UTZ focuses on enabling farmers to become more resilient, through training and access to better farming practices, which in turn enables them to maintain or increase their productivity, securing future supplies and helping them to create a better future.
To enable brands and retailers to incorporate sustainable sourcing into their entire cocoa assortment (which in turn means we are able to bring sustainability to scale and reach a larger number of farmers) UTZ has an innovative traceability system. The system offers three models of supply chain traceability for cocoa, suitable for different market demands; Identity Preserved (IP), Segregation and Mass Balance.
Mass Balance has been instrumental in scaling up our cocoa program into a mainstream program. Compared to a being a niche program, a mainstream program reaches more farmers benefiting from certification. Thanks to mass balance, flexibility in the supply chain is provided. This encourages more companies to source more certified products. Mass balance makes sustainable sourcing more scalable for the market and allows farmers to enjoy the benefits of certification. This approach works as an accelerator for sustainability: getting farmers into the program and motivating the ones making the investment to commit.
We now see sustainability emerging from the niche position where it has been the past years. This is shown by increasing demand for sustainably sourced cocoa and also through the increased willingness to invest in and commit to sustainability by the market. This means we are ready to take the next step in sustaining the cocoa sector by no longer offering the possibility to use cocoa powder credits as cocoa butter credits. This adjustment is planned for January 2018.
This will have considerable impact – not only on the UTZ program but also on cocoa certification in general. UTZ sees it as its responsibility to carefully time and prepare this switch to mitigate any undesirable consequences. The switch should not negatively influence the growth of the demand for certified cocoa, as not all chocolate companies are willing to pay these extra costs. The switch can also lead to pressure on sourcing of certified cocoa. This pressure will create risks for the quality of training delivered, and on the assurance and monitoring processes. UTZ believes creating the required supply needs to be given time.
To prepare the switch well, we are currently preparing a paper together with Fairtrade to analyze the effects of the switch. This is done in the context and on behalf of the CEN/ISO process. The goal of that paper is to create a common understanding of the (possible) implications of the switch with the aim of getting prepared for a smooth transition for all stakeholders involved.
 Not all models fit the different market needs; the complexity and size of some supply chains (such as cocoa and hazelnuts) can make segregation and IP very costly, hindering companies’ efforts to source sustainably. In these supply chains, physical traceability would make sustainable sourcing more expensive without any improvements for farmers. Moreover, fewer sales of sustainably produced commodities would result in no recognition and premium for the farmers applying good practices.