The Toolkit for Ethical Cacao Sourcing

Are you on the hunt for ceremonial cacao but feeling overwhelmed by the myriad of options available? Making an ethical choice when it comes to purchasing cacao can be challenging. To assist you in this endeavor, With Cacao Source, we present a toolkit designed to empower you to make informed decisions. 

There is currently no authority to dictate what is ceremonial cacao or not. It is not our place at Cacao Source to become this authority. This being said, we believe in transparency and empowering cacao consumers and businesses to take responsibility for their sourcing. There are no right or wrong cacao projects, there are only transparent or not-transparent projects. Once the transparency is out, everyone can make a conscious decision about what they choose to support and value. 

This article is a toolkit for cacao sourcing. We will take the time to answer each main question. It does not  mean that we have the right answer but rather, that we are transparent with our answers. We continuously keep learning and improving our production process to bring respect and value back to the local community and land of Guatemala.

What is the process of cacao production? 

Here are seven essential questions to ask your cacao provider to ensure a mindful selection process:

1. How Fairly Are Farmers Compensated?

When it comes to sourcing ceremonial cacao, understanding how farmers are compensated is a crucial aspect for Cacao Source. It not only reflects the value chain of the product but also sheds light on the fairness and sustainability of the entire process.

Let's break it down into two scenarios:

1. Direct Farm Sourcing: In an ideal scenario, farmers grow, ferment, and dry the cacao all on their own land. This setup, although rare, ensures a more direct and equitable exchange. If you're curious about this process, you might wonder how much farmers are paid per bag of cacao, typically weighing one quintal (100 lbs). In Guatemala, where cacao sourcing is prevalent, middlemen known as "coyotes" typically purchase dry cacao from farmers for prices ranging between Q1,300 to Q1,500. Year 2023. 

2. Collective Sourcing: More commonly, cacao sourcing comes from collectives.

Here, it's essential to dive deeper to ensure that farmers are being fairly compensated. You can inquire about the pricing for both wet cacao (straight from the pod) and dry, fermented cacao. It's important to note that wet cacao loses a significant amount of weight during processing—about 60-70%. (The ratio is appr. 1 to 3) That means for 1 libra of dry beans you need to have 3 libras of baba. It means that the price paid for wet cacao doesn't directly translate to the final cacao paste price. In Guatemala, wet cacao averages around 4Q Year 2023 per pound. 

By understanding these intricacies of farmer compensation, we can make more informed and ethical choices when sourcing ceremonial cacao. It's not just about the final product—it's about valuing the hard work and dedication of the farmers who make it all possible.

 Cacao Source: We prioritize fair compensation and pay our farmers an average of Q2,200 year 2023 per quintal for direct frame sourcing.

We ensure that farmers receive between the year 2023 5Q to 8Q per pound for their efforts. Additionally, we pay between Q2,500 and Q3,500 per quintal for cacao from collectives. (dried beans) This higher price reflects the collective's need to cover expenses related to fermentation, drying, and administration. Interestingly, collectives often boast better facilities for fermentation and drying, leading to higher-quality cacao.

​TAKEAWAY

• Understanding the value chain of cacao is crucial.
• Inquire about the payment structure for cacao farmers.
• Differentiate between direct farm sales and collective sourcing.
• Consider the impact of wet and dry cacao prices on farmer earnings.

2. What Processing Methods Are Employed?

When it comes to the cacao you purchase, understanding how it's processed sheds light on the journey from bean to bar. Here are the three main methods:

Fully Artisanal Cacao with Zero Machines: This approach is deeply rooted in tradition, where cacao is roasted over open flames, peeled by hand, ground manually, and molded with care. It's a labor-intensive process that honors ancestral methods. Due to the significant time and effort involved, this cacao is usually priced higher, reflecting the value of the labor invested. But how much do the people involved actually earn? With each pound of cacao taking over three hours to process by hand, fair compensation is essential. In Guatemala, where the minimum wage is Q13 per hour, paying more, perhaps around Q40 for processing, is not just an act of generosity but a recognition of the dedication behind each batch. While projects owned by national or indigenous people may seem promising, it's vital to ensure that everyone in the process is fairly valued. Seeking fully artisanal cacao means appreciating both the product and the people behind it, and there are remarkable projects out there worth supporting.

