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Documentary Report Project on Supply Chains

Vol.1 From Raw Cotton to T-shirts

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PRE-ORGANIC COTTON PROGRAM

PRE-ORGANIC COTTON PROGRAM

Introducing organic farming to resolve issues

In order to solve various problems caused by chemical fertilizers and agricultural chemicals, moves have been made to breathe new life into organic cotton cultivation through the use of fertilizers made from cow dung and other materials and insecticides made from plants. Together with Kurkku, ITOCHU is engaged in a Pre-Organic Cotton Program to promote the organic farming of cotton.

1. Project outline

This program was announced by ITOCHU Corporation and kurkku, represented by the music producer Mr. Takeshi Kobayashi, in approval of the initiatives of Mr. Rajesh Tanwar (photograph) of RAJ ECO FARMS, a support cooperative for farmer education. Mr. Tanwar is teaching organic farming methods and the advantages of organic farming to cotton farmers to persuade them to shift. With organic farming, only cow dung and herbs and trees which the farmers of India can supply by themselves are used instead of chemical fertilizer and agrochemicals.
After the shift to organic farming, it takes three years until a farmer is granted the "organic" certification. Further, production quantities drop by approximately 20% in the short term. The raw cotton in this intermediate phase before being authorized as organic is called "pre-organic cotton" and the drop in the production quantities compensated by a premium price. Supported by this framework, more than 600 farmers are currently participating in this program.

2. Role of ITOCHU Corporation

ITOCHU Corporation makes estimations on the sales quantities and a commitment regarding the purchase (support) quantity before the planting. Then, ITOCHU procures this full quantity of pre-organic cotton from Patspin India Ltd. (photograph). The risks regarding the sales quantity and market prices, etc. is borne by ITOCHU, which sells the raw cotton, cotton yarns and products that are made in many directions. The cooperation with kurkku in this initiative improves the visibility of pre-organic cotton among consumers.

Cultivation

The cotton in the PRE-ORGANIC COTTON PROGRAM is cultivated by the farming households supported by Raj Eco Farms, the largest organic agriculture cooperative in India.

Farmer

Mr. Nanka, Umaldat village
"The best thing is that my skin does not itch any more since I have stopped using agrochemicals. Apart from cotton, I am growing wheat and corn, and I switched everything to organic cultivation."

 

Mr. Patel and others, Boparupura village
"I was introduced to RAJ ECO FARMS by another farmer at the market. This is a village of 300 people, and 70% of them are now using organic farming methods."

  • [Photo]Farming land of Mr. Nanka
  • [Photo]Mr. Nanka(Front, right)
  • [Photo]Village houses with cows
  • [Photo]Together with the people of Boparupura village

RAJ ECO FARMS — Guidance in organic farming and primary processing of raw cotton

  • [Photo]RAJ ECO FARMS
  • [Photo]Mr. Rajesh Tanwar

Mr. Rajesh Tanwar, Managing Director
"My goal is to generally improve the health and living of the farmers and the environment of the farming land, and to spread this throughout India."

Issues in cotton farming
The harvests in Indian cotton farming dramatically improved around the 1960s, when chemical fertilizers and agrochemicals were widely introduced. However, while the production quantities increase, problems are spreading, including a deterioration of the natural environment in the soil and skin or lung diseases caused by directly inhaling agrochemicals sprayed in excessive quantities.
From the economic aspect, the standpoint of farmers in the market is weak, and the reality for many farmers in India is that they do not have sufficient income, and that they cannot escape poverty even if their harvest improves because of a structure where the costs for chemical fertilizer and agrochemicals are too high compared to the income.

Spinning

Cotton spinning takes place at Patspin India Ltd., an environmentally friendly company that uses its nine windmills to generate the electricity it needs.

Patspin India Ltd.

  • [Photo]
  • [Photo]

Mr. Umang Patodia, Managing Director
"I agreed with the policy of Rajesh. In addition, this business is supported by ITOCHU Corporation earnestly trying to promote organic farming."

  • [Photo]Cotton before spinning

  • [Photo]Spinning machine

  • [Photo]The company's wind turbine

Shipped to China

 Knitting fabric

After spinning, the cotton yarn is exported from India to China. The pre-organic cotton is knitted at weaving factories.

  • [Photo]Knitting machine

  • [Photo]Knitting machine

  • [Photo]Knitting machine

Dyeing

The knitted fabric is dyed at nearby dyeing factory. (Care is taken to avoid excessive dyeing, to retain the texture of pre-organic cotton.)

  • [Photo]Dyeing

  • [Photo]Dyeing machine

Sewing

Sewing factories, such as Shanghai Zephyr International Trading Co., Ltd. and Shanghai Chunchao Garment Co., Ltd., import the pre-organic cotton yarn to sew products through knitting and dyeing processes at nearby subcontractor plants. They take great care to avoid mixing the pre-organic cotton with normal cotton products.

