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Go Back: Home > Earth Island Journal > Issues > Winter 2009 > Conversation

Conversation

Frederick Schilling

photo of a smiling man wearing a hat, river scene in backgroundJason Florio, floriophoto.com

When Frederick Schilling started Dagoba Chocolate, everyone was sweet on him. A tiny operation run out of Schilling’s home kitchen, the fair trade chocolate company was the model of a virtuous start-up. With high standards for social and environmental responsibility, and a reputation for excellence, Dagoba was a perfect blend of eco-sustainability and economic success. But when Schilling sold the brand to Hershey’s, many of his fans felt bitter. We caught up with the former chocolatier just before he jetted off to Latin America for his latest project, and asked him to share his thoughts on how to protect vital rainforest areas.

How can cocoa cultivation help protect endangered habitat?

In terms of how cocoa can help protect the environment – primarily the rainforest, because cocoa is a rainforest tree – there are a couple of things. One is that cocoa ideally needs some shade. It can be grown in full sun, but the cocoa tree does thrive when it is grown in some shade, so the cocoa tree can help in preserving the rainforest canopy on that level. In Brazil, there is a system of growing cocoa called cabruca. It’s a traditional way of growing, and it’s basically integrated into the rainforest. In some areas of the world, in order to grow cocoa, people go into a forest, and do some clearing to plant the cocoa. And unfortunately that clearing could be heavy sometimes. But in Brazil, using the cabruca style, for whatever reason, traditionally, the canopy was left pretty heavy.

So the cocoa trees give the farmers enough of an income to incentivize them not to cut down the trees.

In only seven years, you built a company, sold it, and now you’re moving on. What was your original idea of starting a chocolate company?

As an individual, my genetic make-up of passion would be music, food, and the environment. Before I started Dagoba, I was a ski bum. As a ski bum, you love nature. You want to see it preserved. But I also love food … I absolutely love food, so I was cooking, and for whatever reason (laughs), certain things came to be, and I started a chocolate company.

Dagoba was started as full-on grassroots. I hand-poured every bar, I hand-wrapped every bar for the first year and a half, and it just grew based on consumer acceptance. The initial money came from family, just a little bit here and there. It started to grow faster and faster.

I had the idea for Dagoba back in 2000, so I had a year of R & D in my home kitchen, then formally launched the company in 2001. In 2000 … I’m trying to recall what was on the market on that time. I think in my category – the natural organic – there was, gosh, Endangered Species, Newman’s, that was about it.

Now there are countless brands.

There are so many out there (laughs). Every time I go to the store, it’s like, oh my gosh! I have to ask myself, how do these people make it? I give my best to all the smaller companies that are coming into the market now and hope they can survive.

Is that part of the reason you ended up selling, seeing all these new companies and new competition?

No, by the time I sold, Dagoba was pretty solid. We were a brand that was respected and recognized. For me, the reason I sold it … Dagoba was – it is still – it’s a quirky brand. It’s just not that kind of chocolate brand that is going to have broad appeal across mass channel grocery stores. I had brought the company, in my opinion, as far as I could bring it in the natural food channels and reached the consumers that I thought I could actually reach myself.

To bring Dagoba to the next level, and to get it out there on the broader scale, I needed to team up with a company that had that kind of distribution. I had to plug it into a greater architecture that I personally didn’t really understand or have access to.

I didn’t start the company just to have a chocolate company, because I never liked chocolate as a kid, you know? I really wanted to start the company as a catalyst for change in the industry and to prove to the broader industry that you can actually have a very successful, profitable company while adhering to high standards of environmental integrity, social integrity – all the stuff that Dagoba stands for and still does.

How hard was it to find those third-party partners when it came to your strict standards on environmentalism?

Cocoa in and of itself is inherently sustainable. Ninety-five percent of the world’s cocoa is grown by small, independent family farmers. Ninety-five percent. That means that whether the cocoa is going into Dagoba, or Hershey’s, or Nestlé, 95 percent of it is grown by small, independent family farms.

Is that also an historical coincidence?

Yeah, that’s just the way cocoa has always been. For whatever reason, the plantation model really just never took a stronghold for cocoa. There are cocoa plantations out there. But for whatever reason, the way cocoa evolved, it just is a smallholder crop, which makes the supply chain very convoluted and difficult, yet, at the same time, the convoluted chain preserves the sustainability of the crop itself. Let’s say the average land-holding size of the smallholders is between two to five hectares of land, and on that land, it’s basically their food source, because they’re subsistence farmers. So they have cocoa, they have mango, they have papaya, they have corn, they have jackfruit, they are going to have a multitude of crops on that land that they can feed themselves with, but also that they can sell into various markets. So it’s preserving the biodiversity of the land.

Did you get offers from Hershey’s or did you go to them?

You know, I never had any intention of selling. I loved what I did. I had a chocolate company! It was a freakin’ blast. It was a lot of work, don’t get me wrong! It was a lot of work. But I’m from the Midwest, and I have this insane work ethic. I don’t know if it was driven into me as a kid or if it’s just in my genes. We did get offers from a lot of different people. And Hershey’s approached me in, I believe it was in the winter of 2005, just three and a half years after I started the company. And it was very flattering. I mean, gosh, after three and a half years of starting a company, a huge company, an institution like Hershey’s, comes up and says we are interested in buying your company. … I was quite honored.

