Mondelēz International and cocoa beans and ingredients supplier Olam Food Ingredients (OFI) have begun a new collaboration in Indonesia to create the world’s single largest sustainable commercial cocoa farm.
Demand for cocoa is growing across Asia, which is set to become the second-largest consuming region of cocoa ingredients in the world.
Indonesia is a key cocoa-producing country in the region, but farmers have struggled with rising temperatures, low yields and crop disease. This is where the new cocoa collaboration between OFI and Mondelēz, as stewards of some of the world’s most iconic snack and chocolate brands, comes in.
From sensors in fields to irrigation systems, the Joint Venture will use advanced climate-smart and plant science technology – rarely used to grow cocoa at this scale – as innovations included in this 2,000-hectare cocoa farm on Seram, the largest island in Maluku province in Indonesia.
Gerard Manley, CEO of OFI’s Cocoa Business, delves into the new project and how it could be a “game-changing” cocoa farming model to restore environmental productivity, improve farmer livelihoods and empower local communities in Indonesia.
“The partnership brings together two companies with significant interests in the continued growth in the supply and demand of cocoa, and in the production of cocoa in a sustainable and an environmentally positive manner,” he explains.
“Demand is growing across Asia at 8 percent year-on-year, the region is set to become the world’s second-largest consumer of cocoa ingredients and even the first largest for cocoa powder,” he continues.
“That means Indonesia is becoming increasingly important as a cocoa producer, but its production is in serious decline, and we forecast this year’s production to be below 200,000 metric tons.”
Historically farmers in Indonesia have struggled with increased pest and disease pressure and low yields, notes Manley. “We’ll also be using plant science techniques to develop high yield crops, with a nursery producing up to one million high yield cocoa seedlings a year.”
Leveraging synergies
This partnership can strengthen sustainable cocoa sourcing in Indonesia by creating a scalable model for the future of cocoa farming.
It combines OFI’s and Mondelēz International’s expertise in R&D and sustainable farm management to address common challenges in the region, including low yields and crop disease, to help improve cocoa farmers’ livelihoods communities’ environment.
“The project will establish a new, modernized and professional blueprint for best practice cocoa farming and optimal land usage which can be explored as a model across Indonesia,” Manley continues.
The model builds on Mondelēz International’s experience with the company’s signature sustainable sourcing program, Cocoa Life, and OFI’s ambition for sustainable cocoa, Cocoa Compass, to test a scalable approach for the future of commercial cocoa farming.
Climate-smart tech
Manley explains how the plantation is equipped with a state-of-the-art irrigation system that will help enable high productivity while reducing chemical fertilizer use, minimizing both carbon and water footprints of the cocoa produced there.
“The integrated system combines field sensors with satellite data to help with nutrition and irrigation management. We’re also working to restore biodiversity. The farm is located on previously deforested brownfield land that will be planted with cocoa, shade trees, forest and fruit trees to promote biodiversity and carbon capture,” he says.
“An additional area of 47 hectares has been identified as a High Conservation Value forest and is being fully protected as a vital habitat for flora and fauna.”
The team is planting forest trees along the buffer area, and the unplanted areas will be maintained with natural vegetation to promote biodiversity and protect against soil erosion.”
What are the cocoa opportunities in Asia?
Manley notes that indeed Asia is the world’s fastest-growing region for cocoa consumption with 8 percent CAGR overall and more than 10 percent CAGR for cocoa powder alone, meaning powder consumption in Asia doubles every seven years.
“This spectacular growth is mostly driven both by the dynamism of the regional economy and by the young Asian population increasingly adopting new consumption habits,” he says.
“At the same time, however, Asia still ranks at the bottom in terms of per capita consumption, highlighting the massive potential that still exists in the region. As for Indonesia, not only is it a key regional market – it is actually the first for powder consumption – but it is also the fastest-growing in the region.”
“That means demand for good quality cocoa beans in Indonesia is also growing: Indonesia’s annual grind has touched 460,000 MT already and is set to reach 500,000 MT by 2022/23. This only increases the demand for Indonesian cocoa.”
This collaboration is considered a “monumental step” for creating a more positive future for cocoa.
“We hope that through the partnership, we’ll be able to develop techniques for cocoa cultivation and optimal land usage that we can use to support cocoa farmers we work with across the region to also improve their yields and make a better income from their crop. We are continuing to invest in BT Cocoa, the largest cocoa processor in Indonesia, and we continue to improve its environmental footprint,” Manley continues.
“This is a first-of-its-kind project, both in terms of the partnership we’ve formed with Mondelēz and the way in which we’re bringing together plant-science techniques and climate-smart technology at scale.”
The farm is now operational, and planting will be completed on the entire 2,000 hectares by 2025.
What does the partnership aim to deliver?
These are the key points of the collaboration:
- The creation of 700 jobs for residents in an area with limited income opportunities due to its isolated location. Nearly half of these employment opportunities will go to women.
- 2,000 hectares of previously deforested brownfield land will be planted with cocoa, shade trees, forest and fruit trees to promote biodiversity and carbon capture. More than 1,080 hectares have already been planted across the total plantation area of 3,380 hectares.
- An area of 47 hectares has been identified as a High Conservation Value forest and is being fully protected as a vital habitat for flora and fauna.
- A seedling nursery which can grow up to one million high-yielding cocoa seedlings each year.
- Access to healthcare and education for all employees and their families, as well as housing, electricity, water, daycare for the 200 families who live on site.
Quentin Roach, SVP supply chain and chief procurement officer, Mondelēz International, says that as one of the world’s leading chocolate makers, Mondelēz’s objective is to secure a sustainable future for an ingredient essential to its business.
“With nine years of measurable impact demonstrating improved farmer’s livelihoods and reduced environmental impact of cocoa farming through our signature sustainable sourcing program, Cocoa Life, we’re excited to leverage our know-how in a collaborative approach to sustainable raw material sourcing with a geographically customized solution,” he says.
“Creating opportunities to innovate, in partnership with our suppliers, and exploring the ability to scale high-yielding, forest-positive, income-generating approaches to commercial cocoa farming on the single largest farm of its kind offers attractive potential and is an important step forward on our journey to lead the future of a sustainable and resilient cocoa supply.”
