Startup Watch

Uncommon Cacao: Startup decommoditizing cocoa for craft chocolate movement

By Oliver Nieburg contact

- Last updated on GMT

Startup ditches world cocoa market by setting annual fixed prices with farmers and exporters. Photo: UC
Startup ditches world cocoa market by setting annual fixed prices with farmers and exporters. Photo: UC
US startup Uncommon Cacao is enjoying revenue growth as it supplies raw cocoa beans to artisan chocolate makers disconnected from world market prices.

It says its model of setting fixed farm gate and export prices annually helps farmer incomes grow more meaningfully than cocoa in the commodity market or via fair trade certifications.

What is a B-Corp?

images_B_corp_logo
Photo: Bloomin

Uncommon Cacao is B-Corp certified. B Corporation grants B-Corp status to for-profit companies that meet its minimum standards for social and environmental performance. There are 2,221 B-Corps worldwide across 130 industries, including ice cream maker Ben and Jerry's.

The Berkeley, California-based B-Corp was set up two years ago by former employee of Dandelion Chocolate Maya Granit and her business partner, CEO and founder Emily Stone.

Uncommon Cacao​ is today supplying Dandelion and around 130 other chocolate businesses such as Valrhona, Lake Champlain Chocolates and Dick Taylor Craft Chocolate.

The startup’s revenues doubled year-on year in 2016 to reach $1.3m. It recently began supplying beans from Colombia, adding to its offer from Belize, Guatemala, Bolivia, Haiti and the Dominican Republic.

Price systems too low to eradicate poverty

Speaking to ConfectioneryNews, managing director Maya Granit, said the company is aiming to provide a transparent alterative to commodity exchange and certified cocoa, which she argues struggle to substantially improve farmer incomes.

"[Certification] is still based on the commodity price system, which is just intrinsically too low for farmers to come out of poverty.

"Consumers are becoming more savvy and chocolate makers of all sizes are questioning how effective certifications are,” ​she said.

Uncommon background

Copy Raking 3, Belize
Photo: UC

Maya Granit, formerly of Dandelion Chocolate, and her business partner Emily Stone started trading high quality, traceable cocoa beans via 50 smallholder farmers in Belize in 2010 through a company named Moho River Cacao. The business was renamed Maya Mountain Cacao in 2012. This business has expanded operations to work with 300 farmers in Belize and Granit and Stone started a similar direct-sourcing operation in Guatelama (Cacao Verapaz  as demand grew among America's thriving craft chocolate segment. The pair established parent company Uncommon Cacao around two years ago when they acquired a US sales and distribution business with existing partnerships in several countries. Their cocoa sourcing expanded via the acquisition to Bolivia, Haiti, the Dominican Republic and Colombia, where Uncommon works through exporters. Maya Mountain Cacao and Cacao Verapazas are today subsidiaries of Uncommon Cacao.

Premiums for UTZ  - the market-leading certification program making up 56% of global certified cocoa in 2015 - are paid on top of the world market price.

Certified premiums don’t address poverty, argues MD

World market prices crashed to a four-year low earlier this year and with a global production surplus expected for this crop year, analysts forecast​ prices will remain low for the next cocoa year (October 2017 – September 2018).  

Granit said this may worsen farmers incomes and render certification premiums even more ineffective in combating poverty.

She added since certified premiums were typically paid to cooperatives, they did not always reach farmers in cash.

UTZ estimates around 50% of its negotiated cocoa premium - averaging €89/MT cocoa beans in 2016 - is paid in cash to farmers.

But Granit argued premiums don’t go far enough to improving farmers livelihoods.

Misguided focus on yields, says Uncommon Cacao

The Uncommon MD added efforts are underway across the chocolate industry to enhance farmer incomes by concentrating mainly on improving yields.

"In recent years, there have been a lot of groups advocating that the best way to increase incomes for farmers is by increasing yields, rather than touching the price lever.

"And yet, we've seen farmers remain in poverty throughout this time,”​ said Granit.

She said as cocoa prices decline and the market enters a surplus, "farmers who have been listening to these advocates, working on increasing their yields, have less or no market for the cocoa they've been encouraged to grow".

Alterative pricing system

Uncommon Cacao's prices are not based on premiums over the commodity market price.

"They’re based on farm gate price paid to farmers (with an understanding of cost of production), quality of the cacao, and market potential,” ​said Granit.

"In other words, rather than giving farmers back an additional bonus, we’re building a system that enables them to get paid more from the outset....We don’t use premiums, and farmers and suppliers don't have to pay to participate in our system,"​ she said.

uncommon pricing
Source: Uncommon Cacao Transparency Report 2016

Growing incomes

Uncommon Cacao sets fixed annual farm gate prices following community meetings with farmers for its direct supply chains in Belize and Guatemala.

In the other origins, it works through suppliers and sets fixed FOB (Free On Board export prices) with its suppliers each year following negotiations. These discussions are based on farm gate prices the supplier pays to farmers, the quality of cocoa and risk profile of the cocoa.

kpis uncommon
Source: Uncommon Cacao Transparency Report 2016

"Farmer incomes across our supply chain [direct and through suppliers] have increased over +60% [calendar year 2016 compared to 2015],”​ said Granit.