Shanghai Zephyr International Trading Co., Ltd.


Mr. Yoshifumi Iwabuchi
President (photograph on the right)
"Checks and inspection visits from the CSR viewpoint by apparel brand companies from the US and other countries that place orders with us are frequent today. For companies of the apparel industry, social and environmental considerations have become familiar issues."

 

Shanghai Chunchao Garment Co., Ltd.


Mr. Hokan So, President
"The regional government in Shanghai is hurrying to promote environmental and labor-related regulations, also because of the upcoming Expo, and I think that all companies will work hard to respond to this."

  • [Photo]

  • [Photo]
  • [Photo]The president standing next to a package of pre-organic cotton from Patspin.
Issues in the factories
For this report, we visited spinning factories in India, as well as knitting factories, dyeing factories and sewing factories in Shanghai.
The textile industry is struggling with issues such as the reduction of the energy usage and the purification of waste water in the dyeing process, and the labor environment during the sewing process.
In China, the regulative management of companies by the national government and local governments is making progress every day. There is still a large gap in the level of the regulations depending on the region, but when looking at the large picture, improvements from both the environmental and the social aspect are made from year to year.

Exported to Japan

Marketing / Sales

We focus on cooperating with kurkku in marketing and public relations activities, helping customers understand the quality of pre-organic cotton and encouraging them to purchase the products. We also sell pre-organic cotton t-shirts through Itokin Co., Ltd., which supports the program.

Itokin Co., Ltd.

[Photo]

Mr. Tomohiro Suga
Director
"There has been a shift from an era where companies selected consumers to an era where we propose the sense of trust and comfort required by the customers. Itokin also supports the basic philosophy of pre-organic cotton, and we are continuing our efforts to get support from as many consumers as possible."

Impressions from the inspection visits and interviews

[Photo]

CSR Consultant,
The CSR Institute, Inc.
Mr. Tomohiko Yamaguchi

Mr. Tomohiko Yamaguchi from The CSR Institute, Inc. conducted inspection visits and interviews for us at each site from the farmers up to the sewing factories.

1. The supply chain in general

Many cotton farmers in India are illiterate and not skilled in economic bargaining. Also, many of them run their farm just with their family without belonging to any organization. These are some of the reasons for their disadvantaged position and the underlying cause for various problems.

Even if it takes time, I feel that it is most important to develop social systems and the like for basic education to let farmers learn agricultural methods that are highly productive and good for their health and the environment, enabling them to realize a proper way of living in the economic society.

Meanwhile, the processes after the spinning have regulations and so forth in place, so I think that the issues from the CSR viewpoint are small in comparison with the difficulties faced by the farmers.

2. PRE-ORGANIC COTTON PROGRAM

The base of this program is the education of farmers to promote the spread of practical organic farming methods. Listening to the persons involved, I gained a good understanding of the framework for realizing the recovery of the farmers' health, an improvement of their lives, as well as a recovery of the soil environment without contradictions.

Meanwhile, organic cotton production is labor intensive. To make sure that farmers do not discontinue their efforts, it is necessary that products from this cotton are sold at a certain quantity and at fair prices. I think that the key for the success of this program lies in whether the costs for the overall operation, including the tracing down to the commercialization, are accurately communicated to the consumers so that they understand costs and purchase these products on a wide scale.

I hope that this business is brought to success through the agreement of both the seller and the buyer side, and that the shift to organic farming is expanded in the future. In addition, I would also like ITOCHU Corporation to promote social and environmental consideration that reaches all the way back to the origin in all regions of its cotton business.

Vol.2 Coffee from Central America

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Coffee from Central America

Coffee from Central America

Coffee originates from Ethiopia and other parts of eastern Africa. Since around the 16th century, as liking for coffee among people in Spain and other advanced countries spread, it has been grown in countries with tropical climates, including those in Latin America, that were at the time colonies.
Coffee is a commodity that has attracted attention from a CSR perspective because it is grown in tropical developing nations but consumed in industrialized nations.

ITOCHU Corporation handles coffee produced around the world. In this documentary report, we traced the supply chain for coffee grown in El Salvador and Guatemala, from plantation to consumer.

Activities of ITOCHU Corporation and UNEX, S.A.
—— Agriculture that balances society, the environment, and economy

UNEX, S.A. is founded on the principle of coexistence with small- and medium-scale farmers and support for their autonomy. It provides guidance to small and medium-scale farmers in many regions on compliance with such standards as the certification standards for coffee farmers set by the Rainforest Alliance and Starbucks' C.A.F.E. Practices(*). UNEX, S.A. also conducts businesses to achieve agriculture that balances social, environmental, and economic factors, by purchasing at a premium beans that have met these standards through farmers' efforts.

UNEX, S.A., El Salvador
Conducts coffee processing and exporting in El Salvador. Handles a substantial 20% of the coffee exports in this country.
Unex (Guatemala), S.A.
Conducts coffee processing and exporting in Guatemala. Handles 10% of the coffee exports in this country.

