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Building an integrated cinnamon supply chain

Over 80 percent of the world’s annual consumption of cinnamon (cassia) comes from the vast cinnamon plantations of Sumatra, Indonesia.

The Royal Tropical Institute (KIT) is involved in cinnamon production through its work with the company Cassia Co-op. The aim of this project is to improve the lives of those at the bottom of the supply chain, the Indonesian cinnamon harvesters.

Traditional versus integrated supply chains

Traditionally, getting cinnamon from farm to market is a long chain with many actors: farmers, local traders, brokers who export cinnamon, Western importers and processors. By the time the product is on store shelves, all these actors have received a percentage of the profits. As a result, harvesters are paid relatively little for their crop.

Cassia Co-op, founded in 2009, trades its cinnamon through a short, integrated chain. The parent company in Amsterdam receives the cinnamon from Indonesia directly after the harvest. This guarantees good market access and minimizes unnecessary middlemen. Harvesters receive a bonus from Cassia Co-op based on yield, which allows them to grow their incomes.

Unlike a traditional supply chain, Cassia Co-op has responsibility for the chain from end to end. This type of integrated supply chain is more transparent, which facilitates quality control and improves relationships between actors in the chain.

Expertise in sustainable chain development

KIT and Cassia Co-op first got to know each other during the Sustainable Spice Conference organized by KIT in 2010. Because of KIT’s expertise in sustainable supply chains, Cassia Co-op approached KIT senior advisor Marije Boomsma for support in developing its business plan, operations and strategy. The project is progressing well. Cassia Co-op now has its own factory for processing cinnamon which will be operational from April 2013.