As an impact company that makes chocolate, Tony’s Chocolonely has had a single-minded focus on eliminating child forced labor and modern slavery in the cocoa supply chain since its 2005 founding. While focusing on child labor issues, Tony’s quickly realized that this was not an issue that existed in isolation. A number of other issues; illegal deforestation, poor land use practices, low agriculture productivity rates, and income distribution issues that resulted in systemic farmer poverty also affected the child labor problem. Thus, from its inception, Tony’s committed to not only an integrated strategic approach to address the issue, but an integrated strategic approach to track progress. Key to the tracking system is Tony’s “bean-to-bar” traceability system. Knowing where the beans come from and tracing their path from growth to consumption is the key starting point to being able to act on all of the other issues.
THE WORLD OF COCOA – A SUMMARY FROM THE BEAN TO THE BAR
Cocoa production includes a variety of actors. These are the farmers who produce the cocoa beans, the cooperatives who amalgamate the beans from the farmers, the companies who purchase the beans, transporters who move the beans both domestically and internationally, makers of the first refined products, cocoa butter and cocoa liquid, chocolate producers and molders of chocolate into the final bar shape. In some instances, these functions are vertically integrated, especially in the large multinational chocolate enterprises. In other instances, independent actors work in a single part of the supply chain or in several portions of it.
In theory, traceability of the bean is simple. Track the bean from harvest to end of production. But to do so requires a comprehensive investment of time, technology and money. Today, over one-third of the cocoa volumes sourced by some of the biggest companies are still untraceable. While this is a step in the right direction, if we do not know which farm produced the bean and under what conditions, no true effort can be made to eliminate child labor, illegal deforestation and poverty in the cocoa supply chain.
Tony’s core approach is to confront the issue of illegal labor as part of a larger set of poverty-related issues that prevent farmers from earning a living wage. To be able to implement Tony’s holistic approach, operational traceability – namely tracking the flow of the beans along the entire supply chain – forms the basis to be able to take responsibility. Upon the foundation of operational traceability, social and environmental traceability measures can then be implemented to be able to trace, remediate and prevent issues such as child labor cases and deforestation due to farms encroaching into protected areas.
Pays a higher priced premium based on living wage estimates geared to individual farms and farmers in the two nations from which Tony’s sources cocoa: Ghana and Côte d’Ivoire.
Implements its own software called “Beantracker” to guarantee operational traceability throughout the entire supply chain.
Builds upon the operational traceability knowledge by implementing social traceability measures. Called the Child Labor Monitoring and Remediation System (CLMRS) it allows Tony’s to identify and resolve current child labor cases and help prevent new ones.
Provides technical assistance to farmers to implement environmental traceability measures via GPS mapping, improve farming techniques, help develop infrastructure and transfer technology.
Signs long term memoranda of understanding with the participating cooperatives to ensure long term income stability.
Encourages crop diversification to decrease reliance on a single agricultural product.
TONY’S OPERATIONAL TRACEABILITY EFFORTS
Tony’s “bean-to-bar” system is a digital logistics tool that tracks the volume of cocoa beans into the cooperatives (who put the beans into sacks) from the farms of the farmers (who grow but do not package them in any way), tracks the inventory of beans at the cooperatives and traces their movement from the cooperatives through the rest of the cocoa/chocolate production supply chain through to the end product. The system includes GPS mapping information as well as the payments for the premiums Tony’s pays the cooperatives which, in turn, distribute the premiums to the individual farmers as determined by the farmers themselves. It includes historical production data as well as current production totals. That way every bean grown by every farmer can be traced back to its origin.
The system, called “Bean Tracker” is fully transparent. It is built upon Chain Point technology. It allows us insights into the supply chain and the information needed to make it fairer.
WHY THE SYSTEM WORKS
Tony’s bean-to-bar traceability system works because:
Individual farms are inspected every year by Tony’s employees, by co-op officials and by outside certifiers such as Fairtrade in order to look at labor and production conditions.
The system is a closed system with a limited number of participating entities allowing for tracking of all aspects of the production system. It enables a “checks and balances” framework with each subsequent entity validating the prior entity’s data entry. At any given time, all parties to the cocoa supply chain can see exactly where the beans come from and where they are presently in the supply chain.
The financial incentives built into the payment system rest in part on compliance with Tony’s standards and the penalty for non-compliance is ejection from the support system.
There is a yearly audit done by PwC as to the efficacy of our traceability system.
Tony’s currently works with nine cooperatives in the two countries covering almost 12,000 farmers although many farmers have multiple plots of land so the number of farms included exceeds the 12,000 number. Even with these numbers, our system enabled us to fully trace cocoa liquor going to back to 2012 and cocoa butter from 2016 onward.