cocoa sustainability activities around the world focus on the following key areas:

• Finance and farmer incomes: Many smallholder cocoa farmers have limited access to affordable finance, impacting how much they can invest in their farms, and therefore, how much they can grow and earn. Olam Cocoa supports farmers by providing interest-free pre-financing, short-term financing, paying certification premiums above and beyond non-certified pricing and distributing quality based premiums;
• Cocoa farmer training: A lack of education can trap cocoa farmers in a cycle of low productivity. Through farmer field schools and the use of demonstration plots for practical, hands-on learning opportunities, farmers are registered and receive training in Good Agricultural Practices, Good Labor Practices, Integrated Pest Management and Business Capacity training;
• Farm support, improving yields and quality: Sustainably improving yields and crop quality benefits all parties. By providing cocoa farmers access to and distribution of the best varieties of cocoa seeds and seedlings, and through the construction of solar dryers to support quality standards post-harvest, overall cocoa quality is raised and livelihoods are supported;
• Land management and environmental impact mitigation: Sustainable actions to protect the environment in cocoa producing areas relies on improving the quality of key data utilized in program planning. Olam addresses these issues by surveying cocoa farmers and their farms and undertaking GPS mapping through the Olam Farmer Information System (OFIS). It also distributes shade trees to increase ground cover and support forest conservation through the Cocoa & Forests Initiative and its Climate Friendly Cocoa programs with Rainforest Alliance;
• Market access and traceability: Olam’s goal is to reach 100 percent traceable and sustainable cocoa volumes from its direct origination supply chain by 2020. The company’s commitment to traceability is delivered by increasing market access opportunities for farmers and farmer groups, and through its year-round farm gate presence supported by OFIS;
• Social and community investment: From the establishment of resource centers for farmer training and for storing materials for cocoa cooperatives and nurseries to the construction of schools, health centers, maternity units, medical laboratories, water pumps and cooperative stores, Olam’s support of communities is ever-expanding;
• Labor: Olam works to increase farmer incomes and provide training specifically on tackling child labor so that cocoa farmers are able to employ laborers rather than rely on their own families, including children, to work on the farm.

How does Olam continually monitor processes to ensure it can stand by sustainable claims? Davis explains how the digital initiative, The Olam Farmer Information System (OFIS), is a revolutionary tech innovation for collecting, analyzing and applying smallholder farmgate level data, which previously was not possible. 

Thanks to OFIS, within our sustainability programs we are 100 percent traceable, says Olam. 

The system has three core functions:

• Collect: First mile data is collected and centralized via a purpose-built Android OS application designed to operate in the remotest corners of the world;
• Analyze: Data can be visualized, tracked and highlighted through an online application that offers unparalleled analysis opportunities;
• Apply: OFIS can be used to guide ongoing sustainability initiatives, identify hotspots, build farmer group and buying agent capacity and, through the innovative Farm Development Plan module, deliver targeted information to farmers.

“A multi-product platform that has already registered tens of thousands of independent farmers across Olam’s agri-complex portfolio, OFIS is designed to work with any agricultural product, anywhere,” continues Davis.

As of Q2 2017, Olam has registered more than 93,303 farmers with 244,165 hectares covered. 

“OFIS provides greater traceability and transparency for our sustainability partners and customers, allowing for direct access to farmer and origination information. 

“This tool has been instrumental in understanding other key issues with cocoa, namely deforestation in West Africa, gender empowerment and youth employment in the sector.” 

“Until now, data from many origin countries have either been completely inaccessible or has required collection and collation with pen and paper. This has significantly limited both the use and scalability of the information. As part of the Olam Livelihood Charter, OFIS solves the issue by providing an innovative agri-business data solution.”

Ultimately, Davis says, OFIS will map all farms and farmers involved in Olam’s sustainability programs and initiatives worldwide.

The second part of this report, which looks at work at other major suppliers can be found here. 

By Gaynor Selby