※ Starbucks' socially and environmentally responsible coffee buying guidelines

[Photo]An organic farming training center opened on the grounds of the processing plant in Guatemala (April 2010)

Growing

Coffee is grown in tropical regions, in highlands at altitudes of 1,000 to 2,000 meters.

  • [Photo]A coffee tree ready to be harvested; the fruits turn red when they mature.

  • [Photo]Harvesting; only mature fruits are picked by hand.

  • [Photo]The tall trees are shade trees; the short ones are coffee trees.

Overview and challenges of coffee farming
Economic aspects
For many countries in the tropics, coffee farming is a valuable industry for obtaining foreign currency. Various countries have focused on coffee cultivation, and increased their production. In contrast, however, growth in coffee consumption has been relatively slow. As a result, producer prices(*), which are determined by demand, are sometimes lower than the labor, fertilizer, and other costs required to grow the crop. This is one of the factors locking farmers into chronic poverty. As farmers' debts pile up and they are unable to turn a profit, more of them are giving up coffee farming, and migrating to industrialized countries to work.

* Standard selling prices for coffee beans are determined by demand in New York, London, and other markets. Local selling prices are then determined by factoring quality and the like into these standard prices.

Labor aspects
It is difficult to mechanize coffee farming, because coffee is grown on mountain slopes at altitudes of above 1,000 meters. As a result, most of the growing, harvesting, and carrying of coffee is done by hand.
Environmental aspects
Coffee farming uses mountainsides in tropical forests. Since coffee trees shun strong sunlight and evaporation, they require shade trees to protect them from the sun. When a natural forest is converted into a coffee plantation, existing trees are kept as shade trees, and the coffee trees are grown in their shade. One of the distinctive features of coffee farming is this ability to maintain diverse plant life and ecosystems.
The challenges are to avoid the excessive use of chemical fertilizers and agricultural chemicals, and to prevent the runoff of agricultural chemicals and other pollutants into the water system.

Growing

El Salvador Las Lajas Agricultural Cooperative

[Photo]

Mr. German Humberto, Manager (back right of photo)
"Las Lajas is an agricultural cooperative of 213 small-scale farmers. About 70% of the roughly 900 hectares of farmland are devoted to coffee cultivation. We use the certification standards for coffee farmers set by the NGO Rainforest Alliance to improve our farming, the natural environment, and our lives in general. We are proud that we are practicing completely organic agriculture beyond the certification standards."

Guatemala Alotenango Agricultural Cooperative collection point

[Photo]

Mr. Juan Cojolon Chuy, Cooperative Manager (second from right in photo)
"We were referred to the coffee buying guidelines, or C.A.F.E Practices, in our dealings with Starbucks Coffee Company, and all of us in the cooperative decided to join the program. We are also working to eliminate the use of agricultural chemicals from our farms, with the help of Francisco from Unex (Guatemala), S.A."

Mr. Juan Francisco Urias, Unex (Guatemala), S.A. (right end in photo)
"We support 18 agricultural cooperatives nationwide, including Alotenango. Agricultural improvement programs like the C.A.F.E. Practices have many requirements, and it is difficult for small-scale farmers to meet all of them. But they are improving every year, and getting higher assessments from inspectors. The most difficult thing is convincing famers that they'll be OK even if they stop using the pesticides and herbicides that they have always used."

Guatemala Carolina Agricultural Cooperative

  • [Photo]Members of the Carolina Cooperative
  • [Photo]

Mr. Rene Sanchez Lopez
Cooperative Manager
"We are a cooperative of 70 farms. Before, we were tenant farmers on a huge plantation. We lived like slaves: for example, we did not have the right to negotiate prices.But we all got together and borrowed enough money to buy our own land, and started farming for ourselves. Coffee farms are poor, and it is hard to make ends meet, but I would not trade the autonomy we have won together for anything."

Processing

Immediately after the coffee cherries are picked, they begin to ferment and lose their flavor, so the pulp of the cherries is removed within a few hours of harvest, and the drying process is started.

Processing plant, Unex (Guatemala), S.A

  • [Photo]Coffee cherries collected from farmers are soaked in water, and then their pulp is removed.

  • [Photo]The pulp and seeds (beans) have been separated. When the yellow seeds are dried and roasted, they become coffee beans.

Processing plant, UNEX, S.A.
El Salvador


Mr. Leopoldo Muyshondt (bottom right in photo)
"We have started receiving a large number of CSR requirements from Starbucks and other coffee companies, and now there is a broader awareness at our company that we need to focus more on the environment and society."

 

Unex (Guatemala), S.A.


Toshiyuki Hayashi, President (until June 2010)
"Our job at Unex (Guatemala) is to build good relations with farmers, and offer high-quality coffee to our customers. One of our jobs is to provide support to enable farmers to be autonomous."

