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Olam enters into 50:50 JV with Mondelez International to create world's largest sustainable commercial cocoa farm

Felicia Tan
Felicia Tan4/21/2021 07:28 PM GMT+08  • 4 min read
Olam enters into 50:50 JV with Mondelez International to create world's largest sustainable commercial cocoa farm
The partnership seeks to create some 700 jobs for local residents in the area.
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Photo: Olam

Olam Food Ingredients (OFI) has announced that it is entering into a 50:50 joint venture (JV) with global leading chocolate maker, Mondelez International, to create the world’s single largest sustainable commercial cocoa farm.

The model, according to the statement, will restore environmental productivity, improve farmer livelihoods and empower local communities in Indonesia.

Furthermore, the farm will utilise advanced technology to create a model for best practices in cocoa farming. The model, which builds on Mondelez’s experience with its signature sustainable sourcing programme, will be the first of its kind once incepted.

The farm, which spans 2,000 hectares, will be located on Seram, the largest island in the Maluku province in Indonesia.

According to both companies, the partnership seeks to create some 700 jobs for local residents in the area, with nearly half of these opportunities to go to women.

It also aims to deliver 2,000 hectares of previously deforested brown field land, which will be planted with cocoa, shade trees, forest and fruit trees to promote biodiversity and carbon capture.

Some 47 hectares have been identified as High Conservation Value forest and will be fully protected as a vital habitat for flora and fauna.

All employees and their families of the farm will have access to healthcare and education. The 200 families living on site will have access to housing, water as well as day care.

SEE:Olam issues $100 mil subordinated perpetual securities under EMTN Programme

“As one of the world’s leading chocolate makers, we’re on a mission to make cocoa right and to secure a sustainable future for an ingredient essential to our 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,” says Quentin Roach, SVP Supply Chain and chief procurement officer at Mondelez International.

“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. This initiative sits alongside Mondelēz International’s existing Cocoa Life program in Indonesia and our cocoa crop science technical center in Pasuruan, established to support sustainable cocoa farming practices and drive positive change for farmers and communities in the region,” he adds.

“This could be truly game-changing for the future of cocoa in Indonesia and beyond. We would like to thank the regional and national governments of Indonesia for their support. Ever since we launched our first sustainability program in the country more than 16 years ago, we have been committed to supporting Indonesian cocoa farmers while also protecting the environment,” says Gerard A. Manley, CEO of OFI’s cocoa business.

“We reaffirmed this commitment through our acquisition in 2019 of the country’s largest cocoa processor, BT Cocoa, to connect the full supply chain from cocoa beans to cocoa ingredients. We’re now combining our expertise and knowledge with Mondelēz International, a steward of some of the world’s most iconic snack and chocolate brands. Having just announced the achievement of our 2020 sustainability goals, we believe this partnership is a further significant step towards our Cocoa Compass ambition to have a positive impact on the future of cocoa,” he adds.

The transaction, according to Olam, is not expected to have any material impact on the group’s earnings per share (EPS) or net tangible assets (NTA) per share for the FY2021 ending Dec 31.

Shares in Olam closed 3 cents lower or 1.7% down at $1.72 on April 21.

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