Half-Artisanal Cacao: This method blends tradition with modernity, incorporating some machinery while maintaining community involvement and ownership of processing expenses. When exploring half-artisanal cacao, it's essential to inquire about the machinery used, the roles offered to the community, and the distribution of earnings. 

Factory Cacao: In contrast to artisanal methods, factories use maximum machines. different sets of cooking, pressing, refining, and tempering of cacao. While this process may offer the efficiency and consistency required by the chocolate industry, it raises questions about transparency and economic impact. Some factories engage in white labeling, where cacao is purchased as a finished product rather than sourced directly from farmers. This practice can undermine fair-trade principles and participation in the local development of your cacao producer. At times, it results to the appropriation of other people's work marketed as its own. Transparent communication would acknowledge being a bridge between an impactful project and the consumers, therefore, indirectly supporting the regeneration of the forests and social initiatives (being a bridge is an important role, and we support transparent distributors of impactful projects!).  When considering machine-processed cacao, it's important to inquire about processing costs and location to assess its ethical and economic implications. While there are ethical ways to produce chocolate, transparency and accountability are key to ensuring a fair and sustainable supply chain. It is also an important moment to ask ourselves, what is the difference between ceremonial cacao and 100% chocolate?

Cacao Source:  At Cacao Source, for instance, we operate on a half-artisanal model, using a combination of industrial roasting and locally hand-peeled overseen by indigenous women collective leaders. The process happens in the small town of San Marcos la Laguna. This approach not only provides economic opportunities for the community but also allows for increased production and revenue sharing, fostering prosperity and unity.

TAKEAWAY

• Explore the degree of artisanal involvement in cacao processing.
• Learn about the utilization of machinery and its impact on labor costs.
• Assess the community involvement in processing and its economic benefits.

3. Where Does the Money Go?

Understanding where your payment goes when you purchase ceremonial cacao is crucial for making informed choices. Let's break down the distribution:

When you buy a pound of cacao, it's essential to trace where your money flows. Just because the cacao originates from Guatemala doesn't guarantee it goes directly into indigenous hands. Similarly, if the project is led by an international individual, it doesn't necessarily mean they're profiting disproportionately or engaging in charitable endeavors. Over the years, we've witnessed both ethical initiatives and questionable practices within the local and foreign industry.

Cacao Source: we prioritize transparency in our financial distribution. Here's the breakdown of where your payment goes when you purchase our cacao:

• Indigenous Hands: 58.48% of your payment directly benefits indigenous communities involved in the production process. This ensures that those who cultivate, ferment, and process the cacao receive a fair share of the proceeds, empowering local artisans and preserving traditional knowledge.
• Ladinos (Non-Indigenous Guatemalans): 12.21% of the payment is allocated to ladinos who contribute to the production and distribution processes within Guatemala. This inclusive approach acknowledges the diverse cultural landscape of the country and fosters equitable participation.
• International Contributors: 10.98% of the payment supports international individuals working on behalf of Cacao Source. This includes efforts in marketing, distribution, and collaboration with global partners to promote ethical sourcing and sustainable practices.

The remaining portion of the payment covers essential administration costs, such as rent, bank fees, platform fees, legal expenses, taxes, and supplies. By providing this breakdown, we aim to foster transparency and accountability in our operations, ensuring that each purchase contributes positively to the communities involved in our supply chain. 

* Guatemala data has been collected through 4 years of observations and research. Unknown means we couldn't put an average on it as it varies a lot. It is an invitation for you to collect these answers from your cacao provider. 

TAKEAWAY

• Analyze the distribution of revenue among indigenous, local, and international stakeholders.
• Examine the economic implications of your purchase on various communities involved in cacao production.

4. What Initiatives Support the Production Country?

In the world of ceremonial cacao, terms like "regenerative," "organic," and "fair-trade" are frequently tossed around, signaling a commitment to ethical sourcing and sustainability. But what actions are these cacao projects really taking to back up these claims? It's a question worth exploring, especially considering the often distant relationship between cacao companies and the farming communities from which they source.

