Fair trade, organic and what to think of certifications

“We are looking for cooperation with small cooperatives that cultivate old cocoa rarities and are interested in finding a competent partner for their special harvest who appreciates their quality and is not looking for the cheapest price,” says Josef Zotter. “We don’t buy bulk cocoa in monocultures, it just doesn’t taste good.”

Through close networking in the bean-to-bar industry, Julia and Josef Zotter always find rarities from very exciting projects, such as Kokoa Kamili in Tanzania, where African agricultural economists carry out modern educational projects to improve quality for cocoa farmers and the entire harvest at the best prices market. This is fair trade at eye level. There is training, there is the best quality and the price generated then flows back to the cocoa farmers. Because everyone benefits from this high overall result. This is how fair trade should work. Or like in Belize, at the Maya Mountain cooperative, where old Mayan varieties are cultivated in mixed cultures, best hand-picked quality and what is special: the wages are only paid to the women so that the money ends up safely in the families. These two cocoa suppliers are good examples of how fair trade works in small structures.

The average price for a ton of cocoa beans, fully fermented and dried, is currently (February 2022) around USD 2,200 on the stock exchange, prices fluctuate daily.

Our cocoa price is made up as follows: 
The Fair trade minimum price for cocoa, which is set annually by Fairtrade, is currently USD 2,400 per ton, plus a USD 240 Fairtrade premium (this benefits the cooperatives for infrastructure projects and is not used passed on to the farmers), plus USD 300 as an organic surcharge, makes a total of USD 2,940 per ton.

Zotter pays between USD 4,000 and USD 7,000 per ton for premium organic quality, which is a multiple of the world market price and well above the standard price for organic and fair-trade cocoa. Is that fair? We think so.

Can cocoa farmers in a cooperative make a good living from Zotter buying from them? No, for the simple reason that we only need or buy 250 tons of cocoa beans a year, divided between 20 cooperatives from which we currently source premium quality beans. It’s just a drop in the bucket. But we still go this way because it is at least a start and makes a difference for the few who benefit from it. 
 
About three quarters of the cocoa produced worldwide comes from West Africa. The world market in 2020 was around 5 million tons of dried cocoa (according to the Hamburg Foundation for Business Ethics, statista.com (in German) ). Of these, only around 5% are Fair-certified, which is 250,000 tons, and 1% is also organic-certified, ie 50,000 tons (according to Fairtrade Monitoring Report , as of 2018). Zotter purchases 250 tons a year, which corresponds to 0.005% of the world cocoa harvest. We can’t change the business directly, but at least we have an insight and can point out grievances. 

In addition to poor pay for bulk cocoa, exploitation, child trafficking and forced labor in the conventional cocoa business, especially in West Africa, are unfortunately part of everyday life and must not be tolerated. You can’t look away either!

So let’s make the chocolate industry take responsibility for the people in the Global South, because only declarations of intent are not enough. All actors in the cocoa business must finally pay fair prices and implement educational projects so that change can take place! We will continue to work towards this.

Frequently asked questions on the following topics are answered here in compressed form:

Questions about fair trade:

1. How is the Fairtrade Premium received by the cocoa farmers?

The individual farmer does not receive the premium. The cooperative as a community receives the Fairtrade premium and it must be used for the specific purpose of the community. The farmers then decide together in which community projects the money will be invested. What is important locally, for example a school, medical care, literacy programs, pension schemes, training courses and more. Investments that benefit the community.

2. Does a cocoa farmer do the complete processing up to the finished cocoa sack?

No, we also attach great importance to the fact that the farmers do not ferment and dry themselves, because many mistakes can happen and the result is completely different. This is similar to processing grapes into wine or vinegar. Cocoa farmers need to be well trained when it is the right time to harvest, because a cocoa tree always bears ripe and green fruit at the same time. We support central fermentation and drying facilities, most of which are supervised by well-trained staff, to ensure better quality. This is the only way to achieve the fair trade, organic and quality premium. Organic premium quality is fermented in boxes separately from mass-produced goods, turned over and slowly dried under a roof. This process is also documented in detail.If all goes well

3. Is a cooperative always certified fair in its entirety?

No, in large cooperatives, which unite 200 to 3000 farmers, often only a part is fair-certified, the rest runs conventionally without certification. A large proportion is often certified, but if the cocoa is not physically sold to a chocolate producer, certificates are also traded. This is made possible by the concept of mass balancing, but we strictly reject it.

