*4.1. Raw Material Production*

The main ingredient of the confectioneries produced in the investigated supply chain is cocoa, which originates in South America. The cocoa is produced by a farming cooperative that brings together over 200 farmers. The farmers are the owners of the cooperative, and they are closely connected. To collect data from the raw material production stage, a supply chain manager was interviewed who manages the relationships between the cooperative and the farmers and can thus show the perspective of the raw material production stage on the governance of its business relationships.

Contracts are used to coordinate the business relationships between the farmers and the cooperative to set prices and delivery quantities. In addition to formal contracts, the cooperative relies on informal agreements to ensure sustainability standards, e.g., ecological farming practices. The cooperative regularly audits the farming practices (e.g., compliance with the ban on child labor or deforestation). Additionally, the cooperative has several sustainability certificates that ensure that the protection of the environment, soils, groundwater, and employees and are regularly reviewed by certificate issuers (e.g., EU organic logo, Fair Choice certificate, and local organic logo). The EU organic logo restricts, for example, companies in the use of fertilizers, and prohibits the use of genetic engineering [43]. These regulations are regularly checked by EU inspection bodies or correspondingly commissioned audit companies [44].

Informal GMs are also important for the cooperative when working with farms. The cooperation informally supports the farms with the implementation of the sustainability standards, e.g., by providing training to the farmers. The coordinators are constantly exchanging knowledge and information with the farms, e.g., regarding the cocoa beans' cultivation, harvesting, or collection. The close relationship between the cooperative and the farms makes it possible to coordinate production quantities and harvest times at the cooperative level to meet customers' needs. IP1 emphasizes that the close cooperation between the cooperative and the farmers creates a trusting relationship and can generate efficiency gains in cultivation, which also improves the economic sustainability.