  • [Photo]
  • [Photo]
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Overview and challenges of processing
Processing plants are located close to the farm land. After harvest, coffee cherries are quickly stripped of their pulp and dried. As large amounts of water are used for processing, it is necessary to filter and treat the soiled water from processing. Due to lack of budget for water-treatment facilities, however, many processing plants still dump their wastewater into the soil and rivers without treatment.

Exported to Japan

Roasting / Marketing & sales

After the beans have been processed and dried, they are exported to the points of consumption. They are then roasted and blended by coffee manufacturers and retailers, and offered to consumers.

UCC Ueshima Coffee Co., Ltd.

[Photo]

UCC is continually increasing its imports of environmentally and socially conscious coffee, including Rainforest Alliance certified coffee. Spurred by customer demand, we expect to increase imports of these types of sustainable coffee even further in the future.
UCC Group, in support for the system of NGO "Rainforest Alliance" which recognizes and certifies coffee farms meeting high-standards such as conserving forests and eco-system, improving the living standards of farmers and etc., have started to handle coffee beans certified by Rainforest Alliance at the coffee mill stores in 2004 for the first time in Japan.
Aided by the growing concerns for safe and reliable foods and conservation of the environment, the sustainable coffees, including Rainforest Alliance certified coffee, are becoming accepted for commercial use and household use, and, with the increased imports every year, has grown to be one of popular products supported by cafés in hotels and coffee lovers.
Recently we receive such inquiries as "I would like to purchase the sustainable coffee," and "Where I could purchase the coffee?" We will be striving to promote the sustainable coffee in order for more customers to familiarize and purchase them by capturing all available opportunities.
Furthermore, in our consistent business activities "from coffee cup to coffee farm," with the objective to minimize the environmental impacts, we are conducting the comprehensive activities for reducing energy consumption and resource recycling. The example of such activities includes CO2 emission reduction by resource saving by lighter product packages and more efficient distribution networks. Moreover, each factory have achieved 15% reduction of CO2 emission intensity so far by such efforts as fuel conversion and persistent energy-saving activities.

Consumers

Reflections on the inspection visits

[Photo]

CSR Consultant
The CSR Institute, Inc.
Mr.Tomohiko Yamaguchi

Mr. Tomohiko Yamaguchi from The CSR Institute, Inc. made inspection visits to production sites.

1. Coffee supply chain

In general, agriculture is the central challenge in the supply chain, both in terms of society and the environment. In order to reach a fundamental solution to the issue of producer prices, controlling balance between worldwide supply and demand is considered necessary. However, during my visit, I have learned another angle to solving this issue. There is a movement where consumers, coffee manufacturers, farmers, and NGOs and other certification bodies are rationally working together, and some schemes (business models) are now rolling out individually which will comprehensively solve issues of farmer poverty, conservation of biodiversity, etc.

2. Activities of ITOCHU Corporation and UNEX, S.A.

What left the greatest impression on me this time was the words of Mr. Hayashi, at Unex (Guatemala): "The most important thing for farmers is to have their own farm land and become autonomous." I saw their efforts directed toward both attaining autonomy for farmers and producing high-quality coffee, by combining several methods, such as providing guidance on farming methods and supports for certification acquisition, purchasing at appropriate prices, distributing organic fertilizers and the like. I think this approach is excellent and can be applied to other fields as well.

Vol.3 How Chocolate Reaches Your Doorstep

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How Chocolate Reaches Your Doorstep

Issues Surrounding Chocolate and ITOCHU's Role

Cacao is produced in equatorial regions far from Japan, so cacao production faces challenges common to agriculture in tropical regions: inconsistent harvests and quality due to irregular weather patterns, and crop damage due to pests and disease. As a result, cacao farmers often struggle to maintain a decent standard of living.
As a major supplier of cacao beans to the Japanese market, ITOCHU continuously visits cacao-producing countries to work with local suppliers in ensuring that consumers receive a stable source of high-quality cacao beans.
As a part of efforts to maintain the sustainability of cacao cultivation,we contribute to the KAOKA Fund in Ecuador to support the activities of local farmers involved in cultivating regional cacao varieties and help raise their standard of living.

KAOKA Fund and UNOCACE Initiatives
  • [Photo]Cacao farmers. Famers from various production regions gather for joint technical training run by the cooperative

  • [Photo]Farmer undergoing training on grafting cacao trees

  • [Photo]Confection created by Chef Toshi Yoroizuka

Chocolate is made from cacao beans, and the cultivation of these beans is highly dependent on small farmers in tropical regions. Likewise, Ecuador also depended on many small farmers for the cultivation of its highly aromatic cacao; however, after World War I,the country lost its means to export. As a result, the production balance greatly deteriorated and crop disease spread: these combined factors devastated the industry. Moreover, the international cacao market lacked stability and the situation gradually grew worse.
Given this background, the Union of the Ecuador National Cacao Producers (UNOCACE) was established in 1999 to support farmers and help raise crop quality.
KAOKA, a French manufacturer of organic chocolate, runs a project that involves returning a portion of sales proceeds to cacao production activities. Starting in 2002, KOAKA began supporting the UNOCACE through proceeds from its project fund. The fund primarily works to re-train farmers on the cultivation of regional domestic cacao, while also supporting the production techniques and livelihoods of small farmers by returning the added value gained from high-quality cacao to the farmers. The project has also received support from the chef Toshi Yoroizuka, who creates sweets with KAOKA products. The ITOCHU Group supports the project as well by donating to the fund and selling related products.