The company's average farm gate price in 2016 was $3.16 per kg, 67% higher than the average West Africa farm gate price of $1.89 per kg (Côte D’Ivoire and Ghana only).

Uncommon’s exporters also earnt 103% more than the average commodity price in 2016.

The startup is now developing location-specific living income standards for its origins.

Improved incomes, but more work to do

Copy of CacaodeColombia-7285
Photo: UC

Annual farmer income for farmers in the Uncommon network grew +61% in 2016 to an average of $604. This equates to $1.65 a day – below the World Banks $1.90 poverty line. Granit argued farmers in Uncommon Cacao’s supply chain still receive a significantly higher price than most farmers.

She added cocoa was the main source of income for Uncommon Cacao farmers, but was generally supplemented via other activities. Many farmers supplying Uncommon also supply others, but the $604 figure relates only to Uncommon volumes. 

“Many of the farmers we work with – especially the smallholders – are producing low yields of <500 kg per hectare, and on very small plots of land. Many of them have significantly increased their livelihoods through our increased pricing model; that said, we recognize there is still a long way to go,”​ said Granit.

Uncommon customers

Copy ökocaribe2
The company is working with fine flavor cocoa, which is centrally box-fermented and dried by Uncommon Cacao (Guatemala and Belize) or its suppliers in other origins. Around 33% of farmers in Uncommon Cacao’s network in 2016 were women. Around 66% of Uncommon origin companies are managed by women, while 75% of its core team are women under 35. Photo: UC

Around 80% of chocolate makers working with Uncommon Cacao are based in the US, but it also sells to companies in Canada, Europe, Australia and Japan.

"We just shipped our first containers from Guatemala to Europe last week,"​ said Granit.

The majority of Uncommon Cacao's customers are artisan bean-to-bar chocolate makers, but it is looking to also target medium-sized companies currently buying certified cocoa or from the commodity market.

"We would really love to start working with larger chocolate makers...We're slowly growing and we're hoping the trends we're seeing in craft chocolate are indicative of larger trends in the industry,”​ said Granit.

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2 comments

QUIEN SE HACE RICO CON EL CACAO?

Posted by Héctor F. Aguilar,

LA ÚNICA FORMA DE GENERAR RIQUEZA PARA EL AGRICULTOR O PRODUCTOR DE CACAO, ES QUE ÉL MISMO APRENDA A PROCESAR SU CACAO Y ELABORAR LICOR DE CACAO, MANTECA DE CACAO, POLVO DE CACAO Y CHOCOLATES Y BOMBONES Y LOS VENDA O EXPORTA DIRECTAMENTE, SI NO LO HACE ASÍ, LOS RICOS SEGUIRÁN SIENDO Valrhona, Lake Champlain Chocolates y Dick Taylor Craft Chocolate. B-Corp de Berkeley, Dandelion Chocolate Maya Granit CEO y Emily Stone Nestle que esclaviza niños en África, Toblerone, Hershey's, Snikers, kitkat, Lindt, Valor, Ferrero Rocher, ertc, etc, ENTRE OTRAS EMPRESAS Y EL PRODUCTOR SEGUIRÁ SIENDO POBRE Y PROVEEDOR DE ESAS EMPRESAS.

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Start Up Decommoditiize Coco for craft Chocolate Movement.

Posted by Eric K. Meredith,

My wife & I purchased a Cocoa Farm here in Sunyani, Ghana. But under Ghana LAWS ONLY the Ghana CocoBod can BUY, SELL or EXPORT at a FIXED price. This means that the Cocoa Farm can only sell their Cocoa Beans to the government at approx ($100.00) U.S. Dollars for a SIXTY FIVE (65 KG) bag of Cocoa Beans!!! The ONLY EXCEPTION to these laws, are ONLY if the COCOA is PROCESSED here in Ghana!!! We have purchased all of the equipment to PROCESS all TOP GRADE PREMIUM COCOA PRODUCTS at approx ONE HUNDRED FIFTY (150 KG) Per Hour!!! Please if any small Chocolate Artist need PURE TOP GRADE COCOA PRODUCTS from our Cocoa Farm here in Ghana. We want a WIN, WIN relationship with several small PREMIUM CHOCOLATE ARTIST in the U.S. or around the world who want PURE FRESH TOP GRADE COCOA PRODUCTS as follows>
#1) (NIBBS)!! #2) COCOA PASTE / CHOCOLATE LIQUOR!! #3) COCOA BUTTER!!! #4) COCOA POWDER / CAKE!!! This is our COCOA that was harvested in April thru the 1st part of May, 2017!! We will be starting a Web Site real soon, but you can contact my wife ABIGAIL MEREDITH at erickmeredith1958@yahoo.com. We would be happy to send you pictures & anything you want or need. We ONLY WANT TO SUPPLY the BEST PURE COCOA PRODUCTS, so you the GOURMET CHOCOLATE ARTIST can make the BEST CHOCOLATE!!! Please contact us if we can hope supply you with your COCOA PRODUCTS!!

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