Below is an overview of the key requirements of the Rainforest Alliance Mass Balance Cocoa Sourcing Program. These rules are effective for a trial imple-mentation phase of one year, starting November 14, 2016. Minor adjustments may be made to both the rules and the label during the one-year trial imple-mentation phase. Companies who are already using the mass balance sourcing program will be given six months from the date of notification to implement any such changes.

Point at Which Mass Balance Can Begin

If cocoa beans are exported prior to processing:The Mass Balance Sourcing Program requiresRainforest Alliance Certified cocoa beans to bephysically segregated from uncertified cocoabeans from the time they are harvested until thetime they leave the exporters facility. Uncertifiedand certified cocoa beans can be physically mixedfrom the time they leave the exporters facility. Inall cases, the country of origin of the cocoa beansmust be stated on the corresponding TransactionCertificate, as explained in more detail below.

If cocoa beans are processed in the country of

Guidance for Working with the Rainforest Alliance Mass Balance Cocoa Sourcing Program

origin: The Mass Balance Sourcing Program re-quires Rainforest Alliance Certified cocoa beans to be physically segregated from uncertified cocoa beans from the time they are harvested until they reach the first factory gate of the processing facility. Uncertified and certified co-coa products can be physically mixed from the first factory gate of the first processing facility onwards.

Rules for Mass Balance Accounting

All sales and shipments of cocoa and cocoa products claimed as Rainforest Alliance Certified must be reported to the Rainforest Alliance, whether they are sourced through a segregated or a mass balance supply chain, using our new online system, Market-place 2.0. A Transaction Certificate is generated each time a sale or shipment is registered in Marketplace 2.0. The Transaction Certificate will identify the sale or shipment as either mass balance or segregated sourcing, depending upon whether or not segrega-tion is maintained throughout that supply chain to the point of the sale or shipment.

Transaction Certificates must be generated in

The Rainforest Alliance Mass Balance Sourcing Program will initially be avail-able to the cocoa industry but may be expanded to other crops in due course. While companies are still encouraged to maintain fully segregated supply chains whenever possibleas this is the only way to achieve full traceability from farm to product and provide that value proposition to consumerswe rec-ognize that this is not feasible for some cocoa product supply chains. The Mass Balance Sourcing Program has therefore been introduced to enable manufac-turers, brands, and retailers to support the field impacts of Rainforest Alliance certification without the need to change their manufacturing processes to guar-antee that products contain cocoa from Rainforest Alliance CertifiedTM farms.

The Rainforest Alliance works to conserve

biodiversity and ensure sustainable livelihoods by transforming land-

use practices, business practices, and consumer

behavior.

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NOVEMBER 2016

Marketplace 2.0 as close to the date of shipment or date of consumption of the physical product as possible. At the very minimum, all transactions con-ducted during a calendar quarter must be registered in Marketplace 2.0 by the end of that quarter. To generate a Transaction Certificate, companies must have adequate volumes of certified product in their Marketplace account (i.e. sales of certified cocoa beans cannot exceed the volume of certified cocoa beans purchased). If purchases exceed sales then this will generate a positive credit. Credits are valid for a maximum of three years.

Several sites owned or managed by the same com-pany are eligible to operate under one multi-site mass balance account provided they have a central administrator and are Chain of Custody (CoC) certi-fied under one group. If a site has Rainforest Alli-ances single-site CoC certification, single-site mass balance will be required.

Participation Royalty

The Rainforest Alliance charges a participation roy-alty of $0.015 USD (or 1.5 cents USD) per kilogram on all volumes of Rainforest Alliance Certified cocoa beans traded in the marketplace. This royalty is charged to the bean exporter, or first buyer if the co-coa beans are processed in the country of origin, and is based on the volume of cocoa beans purchased as Rainforest Alliance Certified. The royalty is only charged once in the supply chain and will be charged for both segregated and mass balance sales. Invoices are issued quarterly.