Cultivation / Harvest

Chocolate Starts as Tropical Fruit

[Photo]Cacao flowers. Many, many extremely small flowers bloom on each tree, but only some bear fruit

[Photo]Cacao pod. The seeds, which are used to make chocolate,are contained in the fruit's white pulp

Cacao is a tropical plant that grows mainly within 20 degrees latitude of the equator.
Cacao trees are generally planted and cultivated between tall shade trees. The shade provided by the branches allows just the right amount of tropical sunlight to get through. Saplings are grown from seeds, and healthy saplings are then planted in the ground. Saplings are often grafted as a way to maintain high-quality, stable cacao cultivation. For example, in Ecuador, agricultural cooperatives use regional cacao varieties that are highly disease resistant as their crop foundation, which are then grafted to cacao branches that produce highly aromatic fruit: this enables production of a stable supply of high-quality cacao.
Cacao trees bloom with countless small flowers, but less than three percent of the flowers end up bearing fruit. Small insects serve as pollen go-betweens and once pollinated it takes about six months for the flowers to grow into fruit that can finally be harvested. The period from the start of cultivation to when the trees bear fruit is around three to six years. High-yield hybrid cacao varieties may bear fruit in less than two years. Cacao is a tropical fruit, so it can be eaten as a fruit. Regional Ecuadorian cacao varieties include fruit with a sweet, flower-like aroma. There are also hybrid varieties that produce fruit with a refreshing lemon-lime aroma.
Cacao seedpods (=fruit) contain seeds that are used to make chocolate. Once the pods are harvested they are split open and the fleshy pulp and seeds are removed as soon as possible. Farmers harvest the cacao pod and remove the pulp from the pods all by hand. The next step is fermentation.

Fermentation / Drying

From Seed to Cacao Bean

[Photo]Cacao pulp and seeds at the start of fermentation. Surface covered with banana leaves

[Photo]Fermentation in progress. Color gradually turns brown

Pulp and seeds taken from cacao pods are fermented for several days. Yeast, acetic bacteria and other microorganisms activate various chemical reactions during the process of fermentation, which creates the basis of the chocolate aroma and foundation of its flavor. White pulp containing the seeds is gradually reduced during fermentation, eventually leaving only the seeds, which turn brown.
For agricultural cooperatives and export companies with well-established quality control systems in place, the entire harvest to fermentation process is managed by co-op farmers, contracted farmers, or directly owned farms from various regions; furthermore, the entire process until the start of fermentation is completed in the same day. It is also common for farmers not affiliated with any cooperative or organization to sell to brokers after individually conducting fermentation and drying. Even within the same country, there are various routes for the harvest to fermentation process.
After being fermented cacao seeds (cacao beans) contain water, so they are dried until the remaining water content is only 7% to 8%. There are several drying methods, including drying the beans under the sun or drying them with a mechanical dryer that uses gas heat. Since the climate is tropical, with high humidity and a rainy season, organizations like agricultural cooperatives and export companies that consolidate and process cacao in large quantities tend to use both sunlight and mechanical drying methods.

Quality inspection and Control

Careful Inspection of Cacao Beans

Cacao beans are not shipped for export until they pass quality inspections for aroma, flavor, water content and other characteristics. If the water content is high, it is adjusted again before shipping. Cacao beans are also split open to inspect for mold and insect damage.
Cacao beans produced in various regions are consolidated and exported to Japan, but prior to export the traceability of the beans is verified.

  • [Photo]Pulp and seeds harvested by farmers are transported to fermentation facilities. They are carried by donkey on mountain paths

  • [Photo]Cacao beans before export

Exported to Japan

Chocolate processing

From Cacao Beans to Chocolate

[Photo]

Chocolate imported into Japan goes to chocolate manufacturing facilities after passing through quarantine for residual agricultural chemicals and other quality and health inspections.
Pebbles, cacao branches and other foreign substances are removed in the cleaning process and the beans are then roasted. Roasting is a major factor determining chocolate quality, as is the blend of cacao beans that is used. The roasted beans are crushed and the shell removed and then pulverized in a grinder to make a paste called cacao mass.
Chocolate dough is made by adding sugar and cocoa butter to the cacao mass. For milk chocolate, milk powder is also added. Fine particles of cacao, sugar and other ingredients are ground with a precision-crafted metal roll refiner to create smoothly textured chocolate flakes. Next the flakes are processed for an extended period of time in a machine called a conche to complete the process.
Chocolate made through this process is then tempered, put into containers, cooled and hardened or is transported to confectionary manufacturers in melted form via tanker trucks.
Confectionary manufacturers process the chocolate into various sweets and candies and deliver them to consumers through retail outlets.

