Next time you unwrap a candy bar, consider this: an estimated 2.3 million children work in the cocoa fields of Ghana and Côte d’Ivoire. A number of major chocolate companies such as Nestlé, Mars and Hershey are a part of this problem and moreover, have acknowledged their usage of child slavery in their chocolate production. Despite this fact, many of these big league chocolate companies have yet to take meaningful action against the practice.
On the other side of the spectrum, Amsterdam-based chocolate company Tony’s Chocolonely wants to change the entire industry, one chocolate bar at a time. Their objective? To make chocolate 100% slave free, not only their own, but chocolate worldwide. The company has been fighting modern slavery within the chocolate industry for the past 13 years.
In a nutshell, the problem lies within the chocolate supply chain, which begins with cocoa farmers and ends with you enjoying your chocolate bar. Large chocolate companies want to make as much profit as possible which often times means that farmers are left at the short end of the stick not being able to make a living income from cocoa. Essentially farmers are not able to ‘price’ their beans, creating a poverty trap that in turn leads to child labor and modern slavery.
Four years ago Tony’s Chocolonely decided to figure out a way to better trace the path of cocoa beans. They needed a system change and scalable solutions. What they did was create a shared value chain platform from bean to bar called the Beantracker which digitally logs the journey from bean to bar and includes a monitoring tool for all actors in the chain to see where the beans are at any particular moment in time.
The goal? For the Beantracker platform to be able to be the industry standard for the traceability of bean to bar. Moreover, for it to be a platform that all interested chocolate companies including big chocolate could use to join the fight against modern slavery in the industry.
Amongst others the world’s largest cocoa processor, Barry Callebaut, is currently inputting data on the platform enabling a full view from bean to chocolate for Tony’s Chocolonely to use this platform and help develop the value chain. Though Tony’s has been critical towards Callebaut from the beginning about their role concerning child labour and modern slavery, Tony’s Chocolonely believes that the best way to make change in the industry is to slowly get the major players on board with slave-free chocolate and developing a scalable supply chain model. And Callebaut has been a solid partner in that for many years now. If Tony’s can get large companies to follow their Beantracker protocol, the hope is that others won’t have an excuse not to.
Forbes chatted with Frans Pannekoek, Bean to Bartender, on technology’s vital role in traceability and scale, their collaboration with Accenture, blockchain and the future of slave-free chocolate around the world.
The mission of Tony’s Chocolonely is to make chocolate 100 percent slave free; worldwide. Why did you decide to get into the chocolate business and what prompted you to put an end to modern slavery and exploitation in the cocoa industry? Clearly, it’s no easy task; one that isn’t something most chocolate companies are even talking about openly.
My true drive to work for Tony’s is having a real opportunity to change the system, in this case the chocolate industry even if for just a little bit. I was able to execute my vision on a shared value chain centered around the flow of information. And by designing an infrastructure, processes and IT systems (and a great team of people) build something that could be used by the largest players in the industry as well. So reducing barriers for the big choco companies to change for the good.
What are the major challenges stopping more chocolate companies from being 100 percent slave free?
Well, the answer should be ‘not that much’. Basically Tony’s has developed it’s five sourcing principles for others to join and apply in their own supply chains. Even if those others are the big chocolate companies in the world. The premium that would allow farmer families to reach a living income impacts the profit and loss of a chocolate company. It should result in analysis of the total value chain, including the miraculous escalation of margins in the supply chain, up to the (retail) selling prices and promotional activities companies are undertaking.
Another one is traceability, it sounds so easy: consumers just want to know where the raw materials in their bar come from, but cocoa being a long and complex chain and chocolate being a processed product that turns out to be quite a challenge.
Though a chocolate bar actually is made of only two raw materials; cocoa beans and sugar (and a drop of lecithin), the journey and processing steps make it quite complex to trace. We believe that having a direct relationship with farmers through traceability is key in taking responsibility. When you buying of a big pile of beans you might turn a blind eye to what is happening ‘on the other side’ of the pile.
