Lessons Learned: Pilot Summary

We want to find markets where our hard work is valued. We want to sell to buyers that not only care for our beans but for our vision.”

~ Oswaldo, Co-op ACCC Peru

Yellow Seed began as non-profit community marketplace for cacao growers, service intermediaries and buyers to connect and trade with one another.

On Yellow Seed, cacao producers around the world can share their stories and products, set pricing and build consistent trade relationships. Buyers can discover new farm origins, learn about product processing details and initiate trade.

Over the last few years, Yellow Seed heard from the community the need for:

  • Deeper transparency on pricing (i.e., who gets what?)
  • More social and environmental impact data reporting
  • Increased market access for “emerging origins” — producers not known in the community
  • Simpler trade transactions

Our Pilot Project

In response to the needs of our community and a desire to understand the challenge that sellers have in accessing markets, in 2017 Yellow Seed initiated a pilot program where we identified an outstanding emerging origin and built new profile design features to showcase a deeper level of transparency and environmental impact. We also facilitated a 6 MT shipment of beans from that Origin into the U.S., so that the beans were one step closer to buyers making the trade transaction simpler.

We choose to work with Co-op ACCC from Peru, an origin whose work related to agroforestry, conservation and gender equity are far above industry standard. Although they only had one solid buyer, we believed that by sharing their incredible story, we could connect them to new buyers in the US.

Our Objective:

  • Learn about the challenges facing ethical producers who want to connect to fair markets.
  • Provide a new level of transparency for the cacao industry.
  • Coordinate greater collaboration so that everyone ~ from farm, to port to maker and consumer would benefit.

Our Assumptions:

  • There is a market that will pay fair value to producers for their efforts related to agroforestry, social impact and gender equity, regardless of certification status.
  • There is room for market growth in the ethical cacao industry.
  • Storytelling and transparency tools will provide buyers sufficient support to market the products to their customers.
  • Collaboration will make everyone’s work easier, more expedient and financially fruitful.

What we designed:

The lessons we learned:

  • Our new transparency features and the personalized impact receipts sparked industry interest.
  • The speciality markets are saturated, with chocolate makers receiving as many as 5–12 samples and new solicitations per week.
  • Claims around sustainability, agroforestry, and quality blend together in sea of similar options.
  • The market relies on certification to build trust with consumers.
  • Trusted relationships and direct referrals are the strongest sales leads.
  • The lack of a common language around quality and flavor makes it difficult to assess an Origin’s product and describe it to buyers.
  • Crowdfunding loans (Kiva) are a great option to bridge the financial gap between when a farmer needs to get paid for their product and when the buyer receives the product, but these loans need to be applied for 4–5 months before the cacao is harvested.
  • Quotes ≠ Actual Costs — For international freight, the shipping insurance was 45 cents (per $100) higher, handling and duties/taxes were lower, while customs was a lot higher than expected.
  • Quantities/Figures Change — From Agreement to Free on Board (FOB), quantities and timelines can change due to things such as bags breaking or trucks breaking down.
  • Customs Exams put our international freight cost $2,000 over budget. (~45 cent, 5% increase in price per kg).
  • Collaborative shipping is not necessarily cheaper. — Having a concentration of buyers desiring the same processed form of cacao is necessary for the numbers to work out. The total cost to YS would have been $800 more to split a container than to get our own 20’ container.
  • The shipping industry is surprisingly relationship based.
  • Shipping a pallet in the US is expensive, ranging from $150 to $350 with small increases with each bag added.
  • It is most cost effective to retrieve multiple bags from a US warehouse at the same time.

Conclusion

Yellow Seed learned an immense amount by facilitating this pilot project with Co-op ACCC. Hopefully the lessons we learned will prove to be useful for others working in this business. For us, we learned that our greatest role will be in bridging the trust gap, in a way that allows a greater number of ethical farmers to connect with buyers.

Certification is a long and difficult path for most producers. Many producers who are doing amazing things when it comes to biodiversity, climate change and social equity may never be ‘certified’. Therefore our role is not to be an importer, or logistics coordinator, but to find ways for humans to…

… better communicate their value with one another.

Thank you

Sincere appreciation for the countless hours of dreaming, scheming, experimenting and evaluating of so many people that came together for this pilot, to see what we might create together. We look forward to more collaborations in the future!

If interested in the details of our pilot, see the full case study.

For more information on Yellow Seed’s transition, see Yellow Seed Reflections for an Evolution. If you are interested in some of the data and trends that informed our refined vision for the future, you can read more in Reflections Beyond Our Industry.