Confectionary manufacturers / Specialty shops

Confectionary manufacturers: Everyday Chocolate Candies


Chocolate mass is processed into chocolate candies by confectionary manufacturers. Some companies create chocolate by roasting the cacao beans themselves.

 

Specialty shops:
Professional Chocolate


Some cacao beans with distinctive aroma and flavor, like regional Ecuadorian cacao, are processed into chocolate for specialty shops. The chocolatiers at such shops create chocolate sweets that bring out the characteristics of this type of chocolate.

  • [Photo]

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Reflections on the inspection visits

[Photo]

café-CACAO Representative
Cacao Hunter®
Mayumi Ogata

Everyone is familiar with sweet, delicious chocolate, but what people are less familiar with is what chocolate is made from, the cacao bean, and where and how it is grown. Most cacao beans are cultivated in agricultural areas far from urban centers in countries near the equator. Cacao beans are produced on the other side of the world, in places like Ecuador, where this inspection was conducted. Cacao beans are able to reach the Japanese market safely and securely, only through the efforts, trust and cooperation of producers and exporters.
What is important in the cacao supply chain is that ITOCHU serves as a bridge between cacao producers and chocolate consumers, who are far removed from one another, and link all the steps on the path from cacao tree to chocolate.

Vol.4 From Pulp to Tissue paper -Green Economy Project: Enthusiasm of Pulp Producers-

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From Pulp to Tissue paper -Green Economy Project: Enthusiasm of Pulp Producers-

Enthusiasm of Pulp Producers: Green Economy Project

Brief Overview of Frontline Research

This report vol. 4 covers the supply chain from the production of pulp in Brazil to the making of everyday paper tissues, by a nonfiction writer, Kazuma Yamane.

  • Research Period: March 2012
  • Front-line Report: Kazuma yamane(Nonfiction writer and Dokkyo University Department of Economics Specially-Appointed professor)

Visited Brazil for the first time in 1972, and has done on-site research in Brazil about 20 times. In 1996 sponsored the Amazon's first international environmental symposium as representative of Future Association Amazon, an NGO. In 1997, he received an award for distinguished service from the Para state legislature. Brazil and the Amazon are the starting point of his outlook on life and his environmental awareness.

* Photographs, except for photograph of portrait of Yamane and photographs of tissue paper boxes, were taken by Kazuma Yamane.

[Photo]

About CENIBRA

CENIBRA was established on September 13, 1973, as a Japan–Brazil joint venture project after a decision by the Japanese Cabinet. Japan Brazil paper and pulp Resources Development Co., ltd. (JBp), which was a joint venture by large Japanese pulp and paper companies, OECF, and ITOCHU Corporation, owned 48.5% of CENIBRA. The other 51.5% was owned by Brazil's Companhia Vale do Rio Doce (currently Vale S.A.). CENIBRA began operations in March 1977. Subsequently, in 2001 JBP acquired shares in CENIBRA that were owned by Companhia Vale do Rio Doce, and today CENIBRA is operated with 100% Japanese capital. JBP is owned by 14 companies, including Ojipaper (48.98%) and ITOCHU (32.11%) (as of the end of June 2012). It is the seventh largest hardwood market pulp producer in the world, and sales in fi scal 2011 were $728 million.

[Photo]

Islands of Green Amidst Treeless hills

Tissue paper is a product that we use everyday. I heard that pulp from CENIBRA, in Brazil, is the raw material for the well-known Nepia brand of tissue paper. To see the site where the pulp is produced, I traveled to Brazil to visit Ipatinga City in the state of Minas Gerais.
Ipatinga, a small city with a population of about 250,000 people, is located about 700 kilometers northeast of São paulo.
This was my 20th trip to Brazil since 1972, but my fi rst visit to Minas Gerais. As the plane from Sao paulo entered Minas Gerais, I began to see a line of low, gently rolling mountains. On the surface of the mountains, I was surprised at the conspicuous reddish-brown clear areas. Through the window of the plane, I could see the western edge of the Atlantic Rainforest. This rainforest used to cover 1.3 million square kilometers, or about 3.3 times the size of Japan, but 93% of the rainforest has been lost, and today only 91,000 square kilometers remains.
However, as the plane approached Ipatinga, I began to see many dark green areas in the Rio Doce river basin's barren mountain surfaces and small fl at spaces. I later learned that these were CENIBRA plantations.

