Ownership across the Commodity Chain

A guest blog from Michael Niemann, a writer and teacher, and expert on the cocoa to chocolate commodity chain

Think of the Divine chocolate bar you just bought as the last link of a long chain. As you follow the chain back, link by link, you discover all the things that were necessary to make that Divine bar. There’s the wrapper, of course, then all the things what went into the chocolate itself–cocoa, cocoa butter, sugar, vanilla, lecithin. You can spot all those things on the list of ingredients. But you’ll have to use your imagination to see the people who worked hard to make them. That’s the problem with chocolate (and all other things). We can always see the thing but rarely think of the people who make everything that goes into it.

Fairtrade is an important step towards making some of those people visible. Every time I buy a Divine bar, I know that my purchase also benefits the cocoa farmers of Kuapa Kokoo. They will get a fair price and a social premium that contributes to their livelihood. But remember, the farmers stand at the very beginning of that chain. Fairtrade helps channel some additional money their way, but they are still at the beginning.

Throughout history, being at the beginning of a commodity chain has not been the best place to be. Yes, there have been some exceptions–oil comes to mind–but these just prove the rule. Usually the people who handle the later stages of making things, those in the middle and at the end of the chain, gain more. Economists call that value-added. That’s especially true of things made from tropical inputs. Fairtrade, as important as it is, does not change the position of the farmers, nor does it give them a larger share of the value-added that accumulates along the chain.

That’s why venture that Kuapa Kokoo and Divine have pioneered is so important. The farmers are part-owners of the chocolate company. They have leapfrogged from the beginning of the chain to its end. When Divine managing director Sophi Tranchell delivered another dividend check to Kuapa Kokoo last August, she didn’t hand over development aid, she handed the farmers their share of the value-added accumulated at the end of the chain. It’s fairtrade plus ownership. We can only hope that this model is replicated many more times.

Read Michael Niemann’s blog Bitter Chocolate here

6 Responses to Ownership across the Commodity Chain

  1. […] Divine Chocolate in the UK was kind enough to invite me to write a blog entry. You can read it here. […]

  2. Scott says:

    Hi Micheal,

    Thanks you for this overview of Divine’s ownership-based fair trading model.

    I take up your last comment that it is your hope this model will “be replicated many more times”. While such an aspiration seems admirable, I see a number of challenges to its realisation.

    First from what I have read, the development of the Divine “fair trade plus ownership” model took place under a unique set of circumstances, involved an equally unique group of producers, ATOs, NGOs and their very talented members, combined with an equally unique and formidable networking arrangements within those groups.

    Second, there seems to be limited information and expertise available for prospective “ownership model” developers and supporters. They may be around but they appear to have limited visibility to interested others.

    Finally, the current dominance of the FLO model of fairtrade is so heavily marketed and financially supported, alternative models are marginalized and thei credibility undermined…I know that Divine, Cafe’Direct are the exceptions, but they are just that…exceptions.

    As an advocate for this model what advice do you have or direction do you offer for its further advancement and more widespread adoption?

  3. Hi Scott,

    You raise important points. Let me take them in order of ease. Yes, the FLO fairtrade model (which Divine also participates in) has drawbacks. It focuses more on getting corporations in the global North to become fairtrade partners rather than changing the nature of those corporations. Take Cadbury, for example, the company just made a commitment to fairtrade, but its own legal structure does not allow for the kind of ownership model that Divine has pioneered (unless cocoa farmers buy Cadbury shares en masse, not likely). So I’m not so naive as to believe that fairtrade can change that.

    I also understand that Divine is a unique case and involved significant financial support to made the farmer ownership possible. So yes, it will be difficult to replicate that exact model.

    My hope, however, lies with the large number of small entities in the global North that have joined and continue to join the fairtrade movement. That’s where change is possible.

    For one, businesses who decide to make and sell fairtrade products should form cooperatives just like the farmers do. Equal Exchange in the U.S. is one example, as is La Siembra cooperative in Canada.

    That form of organization lends itself much more to the kind of participatory structure I envision. It also creates a persistent structure that continues even if the founders decided to do something different–unlike Green & Black which was sold to Cadbury.

    Just speaking for myself right now, I have plenty of doubts about the “social capitalism” model that makes the rounds–private ownership with a social conscience. That can just be a fad, a new marketing ploy.

    In my mind, alternative business structures are the key. There are both literature and websites that provide information on forming worker- or consumer-owned cooperatives. In the U.S., there is the National Cooperative Business Association and I’m sure there are similar organizations in the UK.

    I hope that answers your question. I know it’s vague and seems a very long shot, but that’s what I hope for.

  4. Scott says:

    Hi Michael,

    Thank you so much for such a comprehensive and informative reply. Thanks also for the information on alternative business structures. I will check out the literature and the net.

    I was wondering if you were aware of any plans by the founding ATOs and NGOs and the amazing individuals that were responsible for the development of the original farmer-ownership model (including Divine) to reform as an ‘alternative FT business structure’ coalition: a coalition that would collectively promote and support the future development of this model?

    It seems such an injustice that those with the most knowledge, understanding and direct experiences of the how to achieve success in creating and sustaining these alternative structures have been and remain so unrecognized and underutilized.

    Maybe you should lead the way??

  5. Scott says:

    Thanks Sophi!

    Checked out those sites, they are great! Best wishes with spreading the word!

    Cheers
    Scott

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