53. Business as Usual is Not the Only Way to Do Business

March 25, 2024.

The Dividing Line--between country and city, between commodity and product.

Principe island--where chocolate started in Africa.  Fitzwilliam Owen, the man who established a cocoa producing colony on Fernando Po (Bioko).  Tetteh. Quarshie.  ICCO.

Importance of certifications (NOT).  PH&F solution:  remove the city-country division.  Importance of the FFGCCC to the international chocolate market.  Will the PH&F model remove the existential barrier?  No if chocolate is only sold locally.  Yes if chocolate is sold to the FFGCCC countries.

Other barriers:  transportation, customs, certification of facilities.

My store in Cordes sur Ciel, a French non-profit.  Breeching the barrier--shipping in refrigerated containers.

Local fund-raising efforts:  (a talk at Chateau de Bouscaillous.

Transcript

SPEAKER_00 0:41

That was Chopin's Prelude Number Seven in A major. It is his easiest prelude and really one of the loveliest. Welcome to Podcast 53, which is entitled Business as Usual Is Not the Only Way to Do Business. Today's podcast is about breaking down barriers, and I am going to list and discuss barriers that prevent us at Project Open Fairness from confronting the biggest barrier of them all, the divide, the wall between country and city. That barrier, that wall, is truly ancient. It harkens back at least 5,000 years to the foundations of civilization, when cities such as Ur of Mesopotamia were founded on the proposition that a country's population be divided between those who live in small communities and those who live in cities, between those who grow agricultural products and those who add value to them and sell them in a consumable form, and reap almost all the profits. We on the board of Project Hope and Fairness are confronted with a slightly more complex version of that dividing principle between country and city, between commodity and consumable. And that's what I'm going to be talking about today. But first a little primer refresher. The cocoa bean is extracted from a large pod that hangs off the limb of an understory tree that grows in tropical forests. For thousands of years, cocoa was grown in forest communities dotting the Amazon River basin. The beans were fermented and dried in forest clearings, then moved by canoe thousands of miles to the great cities of the Mayan and Aztec empires, where they served both as currency and as a liquid refreshment in the form of a hot, frothy, and spicy liquid called chocolato or hot bitter water. Cocoa came to Africa in 1822 when a project funded by the King of Portugal brought thousands of cocoa seedlings from Brazil to the island of Principe. Located about 270 miles southeast of Cameroon, the island was initially home to sugar plantations starting in the late 15th century. However, the sugar industry eventually collapsed because of competition from Brazil, and Portuguese plantation owners lobbied the king to support a new slave-based industry, cocoa growing. The beans were fermented and dried and then ferried to Europe where they were used to make hot cocoa. Later in the Industrial Revolution during the 19th century, when technology was revolutionizing all aspects of European life, including food, cocoa beans were converted into a paste that we now call chocolate. Around 1827, a British naval officer, Fitzwilliam Owen, a cartographer, captain in the Navy, and an ardent abolitionist abolitionist, was on assignment by the Navy to map the island of Fernando Poe, now called Bioko, which is located only 60 miles southeast of Cameroon. Part of his assignment was to establish a colony on the island. While he was mapping, he attacked passing Portuguese slaving ships, liberated in total two hundred and twenty five hundred slaves, and brought them to the new British colony on Fernando Po, now called Bioko. During his three year stint on the island, Owen procured cocoa seedlings from Sao Tome and Princepe Islands, which were Portuguese, and he distributed them to the farmers that he had liberated and settled in communities nestled among the island's tropical forests. The introduction of cocoa growing greatly improved the economy of Bioko as it had done in Sao Tome and Principe. Then in the early 1870s, a Ghanaian blacksmith, Tete Kwarchi, who heard about job possibilities on Fernando Po, left his parents' farm in Mompong Gold Coast or Ghana, and sailed to Fernando Po, where he worked for six years. On his way back home, he illegally secreted cocoa seeds in his toolbox and planted them on his parents' land, where in Mompong you can still find a tree or two that have endured over the last hundred and fifth from