Direct sourcing and sustainabilityDirect sourcing and sustainability

WCF, Partership meeting

October 2012October 2012

• Agricultural Development

• Support and training

• Cocoa plantation promotion• Cocoa plantation promotion

• Purchasing Model

• TraceabilityTraceability  

• Social Commitment

• Scientific Approach 

#

Better quality of life inBetter quality of life in the country side• Strategy:

Our purchasing strategy is based on thedirect relationship with small growers andfarmer cooperatives making the supply chainshorter. We want to guarantee quality,traceability and volumes.

#

Purchasingffioffices

Wh t d th l d?What do the people need?

• Proximity

• Technical support

• Money 

• Right price

( )• Reliability (right weight, humidity measure, etc)

• Aditional services 

What does the company need?What does the company need?

• Long term relationship ‐ commitmentg p

• Traceability

• Quality

• Volumes

• Give to the  farmers the best price we can offer

• Deal directly with few people

• Efficiency

Our model

3870 families,5.100 has.5.100 has.

ASOPROLAN

375 familias,810 has.810 has.

Cooperatives and alliancesCooperatives and alliances

16.834TOTAL HAS.

A l iAs a conclusion

• We are trying to put the right money in theWe are trying to put the right money in the right hands looking for quality, volume, traceability and long term relationshiptraceability and long term relationship

WCFWCF PartnershipPartnership Meeting, 25thMeeting, 25th OctoberOctober 20122012

DIRECT SOURCING STRATEGY

WCF WCF PartnershipPartnership Meeting, 25th Meeting, 25th OctoberOctober 20122012

Key Facts Chocolats Halba 2011

100% Coop Switzerland owned Swiss Premium B2B Chocolate Manufacturer Starting in 2008: Export and Sustainability Strategy

E l 230 Employees 230 Turnover 111,2 Mio CHFT t l S l 12 600 t Total Sales 12.600 tons

Max Mustermann

Max Mustermann

Max Mustermann

Purchasing strategy Chocolats Halba

Direct Sourcing100% Fairtrade cocoa beans

Reforestationprojects withcocoa beanscooperatives

Direct sourcing

Honduras

Ecuador

Peru

Ghana

StartingStarting fromfrom scratchscratch…… ll germgerm plasmplasm qualityquality cooperativescooperatives cooperativescooperatives ……

Ti bTi b tt iiTimberTimber treestrees increaseincreasefarmersfarmers' ' incomesincomes byby

In Ghana In Ghana wewe havehave plantedplanted

ttimberimber treestrees sincesince 20112011

Every Every timbertimber treetree isis

OneOne timbertimber treetree absorbsabsorbs asas muchmuchCOCO22 asas

chocolatechocolate barsbars causecausechocolatechocolate barsbars causecause

Sustainable product marketing

LabelsLabelsCarbonFootprintCarbonFootprint

ProductsProducts QR‐CodesQR‐Codes

Cocoa Cocoa plantationplantation in Dos de in Dos de MaioMaio

Cocoa Cocoa plantationplantation in Dos de in Dos de MaioMaio

Advantages Direct Sourcing

Access to high quality raw material

Trust – efficient supply chain

Joint quality improvements

…

Max Mustermann

Challenges Direct Sourcing

Internal know how

Quality improvement process

"weak" structures within cooperatives

Pre‐financement

…

Max Mustermann

Christoph InauenHead of Sustainability and Cocoa PurchasingHead of Sustainability and Cocoa PurchasingAlte Winterthurerstrasse 18304 Wallisellen+41 44 877 16 07 h i t h i @h lb hchristoph.inauen@halba.ch

Direct sourcing & sustainabilityCargill’s experience in Vietnam

Taco Terheijden

Z i h O t b 25th 2012CONFIDENTIAL. The information contained herein is believed to be true and accurate. However, it is made without guarantee,

expressed or implied, on our part. We disclaim all liability in connection with the use of this information, which is subject to change without notice. Disclosure, use or reproduction outside Cargill and inside Cargill, to or by those employees who do not have a need to

know is prohibited except as authorized by Cargill In writing

Zurich, October 25th 2012

Locations: Cargill cocoa beans sourcing operationsoperationsTo achieve the best product quality, consistency and sustainability we are present in every step of the chain

WCF Zurich 2012

Vietnam

• A relative newcomer to the cocoa arena is Vietnam.

