HOW WE WORK WITH PARTNER COOPERATIVES
The Tony’s Open Chain model is anchored in a cooperative-centric approach. What does that mean in practice?
1. Local ownership The success of Tony’s Open Chain hinges on working with partner cooperatives who are deeply rooted in local cocoa communities and well-versed in the industry. As independent and democratic entities, owned and run by cocoa farmers, they drive the efforts of Tony’s Open Chain in Côte d’Ivoire and Ghana. They are a crucial and direct link between cocoa farmers and Tony’s Open Chain, representing the interests of their farmer members. This makes them ideal partners for implementing programmes that create meaningful impact for cocoa farmers, and delivering the most effective solutions to challenges within their own communities. 2. Long-term commitments emphasising equality For partner cooperatives the long-term commitment to partnership and paying a Living Income Reference Price to farmer members is intended to translate into economic stability, better financial planning and the ability to invest in the cooperative’s members, ultimately enhancing financial resilience. This is why one of our 5 Sourcing Principles emphasises long-term commitments. Tony’s Open Chain facilitates this through a Memorandum of Understanding (MoU), which guarantees at least 5 years of collaboration and ensures that partner cooperatives are also at liberty to sell their cocoa to other buyers. Tony’s Open Chain’s MoUs are designed to address structural inequalities in the cocoa supply chain, offering farmers greater agency and security in the process of selling their cocoa. The focus is on equal partnership, dialogue and shared responsibility. This long-term approach not only empowers cocoa-growing communities but also enables partner cooperatives to develop comprehensive 5-year strategic plans together with the Tony’s Open Chain team. Grounded in shared commitments, this plan serves as a roadmap for the partnership, guiding annual planning, implementation and progress evaluations. Our ambition is to become partner cooperatives’ preferred buyer through our approach rather than because of a binding contract, while ensuring that the non legally binding nature of our agreement never implies that we can simply walk away. Alongside our commitments, dispute resolution and remediation processes are in place to ensure that both parties remain protected. VOICE Network on asymmetrical contracts: “Being tied to a single buyer can be a double-edged sword for farmers and farmer cooperatives as it can create dependencies and prevent them from taking advantage of higher prices elsewhere. There is a clear power imbalance between the various actors in the chain. In the current system most risks (on volume, price, delivery) are covered for the buyer, but farmers find themselves often waiting for a selling contract resulting in them accepting hunger prices. This means that long-term contracts need to be asymmetrical in nature, providing farmers more rights, while putting more responsibilities on the shoulders of the purchasing companies. Concretely, an asymmetric contract needs to commit buyers to buy a minimum tonnage of cocoa at an agreed-on price, but the farmer needs to be free to sell to a different buyer if they can get better conditions. Price renegotiation clauses should be part of such long-term asymmetric contracts, to allow farmers to take into account fluctuations of the prices of raw materials and cost of living.” 1
1. VOICE Network, Good Purchasing Practices: a cocoa barometer consultation paper, p. 15-16
3. Financial investment via the cooperative management fee Partner cooperatives play a central role in enabling the 5 Sourcing Principles on the ground. Specifically, they are responsible for: • Enabling a member-led, community-centred approach to implementing our shared programmes • Implementing and operating BeanTracker, our proprietary software for tracking and tracing beans from farm to processor • Implementing and operating our approach to the Child Labour Monitoring and Remediation System (CLMRS) • Ensuring premium payments are distributed to cocoa farmers • Implementing activities related to the productivity programme, including farmer coaching Building out these systems requires ongoing technical and financial investment beyond the first couple of months of onboarding. In addition to funding for the initial start-up costs required to set up BeanTracker and the CLMRS, Tony’s Open Chain Mission Allies pay a cooperative management fee (defined as an amount per metric ton of cocoa) to fund further development of the partner cooperatives’ business models and day-to-day operationalisation of programmes. In total, Tony’s Open Chain has invested more than €3. 9 million in cooperative management fees since its founding in 2019. This fee is a vital investment in the cooperative business model, helping cover operational costs and enabling long-term development. Such investments are becoming increasingly important in the context of rising administrative costs under emerging due diligence legislation. Companies must take financial responsibility for implementing these compliance requirements, rather than passing the burden down the supply chain. Partner cooperatives that are in their Initial Collaboration Agreement or in their first MoU often use the funds to cover the ongoing costs of implementing the 5 Sourcing Principles (e.g., salaries, insurance, equipment maintenance). Partner cooperatives in their second and subsequent MoUs typically invest in expanding their membership to scale their impact, or strengthening their operations (such as by building warehouses, purchasing trucks for bean transport, or developing additional income generating activities for the cooperative). This evolution is possible because, as we grow the cocoa volumes sourced with each partner cooperative over time, the corresponding cooperative management fee also grows and can be invested more strategically. The allocation of the cooperative management fee is determined collaboratively by the partner cooperative and Tony’s Open Chain, as part of the annual activity planning process and ongoing evaluations. Ultimately, the cooperative fee is designed to foster independence, strengthen systems and drive innovation across all partner cooperatives.
Investing in enabling environments With funding from the Chocolonely Foundation and other external partners, we also invest in building enabling environments that support the strengthening of wellbeing and resilience in partner cooperatives’ communities. Key focus areas include investments in infrastructure, healthcare and education, for example through building accessible schools, healthcare facilities, and clean water sources.
4. Technical collaboration and shared roles & responsibilities
Partner cooperatives are crucial to our core activities, including supply chain traceability, social traceability and cocoa productivity. We are proud to support our partner cooperatives’ strength-building as they own the implementation of the 5 Sourcing Principles, which are ingrained in their business practices. We have dedicated teams in Côte d’Ivoire and Ghana who work very closely with partner cooperatives on a day-to- day basis; providing technical support towards implementation of the programmes.
5. Data sharing Many cocoa cooperatives in West Africa currently lack access to data relating to their supply chain, which limits their ability to innovate and make informed decisions. Tony’s Open Chain aims to change this by ensuring that partner cooperatives can access and use the data from all implemented Tony’s Open Chain programmes. This access to data enables the partner cooperatives to better shape their programmes, revisit successful practices and explore new concepts that truly benefit cocoa farmers. Implementation of meaningful actions begins with actionable data. Having an up-to-date farmer register, knowing which exact land plots the cocoa is coming from, and tracking the flow of beans, for example, allows for better scrutiny of payment flows, enabling cooperatives to address any issues that arise throughout this process in a targeted manner.
Ultimately, Tony’s Open Chain’s cooperative-centric approach is critical to enabling impact in the communities where cocoa is sourced. We are proud to support partner cooperatives’ strength building as they own the implementation of Tony’s Open Chain’s 5 Sourcing Principles, which are ingrained in their business practices.
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