The Cinnamon Revolution
    Category: Entrepreneurs By : Eli Freedman Read : 2832 Date : Monday, November 04, 2013 - 08:39:21


    Courtesy of Cassia Co-Op

    Indonesia is the world's largest producer of cinnamon, with an 85% share of the global market. Today, the cinnamon trade is around $100 million annually with a production of around 50,000 tonnes per year, meaning Indonesia produces about $85 million of the popular spice. Almost all of it comes from one area, the slopes of Indonesia's highest volcano, Mt. Kerinci, in the middle of Sumatra, where cassia trees flourish (cinnamon is made from its bark).

    Frenchman Patrick Barthelemy's PT Cassia Co-Op is completely changing the game of cinnamon production. Typically, the process is a long movement from cinnamon farmer to end user, with up to eight middlemen taking their cut. Farmers often work long hours for little pay, and cinnamon prices have been on a long-term decline. Cassia Co-op cuts the process down to three people. “The concept of the Cassia Co-op is to build a bridge between the farmer and the end user,” says Patrick.

    By going through Cassia, farmers receive more income as less hands are taking their slice of the cinnamon stick. Farmers that sell to Cassia will usually get around 5% above the current market price. For example, in July, a kilo of cinnamon sold for Rp 8,700, and Cassia paid that plus an additional Rp 500 premium to its suppliers, a 5.7% bonus. 

    Patrick, 44, is a veteran spice trader. He started in the trade when he was 22, and in 1995 cofounded Tripper, a company based in the U.S. that traded and processed organic spices from Indonesia, including cinnamon. In 2009 he set out on his own with the idea to focus on cinnamon, starting at the source and working directly with the farmers. The Cassia Co-op is set up with shared ownership between Patrick and members of the farming community.

    However, setting up the co-op took four years of hard effort, with two major steps. First, Patrick worked on the demand side, organizing a group of buyers, retailers and transporters in Europe for the cinnamon. This effort took about a year. The second, and more difficult, step was building the supply side of the Indonesian facility, which took three years. He wanted to build a processing center in Kerinci, along with a school for training farmers. Cassia was the first manufacturing company in the area, which required Patrick to work with the local authorities to get the necessary paperwork. The processing facility required trained staff, so Patrick had to provide the training for jobs that had never existed in the area before. Then the factory that turns the cassia bark into cinnamon powder had to be built, at a cost $375,000.

    To ensure quality, Patrick only buys from farmers who have been certified by him. At the moment, 268 farmers have gone through the process. This initial batch took three years to train. But Patrick has now streamlined the process to six months and by the end of the year he hopes to have 2,000 farmers certified. Eventually he'd like about 5,000 done, about half of all the farmers in the area. To get the certification, farmers must attend day-long workshops. Patrick often pays them to attend, as they must miss a day's work.



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