• This Southeast Asian nation has all the shade warmth and humidity• This Southeast Asian nation has all the shade, warmth and humidity and deep, rich soil that a thriving cocoa crop needs.

I 2004 th h j i t ff t f D t h & Vi t t• In 2004, through joint effort from Dutch & Vietnamese government, Cargill & Mars. The Dutch government provided financial support whilst Cargill set up the supply-chain infrastructure and Mars Incorporated contributed technical consultancyIncorporated contributed technical consultancy.

• And with the Vietnamese farmers in place, ready and willing to diversify their crops all wheels were set in motion to develop a cocoadiversify their crops, all wheels were set in motion to develop a cocoa sector in Vietnam.

O ti i ti d d f t f A i d h l t• Optimistic demand forecasts for Asian cocoa and chocolate consumption

WCF Zurich 2012

Asian Pacific Chocolate Consumption

1,1008,500

Chocolate consumptionUnit: '000 MT

700

800

900

1,000

5,500

6,500

7,500

FORECAST

6004,5002007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

World (left axis) Asia Pacific (right axis)

Source: Euromonitor International

FORECAST

• World chocolate consumption is projected to grow by 11% by 2017 compared to 2012 (from 7,3 to 8,2 million tones).

I A i P ifi h l t ti i j t d t b 25% b 2017• In Asia Pacific chocolate consumption is projected to grow by 25% by 2017 (from 0,8 to 1 million tones).

• Share of Asia Pacific in the world chocolate consumption is forecasted to grow from 11% in 2012 up to 13% in 2017.g p

WCF Zurich 2012

Potential provinces for cocoa development

HIGHLAND:Gialai 4,000 haPhuyen 2,000 haDaklak 58 000 haDaklak 58,000 haDaknong 15,000 haLamdong 10,000 haTotal: 89,000 haTotal upto: 152 000 ha

SOUTH-WEST:

Total upto: 152,000 ha

Bentre 15,000 haTiengiang 2,000 haVinhlong 1,000 haTravinh 1 000 ha

SOUTH-EAST:Binhphuoc 24,000 haDongnai 10,000 haBRVT 5 000 haTravinh 1,000 ha

Tayninh 2,000 haTotal: 21,000 ha

BRVT 5,000 haBinhthuan 3,000 haTotal: 42,000 ha

WCF Zurich 2012

Dynamic crop model based on diversification

Highland

Cocoa is the suitableCocoa is the suitable choice for replacing old coffees!

South‐east

Cocoa is the suitable h i f i tchoice for intercrop with cashews

South‐west

Cocoa is the suitable choice for intercrop 

WCF Zurich 2012

with coconuts, fruits…

Vietnam Crop and trends – to date

1. Current acreage & yield

Source: Vietnam Ministry of agriculture and rural development’s

WCF Zurich 2012

Direct sourcing in Vietnam – Why ?

> Close to farmer– TraceabilityTraceability– Quality– Increase yields

> Efficient supply chains– Increase farm income– Income diversification

> Knowledge & information transfer– Technical support – Consumer information

WCF Zurich 2012

Direct sourcing facilitates sustainable development of cocoa supply chain

Key market players

Key players in Viet Nam market Export destination

Local

Local company: Namsan

1%

Local company: Nonglam

3%

Local company: Phamminh

9%1%

Armajaro19%

Grand Place3%

Cargill65%

WCF Zurich 2012

Viet Nam cocoa supply chain visibility

Multiple farmers

Bean collectors

CargillBuyingStation

Consolidation and loading to container

Ship to oversea customers

Supply Chain Visibility

WCF Zurich 2012

Created and applied origin tracing system

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002

001-NT

002-NT

VA0506-TG001-NT-CG

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WCF Zurich 2012

VA0506-TG : Vietnam, Main crop Year 0506 – Tien Giang province001-NT-CG : Collector 001 – Local trader NT – Exporter Cargill

WCF Zurich 2012

WCF Zurich 2012

Knowledge and information transfer

WCF Zurich 2012

Quality overview 2011/2012

WCF Zurich 2012

Fertilizer distribution

WCF Zurich 2012

Viet Nam cocoa supply chain

Ship to oversea customers

WCF Zurich 2012

The future?

WCF Zurich 2012