Volume Coverage

For a company to claim that a particular Stock Keeping Unit (SKU) is supporting Rainforest Al-liance Certified farms through the Mass Balance Sourcing Program, a volume of cocoa equivalent to 100 percent of the cocoa content of the SKU must be purchased from Rainforest Alliance Certi-fied farms by the supply chain. This differs from the existing rules for segregated cocoa supply chains in two important ways. First, under the Mass Balance Sourcing Program certified and uncertified cocoa can be physically mixed during processing and manu-facturing. Second, while the green frog seal (which

indicates a segregated supply chain) can normally be used when at least 30 percent of the cocoa content is from Rainforest Alliance Certified farms (with a percent disclosure), the Mass Balance Sourcing Pro-gram Label can only be used on SKUs if purchases of Rainforest Alliance Certified cocoa are equivalent to 100 percent of the cocoa content of the SKU.

If a product contains cocoa-based inclusions (e.g. chocolate chip cookie crumb in a chocolate tablet) produced by a third party which account for less than 10 percent of the total cocoa content of the SKU, then the primary manufacturer of the product may purchase additional Rainforest Alliance Certified cocoa to cover the cocoa content of the inclusion. In this scenario the third party supplier of the inclu-sion would not be required to comply with the rules outlined in this document. However, if the inclusion accounts for 10 percent or more of the total content of the SKU, then the third party inclusion manufac-turer must ensure that its own supply chain sources a volume of cocoa equivalent to 100 percent of the cocoa content of the inclusion from Rainforest Alli-ance Certified farms.

Avoiding Double Accounting

If a batch of cocoa products is purchased from a farm, which has more than one sustainability certification (e.g. Rainforest Alliance certification and UTZ certification), then the equivalent volume of cocoa product can be sold with dual certification status. However, the Rainforest Alliance certifica-tion and UTZ certification may not be separated and applied to two separate batches of cocoa product, each equivalent in volume to the original purchase, as this would be considered double accounting. For example, if a company in the supply chain has pur-chased 100MT of cocoa powder made from beans grown on a farm that has both Rainforest Alliance and UTZ certification, the company cannot sell for-ward 100MT of Rainforest Alliance Certified cocoa powder AND 100MT of UTZ certified cocoa powder. The sum total volume of cocoa powder that can be sold forward as certified (Rainforest Alliance and/or UTZ) from that batch must not exceed 100MT. The Rainforest Alliance has begun working with UTZ and Fair Trade International to eliminate the potential for double counting.

Cocoa bean Transaction Certificates will be con-verted to cocoa liquor, butter or powder Transaction Certificates, using these ratios, when processing takes place. The balance of each ingredient will be shown in the Marketplace 2.0 account. The type of Transaction Certificate purchased must reflect the recipe of the product. For example, if the formulation for a product is 30 percent cocoa butter and 70 per-cent cocoa powder, Transaction Certificates should be purchased for these ingredients in the same proportions. It is not possible to convert or substi-tute Transaction Certificates unless this reflects the processing that has taken place (e.g. cocoa powder Transaction Certificates cannot be converted to cocoa butter Transaction Certificates).

Origin Matching

The country of origin of the cocoa beans will be recorded on the Transaction Certificate at the time of export. Companies purchasing cocoa beans must purchase cocoa with Transaction Certificates from the same country of origin as the cocoa beans they are selling under the Mass Balance Sourcing Pro-gram.

Origin match will only be required for cocoa prod-ucts (e.g. cocoa butter, cocoa powder, or a chocolate bar) if a claim is made regarding the country of origin of that product on pack or in accompanying busi-ness-to-business or business-to-consumer marketing materials. For example, if a chocolate bar claims to be a blend of cocoa from Cte dIvoire and Ecuador then the company manufacturing it must buy cocoa with Transaction Certificates from producers in these ori-gin countries in approximately the same proportions as in the recipe for the product.

Use of Rainforest Alliance Trademarks

Companies promoting cocoa products produced us-ing the new Mass Balance Sourcing Program should use the Rainforest Alliances new Cocoa Sourcing la-bel instead of the usual green frog seal. This label can be used either on the front or the back of product packaging, but must be accompanied by an explana-tory statement and URL to a website which provides more information about the Rainforest Alliances Mass Balance Sourcing Program. If space is limited, the label may be used on the front of the pack and

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