That doesn’t happen once you’ve met and worked together with the people in the value chain. So, of the five sourcing principles, the premium and the traceability are perhaps most divergent from common practices. Note that programs to increase quality and productivity have been around for decades, only without traceability they have seldom gained scale and impact beyond the program itself.
Talk about Beantracker and how the advent of blockchain technology has dramatically changed the potential of reliably managing traceability. Though Blockchain use for traceability is still in its early stages, how long until it becomes more mainstream?
One or two years ago Blockchain popped up everywhere. It was the hottest of exponential technologies around. And next to bitcoin its potential application in making (food) chains traceable was the key promise. We were asked to host a pilot with Accenture to explore the possibilities and first-hand experience working with this new technology. We were especially interested in what its performance would be compared to our cloud-based Beantracker. We learned a lot!
Most elementary for technology is input equals output so getting the data onto a platform (whether this is the Beantracker of a blockchain) it the main challenge. And blockchain does nothing (more) to facilitate or improve that process any more than other technologies.
And because it is still in its developing stages technology is still expensive and it requires time and resources to update and change. All in all the conclusion was, what blockchain holds the promise of being a platform for traceability anonymous transaction yet, for now, the tech was too early to move our business operations onto that platform. So the transition into the mainstream will definitely take a few more years and lots of pilots and learning to be made in all different kinds of (food) chains.
What are the main obstacles for Blockchain use for traceability?
The main obstacle for a traceability platform is uploading the data. Unlike bitcoin, which is a 100% virtual world, in the cocoa value chain, we deal with physical goods which easily can be misplaced. A bag of cocoa may be torn and disposed of, fallen off a truck or misplaced by putting it on the other side of chalk line in a dusty warehouse in the bush. If not all these (less than 100%) are logged the inflow of data determines the outcome of the dataset. So, creating complete inputs from different nodes along a long value chain is a challenge. Timely data is also a challenge because many of the cocoa locations are in regions with bad to no network coverage.
Cooperatives managers need to travel for network connections and data to be uploaded on a platform. Tony’s has built strong partnerships in Africa along the value chain so with intensive training, follow-up and a good relationship we have been able to create very good data input for the Beantracker. But neither technologies Beantracker nor blockchain in itself improve data input/uploads. We do see a big role for (improvement of data upload) in using mobile devices. We are piloting that this season.
Explain your collaboration with Accenture. Were the results promising? Where do you see this going in 5-10 years?
Before the blockchain pilot we had no working relationship with Accenture. Accenture hosts ‘dragons den-like’ events for employees to pitch innovative purposeful projects. Accenture then funds the winning projects. Two young guys from Accenture pitched the plan to do a Blockchain pilot on traceability and invited Tony’s to be the value chain owner.
Because we were monitoring this new technology and because we had Beantracker we were interested. So, together we designed the pilot, chose one cooperative and one local trader in Cote d’Ivoire (that were already doing well in data compliance in Beantracker) and trained them to input the Blockchain.
During a period of two months we logged and monitored the cocoa bean flow. Altogether 63 Delegees and one cooperative Socoopacdi and one local trader Ocean participated. We tracked about 900K kg beans, around 400 transactions (registrations, movements and corrections), 35 shipments between cooperation and local trader (trucks) and 12 international shipments.
Our conclusions based on the pilot: There is important potential in blockchain technology for traceability worth investigating, we anticipate it will take another three to five years for it to become business operations viable. We have a functional and operational traceability platform that performs the same service with a different technology.
Together with ChainPoint our partner for Beantracker we will follow blockchain developments closely as well as other relevant technological developments like Artificial Intelligence (AI) and the Internet of Things (IoT). And when appropriate applications arise, or the eco-system readiness grows, we will integrate blockchain technology into Beantracker. We are open to other parties to further explore other technologies (AI) and the application for traceability.
In short, the pilot was a great ride, we learned a great deal, had some fun along the way and realized the Beantracker was doing a fine job as our traceability platform.