Seedlings

15 Million Seedlings per Year

[Photo]

In one day, 50,000 eucalyptus logs are fed into the production line. That means that large quantities of eucalyptus seedlings are necessary for planting, more than 50,000 a day, and CENIBRA uses its own nursery to produce 100% of the seedlings it needs. At the nursery, which is like a large test plantation, highly experienced Japanese specialists from Oji Paper, which is the lead shareholder, provide enthusiasticguidance about seedling development. To select rootstock that are highly resistant to aridity, changes in temperature, insect pests, and wind; matches the soil; and will grow well, 10,000 seed plants are created each year by crossbreeding rootstock (100 x 100). After trial planting, the best rootstocks are selected.

[Photo]

The rootstocks selected in this way are known as clones, and the branches and leaves of the rootstocks (5 to 8 cm scions) are cut and placed in a small pot, in which they grow into 20– 30 cm seedlings in 70 to 80 days. If all goes well, they are then sent on to the plantation site. At the nursery, 15 million seedlings are produced in a year. The cost competitiveness of pulp producers is said to be based on the growth of the eucalyptus trees, which are the raw material. CENIBRA continually repeats the process of seed improvement, patiently taking time and selecting the best seed plants. Outstanding cost competitiveness is maintained by painstakingly producing each individual seed stock in-house.

Tree planting / Felling

Logs That Can Be Harvested in 7 Years

[Photo]

The plantations of CENIBRA are interspersed among an area the size of the Kanto Plain, or about 17,000 square kilometers. Those were the green areas I saw out of the plane window when we were nearing Ipatinga. CENIBRA's holdings total 255,000 hectares, about the size of Kanagawa Prefecture.
I was able to visit one of the plantations. First, the employees open holes in the surface soil with a digging machine Then other employees use a metal tube to plant the seedlings in the soil, and finally employees with a water supply hose sprinkle water on the seedlings and apply fertilizer.

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Each hectare of eucalyptus trees grown in this way yields 41 cubic meters of wood a year, with harvesting conducted after seven years. The speed of this growth supports the international competitiveness of CENIBRA. At the harvest site, the arm of the harvester grabs and cuts the eucalyptus trees, which have grown to about 30 meters. It takes about 20 seconds to harvest one tree and turn it into a log. The efficiency of the process was hard to believe.

Forest Certification and 70 Awards

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Near the plantation and the harvesting area, there is a temporary tent that is used for the workers to take breaks and have lunch. I was surprised at the thorough approach to appropriate working conditions. The reason is that the industrial use of forest resources entails the strict observance of such things as conservation of the natural environment, maintenance of biodiversity, and contributions to the workers and the local community. We have reached an age in which the only companies that survive will be those that market products that have been “certified” as clearing a management process that meets these social requirements.

In 2005, CENIBRA became the first company to simultaneously receive FSC (Forest Stewardship Council) forest certification and CERFLOR (Sistema Brasileiro de Certificação Florestal) forest certification. In total, the company has received 3,828 environmental licenses.
CENIBRA's eucalyptus plantations are not connected in any way to the harvesting of primary forests. Out of CENIBRA's holdings, an area of 103,000 hectares is sustaining the ecosystem as permanent forest reserve or legal forest reserve. These reserves account for about 40% of the forest holdings. Just since 2000, CENIBRA has received 70 awards, which is an indication of their passionate commitment to the environment.

Pulp production

Rigorous Approach to Saving Energy and Handling Wastewater and Odors

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In the huge log yard at the pulp mill, there were mountains of eucalyptus logs brought in by truck and rail. Pulp is shipped in the form of sheets that look much like dried sake lees that are used as a raw material for amazake. The paper mills that buy the pulp dissolve the boards with water and use the fiber as raw material to make paper for specific needs, such as for tissues or printing.
Pulp plants require large quantities of water and fuel. The production process also generates substantial amounts of odors and wastewater. CENIBRA conducts rigorous daily monitoring of odors outside the plant grounds and of the degree of contamination of wastewater. The environmental facilities here are top level. In addition, the bark from the logs is used in biomass electric power generation, and the lignin, an impurity that is generated during the cooking process, is used as fuel for in-house power generation. In these ways, a rigorous approach to energy conservation is implemented.

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The amount of water consumed in the production process has been reduced to one-fifteenth the level in 1977, and the amount of bleaching agent has been reduced 32% in comparison with 2006 (available chlorine equivalent units). The amount of electricity purchased has declined 29%, and boiler fuel is down 82% (both in comparison with 2011). Everywhere I looked, I saw this type of innovation and effort in the areas of production and the environment. This progress is the fruit of daily efforts to improve operations and cut costs, on a base of papermaking technology from Japan, which is at the world's highest level. ISO 9001 and ISO 14001 certifications have been acquired.