But I just woke up one day and I realized that in order for Dagoba to maximize its impact, that it had to move on, it had to go into this next stage of existence that I could not provide for it. For me, the more I was able to grow Dagoba, the more sales, the more impact I could have back in origin [countries], because the more cocoa I had to buy, the more farmers I could influence and work with, and try to convert more cocoa to organic, and whatnot. I would be a hypocrite if I did not allow Dagoba to move on into a larger architecture. And a lot of people castrated me for doing what I did. I mean, the amount of hate mail that I got was insane, but for the most part those people have no idea what it’s like to run a company, or who I am as an individual or why I started the company. They just see this small company selling to this multinational.

Money is great, but it’s not what drives me. I live a very simple life here in Oregon. I live in a very small home. My car is 30 years old. I have a hard time spending $20 on razors (laughs)!

What, if any, assurances did you get from Hershey’s regarding them maintaining those founding principles?

We do have some basic things in the contract, but nothing that grandiose.

Those ethos that we started the company on are just there. I firmly believe, and I told this to Hershey’s many times, that if you veer off the path, Dagoba will fail. It’s a built-in … I don’t want to say curse … but it’s a built-in ethos that if you veer off, Dagoba will suffer. And they get that. They really, really do. Hershey’s is really a great company, and they understand that if you take away the ethos of the brand, it’s going to change, and the consumers that love the brand will recognize the change and it will fail.

I’ll be honest with you, that morning that I woke up and had my epiphany – realizing that for Dagoba as its own entity to reach its destiny, I had to let it go – that night, I cried for hours and hours. I mean, I had never cried so much in my life. It was extremely painful. It was like half my personality was being ripped out of my soul. Because for all of these years, I was Freddie the Dagoba Guy, right? Then all of sudden, my persona was gone. It was so difficult to have this realization that I had no identity anymore (laughs). It was really, really intense, and it was an incredible lesson for non-attachment. Ultimately, I had to realize that my personality, my being, was not just Freddie, Dagoba Guy.

Take me through the last year of what you’ve been doing.

I started a new company called Big Tree Climate Fund (BTCF). There are two sides of the company, basically. One is project development, and the other side is selling the carbon credits. On the project development side, we’re working on 36,000 hectares of primary rainforest in the Amazon. One single landowner owns 36,000 hectares. The trend over there is to cut down the rainforest and plant soybeans and raise cattle. We have approached this landowner and said there is value to those trees … don’t cut them down. And the value in those trees right now is the carbon credits. That’s the tool that we have to use in this day and age to give the incentive to the landowners not to cut down the trees. What is happening right now is that Brazil as a country is emerging. Their economy is doing great, there’s a growing middle class, which means that things are becoming more expensive. A lot of the farmers that grow cocoa, they’re finding that they really can’t make a living anymore. So all of a sudden, cutting down trees on their land is becoming much more appealing, because they’ve got to make a living. Look, I can’t blame them. No one can blame them.

photo of a woman planting a small tree in a potFrederick SchillingFor some forest communities, there is more money to be made in
planting trees and selling carbon credits than in cutting down trees
and selling lumber.

What we want to do is create a model that convinces the carbon market to allow these farmers to sell carbon credits from their existing trees in order for them to have that incentive to not cut down their trees. And BTCF will help the farmers bring their carbon credits to market and make money. Get them out of that level of poverty.

You’re starting to see this in the States, that land is now worth more with the trees than it is without them. It’s interesting that you start to have these tipping points.

Exactly. I have goosebumps thinking about what you just said. It’s great that we’re finally starting to see that door open. You’ve just nailed it: Land is more valuable with trees on it. That’s not true everywhere.

What’s the next step? Pedal to the metal on these forestry projects?

Yeah, that’s it. It’s just a fascinating industry. The carbon market, it’s funny, because I’ve not been in it that long. But when I’ve talked to people in the industry, they say it’s a mature industry, you’re never going to succeed in it. You should go do something else. But then I poll my friends and associates in the natural food industry, and I ask, “How many of you offset your own carbon emissions?” My friends, we’re the eco-warriors, right? We’re the ones that are pointing our fingers at the evil corporations. We’re the ones that are supposed to be doing the good things. So I sent this survey out, and like two percent of these people actually offset their own emissions. I’m scratching my head … we’re supposed to be the enlightened ones! And nobody’s offsetting their own personal emissions. So how can anyone say that the carbon market is mature? If 98 percent of my peers don’t offset their own emissions, then something is seriously wrong.

My goal with BTCF is the project development side, primarily focused on forestry, but we are going to be working with methane captures, but more from the social side. I really don’t have any interest in supporting large industrial wind farms or huge pig farm methane projects. We were talking with someone yesterday about a partnership. … They want to put wind turbines on schools. That’s the kind of stuff I’m into – things that will actually benefit communities, and really tie in the humanity to it, especially in developing countries. In Indonesia, we’re working with an organization that develops these tiny bio-gassers. Smallholders can shovel any kind of composting material into there, they hook up an inner tube to it, they collect methane, and they can light their stoves from it. These are the kinds of things that BTCF will be focusing on.

What’s your favorite flavor of chocolate bar?

(laughs) Actually, I don’t eat a lot of chocolate. Still, to this day, I do not eat a lot of chocolate. But I do drink hot cocoa every morning. I drink probably about a half gallon of hot cocoa every day. I make it with water and cocoa powder, so it’s kind of like drinking tea. There’s very little caffeine in it, but it’s a theobromine, so it makes me feel good.

—Interviewed by Adam Spangler; condensed by Audrey Webb

   

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