4. Does Zotter run its own plantations?

No, we do not have our own plantations and we do not manage any plantations ourselves.

5. Does Zotter purchase cocoa directly from cooperatives?

Yes, if the delivery fills an entire container (approx. 20 tons). However, an import company always does the import processing for us, which carries out quality control on site and checks the papers.

6. How does Zotter control?

By checking the certificates. Fair trade cocoa as such cannot be checked visually or sensorically, so we have to rely on the certificates.

7. What does Zotter do if there are irregularities in the cooperative?

The defect is shown. Orders are canceled immediately, then the cooperative is put on a waiting list until the cooperative can prove that internal controls are working again. A special audit is carried out by the certification body. Black sheep, which unfortunately exist everywhere, are sanctioned or have to be better trained on the system. But some keep trying, so we end the collaboration.

8. What effects does the Fairtrade premium have on the final price at Zotter?

The cocoa price itself only has a minimal impact in the cent range, depending on the type of chocolate and the cocoa content of the product. The internal administration in our company is quite a lot of work. Everything has to be documented and the audits are also a great effort, which one would not want to assume in this context. Unlike bananas, for example, which are sold without processing, cocoa goes through a series of production steps, is mixed with other ingredients until the chocolate is packaged and ready to be sold.

9. Does Zotter press cocoa butter that is additionally processed itself?

Yes and no. We can centrifuge a small amount for special varieties. The largest part is pressed especially for us by two or three manufacturers (with a certificate of origin). Cocoa butter also needs to be deodorized, we don’t have that technology in-house. We can precisely trace the organic cocoa that is pressed for the cocoa butter. Depending on the season, it usually comes from the Dominican Republic or Peru.

10. Does the Fairtrade certification system also support “poor” cocoa farmers?

With our Zotter quality premium system, we address independent small cocoa farmers who own their land and have organized themselves into cooperatives. We also work with many indigenous cocoa farmers who plant cocoa in intercropping. Cocoa is an important source of income for them and helps maintain their traditional way of life. All in all, we work with cocoa farmers who want to get “more” out of their cocoa, who value quality and who care about the environment. Cocoa cooperatives have between 200 and 3000 members. In large cooperatives, only some of the cocoa farmers grow fair trade organic cocoa, while the others grow conventionally. For us, the harvest is precisely separated and we only get organic and fair quality.As with us, conventional farmers exist alongside organic farmers.

11. Why does Zotter work in fair trade, only for marketing reasons?

No, that was never our approach. We think it makes sense to meet eye to eye. We don’t give anything away, or donate to fair trade, and we don’t distribute alms. First the quality has to be right, then the cooperative can demand a price that we are willing to pay. That’s the free market.

12. Does a cooperative need Fairtrade certification?

Not if you are self-confident enough and can leverage the world market price with quality. We think a basic certification is good so that there is an inspection at all. Otherwise everyone claims something.

13. Do cooperatives have various certifications?

Yes, of course, that too is a market like many others. There are stronger and very weak “certifications”, for example declarations of intent.

13. Which certification is the strictest?

From our point of view, the FLO certification (https://www.flocert.net) is the strictest, which does not rely on declarations of intent but on facts and also checks them. As a company, we are also a member of the WFTO (World Fair Trade Organization) and are verified as a company according to the ten fair trade standards (www.wfto.com).

14. Is such a certification 100% secure?

No never, especially in less developed countries, corruption, personal enrichment, ignorance, etc. are the order of the day. You have to understand that when you’re constantly up to your neck in water – but you don’t have to promote it through price dumping.

15. Why are there always irregularities related to fair trade?

On the one hand because it is a business for the cocoa farmers and cooperatives, you have to be honest about that. On the other hand, manufacturing companies also want to stand out from the competition without paying a higher price for it.

16. Why is there always this agenda from large corporations or mergers that explain when you want to implement improvements? But which are postponed by another five years every five years?

Yes, because you can easily argue that you want to, but can’t yet. Similar to the climate debate.

17. Does a cooperative only have one quality standard?

No, absolutely not! It’s like everywhere, there are better and worse qualities. We attach great importance to long, rather cooler fermentation times and slow drying processes, which is of course more complex.

18. What is Mass Balancing in Fair Trade?

We have put together a detailed overview and comparison of 100% physical traceability here.