the initial planting. Within a mere generation, cocoa growing spread from Gold Coast to nearby Ivory Coast, which is um still called Ivory Coast. Gold Coast got changed to Ghana in 1957. After the independence of Ghana and Cote d'Ivoire in the late 50s, the 1950s, the chocolate business switched from colonial control to an alternating dual control between the growing countries of the world and the major buyers. An organization that was founded by the world by the UN has combined this dual control, and it's called the ICCO or International Cocoa Organization. That is an intergovernmental body of 22 cocoa producing countries and 29 cocoa importing countries. Its members vote on international cocoa trading contracts. And on the website of ICCO, you can see how cocoa is trading currently, what the prices are. In 2000, people became aware that cocoa growing in West Africa, particularly in Ghana and Ivory Coast, depended heavily on child labor and even in some cases child slavery. When I first became interested in the cocoa industry in 2003, the price of cocoa was at just over $1,000 per metric ton. Now, because of global warming effects on climate, the price has shot up to $7,000 per metric ton. This price increase, however, does nothing about the problem. It does not enrich the farmers. Cocoa farmers still earn very little and still use extensive child labor to bring in and treat the crop. In the early 2000s, the chocolate industry's solution to essential poverty in the industry was a series of certifications known as, for example, Fair Trade, Organic Certification, UTZ, and Rainforest Alliance. These certifications added a little bit to the price of a metric ton of cocoa and did very little to solve the child labor problem. For example, the pittance that it provided didn't pay for fertilizer, needed to increase yields, nor did it really generate the cash to keep one's children alive from getting malaria, or to hire adult labor to replace one's children and send them to school. And that's where we come in at Project Hope and Fairness, which was founded in 2006 to work on a restructuring of the UR model to remove the city-country division and to bring manufacturing into the countryside rather than having it based in industrial zones surrounding cities. This we believed would bring cash into the village and family coffers to improve the cocoa growers' way of life, to drill boreholes and erect water towers so that clean water would be available from a tap rather than having to carry it for hundreds of feet in basins on top of one's head, or to bring solar electricity to communities that are off the grid, and so many of them are off the grid, and to improve availability of education and modern medicine. In 2013, Project Open Fairness established its first mini chocolate factory. In 2021, we bought our first cocoa press and cocoa grinder for the village of Depa, our first project. And now half of their business is selling chocolate bars, and the other half is selling cocoa butter and cocoa powder inside Ivory Coast. Well, back to the concept of barriers. The barrier remains. That is the barrier between country and city and the money going mostly to the city. Despite organic and fair trade and rainforest and UTZ certifications, cocoa farmers still cannot earn enough to improve their quality of life. And now, on top of that, global warming is caused by the what I call the FFGCCC, which is an acronym that I made up for fossil fuel guzzling chocolate consuming countries, is taking a hefty bite out of cocoa production in West Africa. Now, even if farmers get their pittance from the laughably inadequate certifications, it's easily countered by severe losses in yields as soils become more depleted with higher temperatures and scarcity of rainfall, and fires are now threatening the very existence of the cocoa farms. Only one country in the global north, that is the producing countries, does not really belong in the FFGCCC category, fossil fuel guzzling chocolate consuming countries, and that's Norway. One year from now, in fact, in 2025, Norway is banning the sales of all internal combustion cars. Who else is even close to doing that? Certainly not the United States and certainly not Europe. They're right around 10% of cars per year are electric, so they aren't doing much good. Will the Project Open Fairness model break the existential barrier for the cocoa farmer? The answer is a qualified yes. There is a big if, however, associated with the model. If the cocoa producing cooperatives sell only locally, that is, only in their own country, then the model may not work. Because they're selling to people who can hardly afford to pay much for the