Over winter break, I completed my second Farmer-to-Farmer assignment for ACDI/VOCA, in Viet Nam. I spent three weeks in country, from 14 December 2013 to 4 January 2014. The goal of the assignment was to evaluate farmers’ decisions whether to maintain cacao (“ca cao” in Viet Nam) trees that they planted as participants in the SUCCESS Alliance/SCF program (SUstainable CoCoa Enterprise Solutions for Smallholder/Sustainable Cocoa for Farmers).
Viet Nam is a small cacao supplier in the global market, and cacao is not a major crop. The French introduced it during the time of colonialism, but it didn’t take off like coffee, which has become a key export crop (particularly low-priced robustas). The chocolate sector has gained increasing interest in developing cacao supplies in smaller origins such as Viet Nam in the face of supply disruptions in larger cacao-growing countries and a projected cacao deficit; and to obtain unique, quality cacao for the fine flavor segment. Mars, Cargill and Puratos (Grand Place) have on-the-ground development programs, along with donor-funded programs such as SUCCESS and SCF), a USAID-funded program that ACDI/VOCA is implementing in the country. Smallholders tend to intercrop it with primary cash crops such as cashew and coconut, or on a
separate plot on farms where they grow coffee. (Pepper and rice are other common crops in these mixed systems.)
SCF has facilitated farmer training (via the train the trainers methodology), access to cacao seedlings and inputs, and linkages to markets, in order to support the establishment of new cacao plantings on smallholder farms. Smallholders in the program have been dropping out at a higher rate than usual (though not a large percentage overall), and cutting down their cacao trees (or letting them die), necessitating an exploration of the underlying reasons, and ways to improve project activities and communications to promote retention of the crop, where it is profitable to do so. The project funding ends in 2014, and ACDI/VOCA wants to stem farmer attrition through that time, while equipping on-the-ground partners to maintain efforts that foster farmer retention and success.
The fieldwork focused on addressing three questions
- Why are farmers leaving cacao, and what information do they use to make this decision?
- Is leaving cacao a rational economic choice for long-term farm and household viability, or a short-term decision dictated by cash flow?
- What can the SCF project (or future projects) do to prevent farmers from leaving cacao in terms of a) project methodology and b) communications and messaging?
To meet these objectives, I coordinated a survey of 74 farmers (58 individual, 16 in groups) in the Lam Dong and Dak Lak provinces, and interviewed key informants at the national, provincial and district levels of the Ministry of Agriculture and Rural Development (MARD); and companies such as Mars and Cargill. I also presented the results and draft recommendations to stakeholders in order to obtain feedback to revise the recommendations.
The major findings were that
- Eliminating or significantly reducing subsidies is critical to develop a sustainable cacao sector, including input and service providers. Most farmers said they began to grow cacao due to external support and promotion such as training, free seedlings and fertilizer; and government promotion. In such cases, farmers may not be self-motivated to maintain, expand or market the crop; and may not be willing to purchase inputs and services at market rates, when external support ends. Input and service providers also have difficulty competing on price, leaving a gap in the private sector.
- Farmers who maintained their cacao overwhelmingly cited satisfactory prices and income as the reasons for doing so.
- Farmers who cut some or all of their cacao stated more diverse factors, including challenges obtaining sufficient water (it requires irrigation in the study areas, which adds costs), problems controlling insects, and prices that farmers found unattractive. This indicates that there is not a strong reason cacao farming cannot be successful; but addressing attrition will not be simple, because approaches must be tailored to myriad issues facing small subsets of farmers. Not all of these farmers abandoned the crop completely, indicating an opportunity to prevent further attrition through efforts informed by program outcomes and research to date.
- Longer-term agronomic training, including capacity building among national extension, is critical to improve retention, since cacao is a tree crop that does not bear for about three years. The program facilitated three years of farmer training, leaving them with a knowledge gap in crop management and harvest practices when trees matured. MARD extension agents provide technical assistance on a long-term basis, but had limited knowledge of cacao management given that it is a minor crop with a relatively recent uptick in interest.
- Training on markets could help address attrition. Several farmers cut their trees as a result of a drop in prices, and said they regretted their decision when prices rose later. Educating farmers on the lifecycle cost/benefit of cacao, and long-term price trends, would help address these issues.
- Training on farm finance could also foster retention. Several farmers cut their cacao before it bore much or any crop, leaving them unable to understand its economic potential. Most farmers also did not seem to understand the relative profitability of their crops because they do not consider the value of their own labor, and do not keep financial records. Given the small number of cacao trees on the average farm, farmers harvest too little
cacao to have enough beans for a good fermentation, so they sell the fresh pods to a fermentary for a relatively low price/kg. Many of these same farmers grow cashew and/or coffee, and undertake post-harvest processing on their farm, then sell the commodity for a relatively higher price. (Farmers can identify differences in cash costs, such as lower hired labor costs for cacao versus coffee.)
- An improved understanding of the true profitability of cacao would also motivate farmers to invest more in maintaining and expanding their crop, increasing their output and efficiency, driving further improvements in economic outcomes.
- Access to affordable credit was a challenge in some areas, indicating a need to facilitate financing such as value chain finance through input provider and buyers.