Shipping

Specialized Shipping Terminal for Pulp Export (5.5 Million Tons a Year)

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Annual sales of this pulp total 1.2 million tons, with 90 customers in 25 countries. Sales to the domestic Brazilian market are handled directly by CENIBRA (5%), while exports are handled by ITOCHU Corporation. Exports to Asia, including Japan, are increasing, and now account for 48% of total exports. Exports to overseas destinations are shipped from Portocel, which is on the Atlantic Coast about 375 kilometers away from the mill. Each day, about 3,200 tons are carried to Portocel via the Vitoria a Minas Railway.
Portocel (full company name Terminal Especializado de Barra do Riacho S.A.), is owned 49% by CENIBRA and 51% by Fibria S.A. (Brazilian pulp maker). The world's largest specialized pulp terminal, it exported 5.5 million tons of pulp in 2011. Brazil is in the process of establishing its infrastructure. In this setting, the fact that CENIBRA had, in advance, secured a rail transport route from the mill to a port, and owned a shipping port, was one of the sources of CENIBRA's cost competitiveness.

Processing

400 Million Boxes of Tissue Paper Annually

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After I came back to Japan, I visited the Oji Nepia Nagoya Plant (Kasugai City, Aichi Prefecture), which is a major user of CENIBRA pulp and is the maker of Nepia brand tissue paper.
When I observed the final production line of the Nagoya Plant, which has an area equivalent to about two Tokyo Domes, I was overwhelmed by the scene of high-speed tissue packaging. The production volume reaches 400 million boxes a year.
The process of making tissue paper uses only one gram of pulp fiber per liter of water, to realize the soft texture that is easy on the skin. However, the ultra-thin tissue has two-ply construction, with the side that touches the skin using soft fibers and the back side using slightly stiffer fibers for support. The fibers that are used on the easy-on-the-skin portion are made from CENIBRA pulp from Brazil. The CENIBRA pulp is produced with 100% plantation trees, and the raw material eucalyptus trees are produced and managed by the company from the individual seedling stage. Today, when environmental problems are the focus of attention, this traceability gives consumers a sense of security.

In harmony with local communities  Initiatives targeting biodiversity

In harmony with local communities

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Moving Ahead in Tandem with Local Communities and Farmers

CENIBRA is moving ahead with contracts under which it consigns the plantations to local farmers and then purchases the logs that they cultivate. Many of the farming families operate pastureland, but the eucalyptus plantations turn barren areas into green areas, and the income is more than from farming, so it is a very attractive business for the farming households. The contract farmer that I visited was satisfied with the stable income from eucalyptus plantations. The “contract plantations,” which began in 1985, already number 1,200, with total plantation area of 25,000 hectares. This is a new business model that helps the environment through the greening of barren areas and also reduces plantation costs for CENIBRA.

Initiatives targeting biodiversity

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Conservation and Breeding of Rare Endangered Species

Over many years, much forest area has been lost, and CENIBRA is working to restore natural forests. In an area totaling 300 hectares that constitute natural forest, the company is planting 40 varieties of tree seedlings, a total of 70,000 seedlings a year.
A representative example of these efforts to sustain and restore biodiversity is the Reserva Particular do Patrimonio Natural (RPPN) Macedonia Farm. I wanted to visit when I heard that endangered birds are protected and bred here.
The forests in this area are the habitat of a pheasant family bird with the Brazilian name mutum (a type of curassow). The mutum habitat here is the only one in the Americas, so there are very few people in Japan who know of it. When I first saw it, I was impressed with the black, rather large bird that flew slowly and walked like a chicken. The conservation, breeding, and release activities, are, in the final analysis, Brazil's version of the Japanese programs for the crested ibis and white stork. It was 21 years ago that CENIBRA, with partners Crax NPO and Crax Internacional, began working to prevent the extinction of these birds with the conservation, breeding, and release project.
The base for those activities is in the forest. There are seven endangered bird species being raised in cages, awaiting release, including the mutum and the Black-fronted Piping Guan. I received a several-hour presentation from a CENIBRA team, and I was overwhelmed with their enthusiasm. As a result of continued breeding and release, 20% of the world's mutum are on the Macedonia Farm. The curassow have been around since 4,000 to 5,000 years ago, and they are considered to be something like the “coelacanth” of birds. As a result, CENIBRA's enthusiastic activities are well-known in Brazil.
Activities to conserve and breed rare endangered species have a significant educational effect. At the Macedonia Farm, they are also working to welcome ordinary environmental visitors (6,000 a year) and offer school teacher training (1,760 people). The public school teachers who have received training here have already gone on to teach 220,000 students. I admired the manner in which the program to raise local environmental awareness has been enriched.

Concluding the Observation

Nonfiction writer  Dokkyo University Department of Economics Specially-Appointed professor  Kazuma yamane

Nonfiction writer
Dokkyo University
Department of Economics
Specially-Appointed professor
Kazuma yamane

Tissue paper, an everyday product that I have always used without really thinking about it, is made from raw materials that are obtained through rigorous consideration for the environment and hard work. It was at just this point when the theme of the United Nations Conference on Sustainable Development, known as Rio +20, was released: “Green Economy.” The eco business advanced by CENIBRA is certainly a desirable “green economy,” I think. CENIBRA's implementation of environmental measures should be studied by many other companies.