- Olam International, the world’s third-largest cocoa processor, has achieved 100% traceability for the cocoa it directly sources, according to an announcement from the company. Olam says it can trace its cocoa from the farm or community from which it originates to its ingredient processing facilities, a total quantity that amounts to approximately 12% of the world’s cocoa beans.
- The chocolate processor is using technology to trace supply chains across nine countries. It intends to use this tracing capability going forward to provide additional transparency to answer questions of living wage, child labor and deforestation in its supply chain.
- Sustainability in the cocoa industry is a pressing concern for consumers. Farmer livelihoods, child labor and deforestation are core concerns as the majority of the world’s cocoa is produced on small holder farms where transparency and oversight has long been lacking.
Olam is only behind Barry Callebaut and Cargill in terms of cocoa processing and distribution worldwide. This means having 100% traceability in the cocoa it sources will affect many companies that use its chocolate in their products. The global company has deZaan, Unicao, Joanes, Macao, Huysman, BT Cocoa and Britannia cocoa powder and butter brands in its own portfolio, and also provides a number of cocoa-based ingredients to manufacturers, bakeries and chocolate confectionery companies.
While Olam sources a lot of its cocoa products, about 40% of the raw ingredient it uses comes from other producers. The traceability only represents about 60% of the company’s purchases, according to Bloomberg. It's the first step to complete transparency for the commodity, which puts Olam ahead of competitors also striving to integrate it into their operations.
CPG companies such as Mars, Nestlé, Mondelez and Hershey and chocolate ingredient powerhouse Barry Callebaut have tried to make internal changes to respond to environmental and economic issues involved in cocoa production. Not all of these programs have made an impact. The Cocoa Barometer 2018 report found chocolate companies’ programs to improve sustainability in the sector have resulted in few changes during the past 10 years.
However, companies continue to take steps toward traceability. This month, Barry Callebaut began disclosing the names of the cooperatives and buying stations where it sources its West African cocoa, Bloomberg reported.
A traceable supply chain is valuable, and companies will find themselves at a disadvantage if they are unable to demonstrate that their cocoa’s journey is transparent from farm to bar. The Rainforest Alliance is planning to tighten up its certification for cocoa producers next year to improve traceability and sustainability for companies, governments, NGOs and other participants in the cocoa industry.
An end-to-end system to track cocoa across each stage of processing will help to alleviate the challenges of overproduction, fluctuating prices, low farmer incomes, persistent child labor and negative impacts from climate change. Olam said in its release that it plans to continue working toward its commitments of achieving 100% deforestation and child labor monitoring across its entire direct supply chain by the end of 2020.
Nearly half of U.S. consumers are likely to change their purchasing behavior based on the environmental attributes of the food, according to survey data from Nielsen. Addressing these persistent issues is not only critical for consumer expectations, but it is imperative for their bottom lines that these practices change. Traceability leads to responsible sourcing, which can alleviate production threats and ensure a sustainable cocoa supply for the long term.