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Olam Cocoa to source 100% sustainable beans by 2020

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Douglas Yu

By Douglas Yu+

18-May-2017
Last updated on 19-May-2017 at 15:47 GMT2017-05-19T15:47:38Z

Around 20% of Olam Cocoa's cocoa beans are currently sourced to its version of sustainability. ©iStock/AndreyGorulko
Around 20% of Olam Cocoa's cocoa beans are currently sourced to its version of sustainability. ©iStock/AndreyGorulko

Olam Cocoa has announced it will increase its volume of sustainably sourced cocoa beans by 20% over the next year, and ultimately reach 100% by 2020.

Currently, over 20% of Olam’s cocoa beans are sustainable, which under its definition means they are either sourced from farmers supported by its own sustainability program, Olam Livelihood Charter (OLC), or certified by one of its certifications partners, including Rainforest Alliance, Fair Trade International or UTZ.

The company recently unveiled its US innovation center right outside of Chicago to scale up its regional business. Olam posted $19bn in-group revenues last year.

Olam Cocoa recently opened its latest US innovation center outside of Chicago. Photo: Olam Cocoa

“Olam has a sourcing capacity of around 950,000MT annually across 11 countries, including Cote d’Ivoire, Ghana, Nigeria, Cameroon, Ecuador, Brazil, Indonesia, Papua New Guinea, Uganda, Tanzania and the Republic of Congo,” Leopold Palmer, cocoa trader & sustainability manager at Olam Americas, said.

“In 2016, 200,000MT of all our cocoa was sustainably sourced from OLC,” he said. “Our quickly growing sustainability programs in Indonesia and Ecuador give us confidence [that we’ll reach 100% sustainability goal].”

However, Olam Cocoa does not have any ground presence in Central America, the company said.

The Olam Farmer Information System

As Cargill recently incorporated a digital payment system to its new licensed buying company in order to increase cocoa traceability, Olam said it adopted a similar technology that is “so much more than just a method of payment”.

“We call it ‘The Olam Farmer Information System (OFIS),’ and it is software platform for collecting and analyzing smallholder farm data,” Palmer said.

OFIS utilizes an Android mobile application, which is designed to work offline in some of the most remote corners of the world, he explained. Then Olam-trained field technicians are able to register thousands of smallholders, use GPS to map their farms and local infrastructure, collect all types of farm gate-level data, such as the age of trees, and record every training intervention.

“In short, creating a clear profile of each tiny farm, and give farmers more tailored support while monitoring and learning which interventions have the biggest impact on yield improvements and other outcomes,” Palmer said.

Olam reportedly gave 10,500 cocoa smallholders their customized farm management plans through text message in 2016. These cocoa farmers will soon be able to manage payments through a mobile wallet, Palmer added.

Developing bespoke programs for chocolate makers

Olam said its customer base has broadened extensively since it purchased ADM’s cocoa operations for $1.3bn in 2015.

However, the challenge remains ensuring all Olam’s customers are aware of the sustainability programs it offers, Palmer said.

In addition to working with chocolate producers to support smallholder farmers producing sustainably verified cocoa, Olam said it also developed “bespoke programs that align with the OLC framework.”

“These programs create a direct link between the customer and the farmers who supply their raw materials, increasing visibility of their supply chain and encouraging involvement in ‘on the ground’ sustainability decision making,” Palmer said.

CocoaAction

Palmer said Olam is part of industry initiative CocoaAction, which supports a precompetitive, holistic approach to tackle the cocoa supply chain.

“By sharing knowledge pre-competitively, aligning longer-term goals in cocoa sustainability, and sharing data at levels which have never been achieved previously, it can improve and align those individual programs, making them more impactful across the sector,” Palmer said.

“The first phase is focusing on Côte d’Ivoire and Ghana, involving 300,000 cocoa farmers participating in productivity-enhancing and community development interventions.” 

Olam's competitor Barry Callebaut pledged last year to source all its cocoa sustainably by 2025.

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