Grading Cocoa: Sweet Work if You Can Get It

The Wall Street Journal

Just blocks from the New York Stock Exchange on a Monday morning in April, three men sat around a long rectangular table under florescent lights, dividing a pile of cocoa beans among themselves like they were poker chips.

The space is a crucial staging post in the $8 billion-plus global market for cocoa beans: the grading room of the IntercontinentalExchange, or ICE.

The men are among the elite ranks of ICE's cocoa graders, who scrutinize shipments of cocoa beans—the key ingredient in chocolate—before they can be certified by one of the world's largest agricultural commodity exchanges.

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Although a small percentage of the world's cocoa is purchased through exchanges, ICE says it must ensure that the beans are of commercial-grade quality because traders who buy cocoa futures sometimes ask to receive the actual beans to fulfill the contracts.

The problem is that there are only 24 certified graders for ICE and the exchange is concerned that retirement and old age will deprive it of a crucial cog in its commodity-trading machine.

In an effort to "keep the talent pure and fresh," the exchange is offering its licensing exam in October for the first time in two years, said Valerie Colaizzo, managing director of commodities operations for the exchange.

Becoming a cocoa beans grader is about four times harder than passing the New York State Bar exam, judging by a comparison of the two tests' pass rates.

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Candidates must correctly identify defects in beans such as mold, infestation from insects and cocoa that is "smoky or hammy"—a sign that the beans have been dried over a fire, not in the sun. Since beans easily absorb odors, the fire can give the beans a smoky flavor. In another section, they must identify the origin of various beans, most of which look identical to the layperson's eye.

David Morales, one of the three men huddled over the beans in the ICE's grading room, says he failed twice before he passed the exam two years ago. "I was studying for it, but not enough," said the 37-year-old Bronx native, who noted the origin section tripped him up.

After his second failure, he took drastic measures.

"I took the beans home with me. I lived with the beans," he said. "I placed them on my living room table so every time I was in my living room watching TV, they would always be there so during commercial breaks I would look at them. My girlfriend didn't like it."

Most cocoa graders have day jobs at commodity trade houses or food companies, and are called up for sessions only when beans are delivered to the exchange. The graders earn $21 per 10-ton shipment of beans. Participants say they can earn around $350 per session but the amount varies. The ICE estimates the graders are called in around 50 days a year, on average.

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But becoming an ICE cocoa grader pays off in other ways, people in the job say.

Mr. Morales, who is an importer at Atlantic Cocoa Co., a unit of major cocoa trader Ecom Agroindustrial Corp. Ltd, said being a licensed grader is a deterrent to suppliers and buyers who want to shortchange on bean quantity and quality. He graded cocoa for almost a decade on behalf of his company before attaining the imprimatur of an ICE grader.

"If you're selling it to the manufacturer, they know you have a licensed grader on your team who can accurately" judge the beans.

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Mr. Morales' former study partner, Emily Traub, will take the exam in October. A 31-year cocoa-trader at New York dealer General Cocoa Co., she also failed the exam twice before. Most recently, she misidentified beans from Haiti as Dominican cocoa, showing how even beans grown on the same land mass can be distinct.

"I was certainly overconfident," said Ms. Traub. "Hopefully, the third time's the charm."

Ms. Traub says she spends around two or three hours a week in her office's grading room to scrutinize the trademark characteristics of each origin, such as the aroma of wine found in Ecuadorian beans to the dark casings of Nigerian cocoa.

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Graders are expected to be hawk-eyed, looking for debris, which can range from coins to gravel and even worse.

"The weirdest thing I found was a spent shell [casing from a bullet]," said Dan Diez, vice president at American Cocoa Co. and a two-decade member of the ICE grading team.

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