product. So they're not going to make much money. I believe that in order for cocoa farmers to earn enough to raise a family and to have a decent uh living, they need to sell to external markets that pay more. Those markets lie mostly outside of Africa in what is called the global north. And somehow we have to break the stranglehold that big chocolate has on this whole system, where big chocolate is getting the product for a very low price. To sell the chocolate products in the global north, we have three big barriers to contend with. How to get a production facility certified so that it is acceptable by the global northern countries, how to ship product affordably and safely, and how to get through customs on the global north end where you might lose your shirt trying to get the product into the country. Because the big guys, big chocolate, they've been doing it for hundreds of years. They know the system, they're very good at it. And uh trying to work uh with uh limited information is is difficult, it takes a long time. Uh, we are getting close to learning how to certify a production facility. If we just make 100 pounds of chocolate bars for 30, we can get it certified, analyzed, get a COA, a certificate of analysis for $30 or $40 for a shipment that's worth maybe $3,000. Um that's called, as I said, a COA or certificate of analysis, showing that the product is safe to eat. That is, it gives you a microbial breakdown. Um, or if we are into long-term production with more regular shipments, uh, we can purchase a certificat de salubrité, a certificate of safety, that lasts that's good for an entire year. Uh, that certificate costs $650 per production facility per year. So that's one barrier. It's expensive, uh, and we have to pay for it. The cocoa farmers don't make enough money. You know, the average cocoa farmer makes somewhere between $400 and $800 a year. It's not enough to pay for stuff like that, even if you they all group together. Shipping finished product is another uh real challenge. For example, I run a small chocolate shop in Cordesur-Ciel in southern France, where I live with my wife Eve. You'd if you'd like to see pictures and watch videos of my shop, just go to Facebook and search Le Comptoir du Cacao, L-E-C-O-M-P-T-O-I-R, space, d u space, c A-C A O, Le Comptoir du Cacao, and then Cord sur Ciel or uh C-O-R-D-E-S space, S-U-R-Space-C I E L. So search for that and you'll find a lot of videos. I talk about my products, how they're made, and lots of pictures of new products. I started the shop uh 10 months ago in the beginning, thanks to help from Project Open Fairness. I imported 70% bittersweet chocolate, 30 pounds of that, 130 kilos of that. I'm sorry, 100% chocolate, that's bitter or baking chocolate. I imported 55% milk chocolate. I imported cocoa butter and cocoa powder. It was all brought by DHL. I had to pay 600 euros or 700 to French Customs because I didn't have a shipping agent. Sometimes, you know, with this in this business, uh, it can so you can have a few unpleasant surprises. And what I had imported was two kilogram blocks. So they weren't like retail ready bars. The rule is that you have to pay a duty on retail ready bars because the theory is that you're cutting into jobs in France or your United States, wherever you're importing to, so you should have to pay the opportunity cost. Um, however, these are two kilogram blocks. Nobody buys two kilograms, a giant block that weighs like almost five pounds. Nobody's going to buy something like that in a retail environment. And that theoretically, there's no duty for something like that, but I still paid duty. I had to pay 600 euros. A year later, Depa and Nducy, the two villages that shipped me, now send me the 200 kilogram blocks by mail. It's an expensive way to go, but it works. I pay 30 kilograms per kilo or 15 dollars a pound. 10 euros go to the cooperatives and 20 euros go to the French postal system. The Austin, well, actually, it's the Ivorian and French postal systems. To make this work financially, my shop is a French nonprofit. It's called Projet Espoir et Equité. It's the it's a nonprofit uh named after the American one, Project Hope in Fairness. So I don't pay salaries and I don't receive one. I'm a bénévole, I'm working for free. I do pay for contract labor, I can do that legally, and it's only for one day a week. Most items in the store involve less than a 30% food cost, so that way I can use very expensive chocolate and still make money. For example, I make butter-based cookies that are dipped in chocolate, so they taste really good and they look really beautiful. And the chocolate only accounts for 5% of the product's weight. Another