Many cacao projects operate by simply ordering cacao seeds and having them delivered, with minimal engagement beyond the transaction. While occasional farm visits may occur, they're infrequent due to the remote locations of many farms. While establishing relationships with farmers can be beneficial, particularly if fair compensation is ensured, transparency in communication is paramount.

So, has your preferred ceremonial cacao brand made a tangible difference in farming communities? Have they invested time and resources into environmental regeneration or social support initiatives? At Cacao Source, we believe in putting our words into action.

Cacao Source: For instance, we employ a full-time farm supervisor with over a decade of experience in regenerative farming. His role involves monthly visits to our farm origins, working closely with farmers to develop plans for enhancing production, cacao quality, and soil health. We've collaborated with individual farmers to share fermentation techniques and improve drying facilities, supporting the entry of two new small-scale farms into the organic cacao market.

Working with emerging cacao farmers demands significant behind-the-scenes effort, including ongoing follow-ups and technical assistance. Additionally, we've established the NGO Give Back to the Source, (and partnered with a newly founded NGO in Germany (Corazon de Cacao) dedicated to reinvesting our profits into rural community development. Over the past year, we've conducted three workshops on bamboo crafts for indigenous women and are currently spearheading the creation of an eco-artisan women's center. We initiated a dentist initiative and a school to help the kids to learn about hygiene and nutrition and many more things.

On a local level, in San Marcos la Laguna, we've empowered seven women collectives with the knowledge of cacao transformation. Today, two of these collectives have launched their own cacao brands while continuing to collaborate with Cacao Source on processing. 

These initiatives represent just a snapshot of our commitment to social and environmental responsibility. Don't hesitate to inquire about them—it's these actions that truly make a difference.

TAKEAWAY

• Look beyond labels like "organic" and "fair-trade" and assess tangible actions taken by cacao projects.
• Evaluate the direct environmental and social impacts within farming communities.

5. How Productive Are the Farmers and What is the Scale of Their Operations?

Exploring the intricacies of sourcing ceremonial cacao unveils a journey of discovery and accountability, a path that Cacao Source has traversed with earnestness and introspection. One of the pivotal questions we've grappled with is how to discern the authenticity and sustainability of our cacao sources—a quest marked by lessons learned and evolving practices.

The challenge lies in gauging the correlation between the volume of cacao we procure and the expanse of the lands we survey—a task devoid of a definitive formula but guided by astute assessments. We delve into the density and age of cacao plantations, mindful that the yield varies with factors like tree age and plantation health.

Ensuring the quality and organic integrity of our cacao entails assuming responsibility and diligence in our research. As stewards of our product, we are beholden to the truthfulness of our claims and the trust of our customers. Ignorance is not an excuse; it's incumbent upon us to scrutinize our sourcing practices rigorously.

In essence, procuring cacao demands more than blind trust; it necessitates a nuanced understanding of the challenges faced by farmers and a commitment to their upliftment. While economic hardships prevail in rural Guatemala, we recognize the imperative of supporting struggling farmers on their journey toward sustainable practices. True impact lies not in facile transactions but in fostering enduring relationships and nurturing regenerative practices—an ethos that underpins our commitment to "regenerative cacao.".

Cacao Source: In the nascent stages of our sourcing journey, our network comprised primarily small-scale farmers, meeting modest demands. However, as our community burgeoned and demand surged, we confronted a sobering realization during our visits to one origin: the disparity between the volume of seeds received and the land's purported capacity. Despite months of inquiry, transparency remained elusive, and we discovered that some cacao originated from larger estates in the vicinity.

Maintaining amicable ties with our origin, we recalibrated our purchasing approach, opting for modest quantities to sustain support while mitigating reliance on surplus from expansive farms. Each procurement is preceded by a meticulous assessment by our farm supervisor, ensuring the cacao meets our stringent quality standards.

Today, we can still observe some farm origins selling organic cacao in a much larger quantity than the capacity of the production of the farmland. 

​TAKEAWAY

• Delve into the productivity of cacao farms and the factors influencing yield.
• Scrutinize the transparency of sourcing practices to ensure accountability.