19. Is there such a thing as lobbying for or against fair trade?

Yes, of course, there are always arguments why you don’t have to or shouldn’t get involved in fair trade. If irregularities occur somewhere, many have known about it beforehand. So you can do everything badly to have an excuse why you don’t have to do it. In this way, certification is a start and at some point the whole world should also act fairly. If you don’t start changing something, there won’t be a better life for everyone. Speaking of change, as the name suggests, you change something slowly, but you haven’t reached your goal yet.

Questions about organic:

1. Is everything “organic” at Zotter?

Yes, all the ingredients used in Zotter’s chocolate production or from Zotter’s own farm are 100% certified organic (by the independent certification institute  Lacon) based on EU Organic regulations. For the United States there is a slight difference:   All our products containing dairy don’t carry the USDA Organic Seal, as there is an exemption in the organic equivalency agreement between the U.S. and the EU when it comes to the use of antibiotics. While in the US an animal which has been treated with antibiotics cannot be used in the production ever again, the EU allows a certain wait time until the animal can be used again for the production of dairy. It still means our products are 100% organic certified in the EU, but they are not in the US. All our vegan, dairy free products are also 100% USDA organic certified. Each product page has more detailed information on the ingredients tab.

2. How can Zotter ensure that real organic raw materials are used?

Through a certification. Organic is relatively easy to control. Our quality management regularly takes samples of individual deliveries and checks them for pesticide residues.

3. What does Zotter do if there is contaminated cocoa anyway?

The batch is then blocked immediately until a counter assessment is available.

4. What happens to the contaminated cocoa if there are problems?

This is sold to the normal conventional chocolate industry if the limits allow it, otherwise it has to be destroyed.

5. What about cadmium and cocoa?

There are growing areas that have absolutely no problems with cadmium and there are growing areas in which cadmium occurs naturally through soil conditions, favored by volcanoes. In principle, there are EU limits for cadmium that we strictly adhere to.

6. Why does it happen again and again that organic cocoa contains traces of pesticides?

It has been our experience (aside from scammers) that many cocoa plantations are near rivers because cocoa loves moisture. If it is an organic cocoa plantation, if there is intensive agriculture (rice or soybean farming) in the upper river basin and there are floods, these organic cocoa plantations will be flooded and contaminated with agricultural pesticides. Unfortunately, this phenomenon is increasing due to climate change. That is why we have taken the measure that we do not buy any cocoa from near the river. For us, cocoa should be harvested at least 80 to 100 meters above the water level. We also pay a higher price for this.

General questions:

1. Why is Zotter more expensive than many other chocolate manufacturers?

Because we focus on quality first and foremost, only process organic raw materials and all ingredients from the global south must also be fair-certified. We are a medium-sized company that manufactures in Austria under Austrian conditions. We place great emphasis on employee satisfaction. We have breakfast, lunch and dinner in organic quality, freshly cooked and this is fully financed by the company. We also offer free childcare during the holidays, since employees only have five weeks’ vacation. This does not cover the holiday periods. We do not pay collective wages for our employees, but much higher ones, otherwise there will soon be no more skilled workers. We rely on diversity and therefore do not act efficiently. If you always produce the same thing on one machine in three shifts, you can certainly produce more cheaply. But others can do that better. Our hand-scooped chocolates are not comparable to conventionally cast chocolates, for example in terms of the amount of work involved. No machine can do that. We do not outsource any pre-production stages to cheaper countries. We pay taxes in Austria and not on any holiday islands or in tax havens. We supply many small specialty retailers who cannot afford to sell at discount prices. We pay quality premiums, fair and organic premiums to our suppliers, which often amount to twice the world market price. We hope you can taste it too. All in all, we believe that we make “cheap” chocolates, so,

2. Does Zotter produce chocolate in China?

No, all the chocolates that are sold in shops and to small retailers in Shanghai come from Austria. Only the “Mi-Xing bar” do-it-yourself line is made on site, but the chocolates and ingredients for it also come from our chocolate factory in Austria.

3. Does Zotter have its own plantations?

No, absolutely not, we want to be free in quality assurance.

4. What is sailing cocoa all about?

Cocoa from Belize, for example, is transported across the sea in small sailing ships. We hope that there will be more offers in the future. When the wind is more favorable than heavy oil.

5. What does “Bean to Bar” actually mean?

This means that we have the entire chocolate manufacturing process in-house, from bean to bar, and carry out all production steps such as roasting, rolling and conching ourselves. Insourcing instead of outsourcing.