thing that I serve in the store is hot chocolate, which is quite popular, made from the cocoa powder that is made in Depa, the village that has a cocoa press. And soon uh Indusi is going to get its own cocoa press thanks to a grant that we're getting. And uh in the hot cocoa in the hot chocolate, the cocoa powder only represents 10% of the formula. Eventually, if I can grow the market, then I can import 1,000 kilograms or 2,200 pounds of product at a time. Uh, and this will drop the shipping cost from 20 euros per kilogram to, I believe, 2 euros per kilogram. So it's one-tenth the cost because it will be uh put in a container, in a refrigerated container. So that way it might take four to six weeks to get here, but it won't melt on the way and won't be damaged. Uh chocolate does not ship well at tropical temperatures, it needs to stay below 65 degrees Fahrenheit because the melted cocoa butter, um, as we learned in the last podcast, changes the flavor, makes the chocolate bar crumbly, dull in appearance, and it loses the flavor because of the fat that's coating the outside. Just two days ago, a local school featured a non-competitive race in which the children ran a prescribed distance and the parents wrote a check. Half the proceeds go to the school and half go to Projet Espoirs et Equité. Two weeks from now, I will be giving a talk at a dinner at the Chateau de Bouscaillou in nearby Gayac, France's oldest wine region. The dinner is comprised of five chocolate-based dishes cooked by Jean-Luc Denonin, a semi-retired chef who used to run a two-star Michelin restaurant here in Cordes-sur-Siel. I'm making some headway here in France. I've been to the Salon du Chocolat in Paris for two years running, and I hope to continue to gain some connections and notoriety. Already my store is known locally for its buttery and flaky palmiers, which are the queen of French pastry, and other gâteaux or biscuits biscuits such as speculos, a spicy Dutch cookie, cookies, that's how the French pronounce cookies, uh, which are gluten-free chocolate chip cookies made with buckwheat, chopped chocolate, chopped candied orange peel, and whole roasted noisette, the hazelnuts, and madlen, which is a French pastry made from pound cake batter baked in a shell-shaped mold. But in keeping with the international theme of my store, I make a Japanese version in which I mix matcha tea powder into the pound cake batter, an orange, an American version, which is carrot cake, and a French version, pound cake flavored with candied orange peel. Also included in the list of gateau is the brownie, which I make with cocoa powder and top with coffee buttercream. Soon I will make I will buy an ice cream machine and begin to make chocolate ice cream, hazelnut ice cream, vanilla ice cream, and raspberry sorbet. And of course, the chocolate comes from the villages, and I will be making sauces that go over the ice cream. And I will also make the most American of desserts, brownies and ice cream. Just a couple days ago, I developed a method for glazing cocoa beans. I purchased them from the cooperatives, lightly roasted and hauled, and then I boil them in a simple syrup that is 50% sugar concentration, until the sugar concentration reaches 80%, that is the softball stage. And then I pour the beans and syrup through a sieve and set spread the beans onto a sheet pan, bake them for three hours at 50 degrees centigrade. They develop an attractively shiny and transparent glazy exterior. These beans are easy to ship, don't stick to other products. They make wonderful snacks, especially if mixed with dried fruit and nuts. An African trail mix. And they'll be really good with dried jackfruit and roasted cashew nuts, which are both local products. Well, we are making progress, and there are many others besides Project Open Fairness who are trying to change the system as well. For example, a friend of mine, Emmanuel Axel, look him up on Facebook, E-M-A-N-U-E-L, space A-X-E-L, left he left the banking business years ago and started his own chocolate shop in Abidjan, the commercial capital of Ivory Coast. He is a fabulous speaker, highly competent chocolatier, and he really cares about the cocoa farmer. I see him twice a year, either at the Salon du Chocolat in Paris or in Abidjan. And he warms my heart because he believes that the little guy deserves a break and that we can make the world a better place. Just because the little guy has not gotten a break for 5,000 years doesn't mean that business as usual. Is the only way to do business. Well, thank you for listening and talk to you next time. Bye. To finish this podcast, I am playing Prelude Number 15 by Johann Sebastian Bach in G major.