6. What Are the Hidden Costs and Business Model?

Exploring the economics behind (ceremonial) cacao unveils a complex tapestry of costs often overlooked in the purchase price. Beyond the remuneration for farmers and processing, there exists a myriad of expenses integral to running a legal cacao business. At Cacao Source, the perception of profitability from the outside belies the reality of our operational overheads.

Running a legitimate cacao enterprise entails more than just production expenses. Considerations extend to securing operational space, maintaining online platforms for outreach and communication, and assembling a dedicated team to facilitate customer interactions. Moreover, the logistics of transportation—both locally for seed shipment and internationally for block distribution—add significant overheads. Factor in bank fees, taxes, legal expenses, and the need for essential supplies, and the financial landscape becomes more intricate. Unforeseen costs further underscore the financial challenges faced by ceremonial cacao companies.

When these ancillary expenses are accounted for, the profit margin for the ceremonial cacao business diminishes considerably. It's a reality often obscured by the final price tag.

Equally crucial is understanding the business ethos and structure of your preferred ceremonial cacao provider. Does it operate on a hierarchical model or embrace equitable profit-sharing? Is the business conducted in the currency of the producing country or tied to a foreign economy?

Cacao Source: we embody a socially conscious business model rooted in the Guatemalan economy. Regardless of ethnicity or nationality, every team member receives a salary commensurate with the Guatemalan standard of living. This equitable approach ensures fair compensation for all, with salaries ranging from 450 to 1150 USD per month, reflective of local wage scales. Our policy fosters collective growth, with salary increments tied to the financial health of Cacao Source, fostering a sense of solidarity and shared prosperity among our team members.

In essence, delving into the economics of ceremonial cacao reveals a nuanced landscape where transparency, equity, and fiscal responsibility intersect to shape the ethos of conscientious sourcing and ethical business practices.

TAKEAWAY

• Uncover additional expenses beyond production costs, including operational overheads.
• Understand the business model and its implications for equitable distribution of profits.

7. What Happens with the Profit?

As we navigate the intricate world of sourcing ceremonial cacao, one question inevitably arises: What about profit? It's a query steeped in the ethos of transparency, where there are no absolutes, only candid revelations.

The notion of profit stems from the framework of (Win loose) We believe in win win, where surplus emerges from revenue surpassing costs. However, our journey with ceremonial cacao has led us to reevaluate this paradigm. At Cacao Source, we've embraced a different ethos—one rooted in reciprocity and community impact.

Cacao Source: For us, profit isn't the ultimate goal when it comes to selling what we deem as ceremonial cacao. Instead, it's about reinvesting in our mission and the communities we serve. Every member of our team, shareholders included, receives a salary aligned with Guatemalan standards. Beyond that, any surplus is channeled back into initiatives that amplify the social and environmental footprint of Cacao Source or directed to our NGO, Give Back to the Source.

In essence, our approach underscores the belief that there's no singular path to producing ceremonial cacao. What matters most is transparency and integrity in every step of the process. Armed with this knowledge, consumers can make informed choices that resonate with their values and aspirations.

Indeed, the cacao landscape is replete with inspiring projects, each infused with its own unique energy and purpose. By asking the right questions and fostering an open mindset, we can uncover these hidden gems and support endeavors aligned with our vision for a more just and sustainable future.

At Cacao Source, our journey is guided by a commitment to social and environmental justice. While our focus may not align with seekers of Mayan ceremonial cacao, we honor and uplift the wisdom keepers who champion this sacred tradition.

TAKEAWAY

• Reflect on the concept of profit within the context of ceremonial cacao.
• Consider how profits are reinvested into community impact or organizational sustainability.

Conclusion

At Cacao Source, we advocate for transparency in the ceremonial cacao industry. By asking these critical questions, consumers can align their values with their purchasing decisions. Each cacao project embodies a unique energy, and by engaging in open dialogue, buyers can find the perfect fit for their needs. Let's continue to explore and support ethical cacao initiatives, fostering social and environmental justice within our communities.

Let's keep evolving this toolkit by keeping the conversation open. We invite you to: 
- Ask us any clarifying questions 
- Send us any further answers to these questions which you think would be relevant to the toolkit
- Add questions that you think we should be able to answer for transparency reports

You can reach Cacao Source at: cacaosource@gmail.com