Farmer to Farmer Assignment in Viet Nam: Cacao Farmer Retention

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).VNCacaoTree

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

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Stakeholder Meeting to Present Findings

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
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    Typical Nativity Display in Viet Nam

    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.

 

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ACDI/VOCA Assignment: Cocoa farmer financial record keeping & GAP

This summer, I had the good fortune to do another ACDI/VOCA Farmer-to-Farmer volunteer assignment. I evaluated financial record keeping, and Good Agricultural Practices (GAP) adoption and cost-benefit, among Ghanaian cocoa farmers. It was a great experience that allowed me to put my cacao sector work and academic training to good use, and get to know Ghana’s wonderful people and culture.

Background

ACDI/VOCA fosters farmer group formation, agricultural training (GAP), market access and agribusiness development through its Specialty Crops division, which developed this assignment. The objectives:
– survey farmers on financial record keeping adoption and challenges, and GAP adoption and cost-benefit
– draft a report with recommendations to improve farmers’ uptake and success with record keeping and GAP
– create record keeping materials for farmers, and draft guidance on training and materials use
– create a GAP cost-benefit/ROI tool, for ACDI/VOCA use

GAP training helps farmers learn basic yet effective crop management practices to increase yield and profits, such pruning, weeding, fertilizing, pest control and the use of better germplasm. Efforts to facilitate and motivate farm financial record keeping have increased across the agricultural sector, as stakeholders seek to help farmers adopt a business mindset that helps them boost yield and profits further.

The assignment

Prior to the three-week stay in country, I developed a farmer survey and refined it with ACDI/VOCA’s fantastic Specialty Crops team (including Managing Director, TJ Ryan, one of my inspirations in transitioning to development).

I spent my first week in Accra, Ghana finalizing the survey questions and design, interviewing ACDI/VOCA staff about Ghanaian cocoa farming and their programs; and meeting with representatives from the Ghana Cocoa Board (Cocobod), Armajaro (trader), SourceTrust (Armajaro’s development non-profit) and the World Cocoa Foundation (WCF). ACDI/VOCA staff Catherine and Prince were wonderful to work with, and quickly set up logistics for surveys in the Ashanti and Central regions.

At the start of week two, I flew to Kumasi, in the Ashanti region, then rode south to the New Edubiase district. We traveled through beautiful green country and passed many colorfully dressed churchgoers, as it was Sunday. Along with Bawah, a fantastic extension agent, I surveyed farmers in three villages over a few days. These farmers had participated in training on record keeping through the WCF Cocoa Livelihoods Program (CLP), as well as ACDI/VOCA’s agricultural training. They were quite proud of their quality cocoa and record keeping efforts. After the surveys, I visited a Business Service Center in New Edubiase, established via the WFC CLP. These provide one-stop-shopping for inputs, planting material and credit—which is particularly difficult for farmers to access. On the day we visited, farmers were lined up to purchase fertilizer, which had just become available and was months late in arriving. Cocoa farming is no easy task as is, and such logistical challenges compound that.

After a few days in New Edubiase, I rode further south to Assin Foso, in the Central Region. There, I met with Armajaro/SourceTrust staff to finalize survey plans for the district. Early the next morning, I set out for village interviews with Edmund, a recent high-school graduate who would translate in the local language. We interviewed farmers in three villages over two days. Edmund had an excellent manner with the farmers, and was a quick study on the survey questions and cacao farming, making him an incredible asset. The farmers in this district had not received the WCF CLP record keeping training, and did not have access to a BSC, making farming more challenging for them.

With the surveys completed (56 in all), the weekend arrived…giving me ample time for data entry, analysis, report writing and materials development. I also enjoyed runs, walks through town, and ample amounts of kenkey, red red and other goods from wonderful food vendors. After a few days of computer work in New Edubiase, I rode back to Accra with ACDI/VOCA’s driver, who imparted a wealth of information about the country. We passed a refugee camp and drive through Cape Coast, where an old slave trade castle stands as a stark reminder of the slave trade.

In week three, I completed my analyses, report draft and materials; and presented these to a cross-sector stakeholder group in Accra. Overall, the results indicated that farmers had a high interest in record keeping and adopted it if they received training, but did so at varying levels if trained due to varied literacy and numeracy skills. The WCF CLP materials are very comprehensive, and a model for other sectors, though producers seem to need secondary schooling to understand and use them. In my recommendations, I included ways to address this such as pairing up farmers with different skill levels. The WCF CLP materials also include only an annual budget form, and recalling costs and sales over this time frame can be challenging for anyone. To address this, I created a monthly cost-income tracking log and a year-by-month budget sheet for farmers. Regarding GAP implementation and cost-benefit, farmers demonstrated high adoption with variation in extent (e.g., amount of fertilizer used, frequency of pesticide spraying). Cost-benefit analyses indicated positive returns. Cocobod’s Cocoa Manual has a Net Present Value sheet that served as the basis for the GAP cost-benefit/ROI tool (spreadsheet).

Overall, this assignment was a fabulous experience, and I hope it will be of some benefit for the farmers and ACDI/VOCA’s programs. Many thanks to all the farmers, translators, ACDI/VOCA staff, and partners for incredible assistance and information. Ghana is terrific —I highly recommend a visit, and plan to return to see and get to know more of it. Ghanaians were all very friendly, and I enjoyed seeing bit of my surroundings during morning runs.

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Thesis research: Cost-Benefit of Cacao Certification in Côte d’Ivoire

For the next six weeks, I’ll be in Côte d’Ivoire to conduct field surveys for my M.S. thesis/dissertation. Many thanks go to my advisor Rich Sexton, Ph D., Kaitlyn Smoot (recent UC Davis IAD/ARE M.S. graduate), and The World Agroforestry Center (ICRAF), which has graciously taken me on as a Research Fellow to undertake this work. This research is supported by a UC Davis Jastro Research Grant

A summary of the research is below, with a longer proposal attached.

Cost-benefit analysis of cocoa sustainability certifications and drivers of net income for Côte d’ Ivoire smallholders

1. Background and rationale

Sustainability certifications are rapidly growing in the cacao sector, and tropical agriculture more broadly. These are purported to improve producer incomes but little research has explored this claim. Given that certification often involves added costs, with varied price premiums, cost-benefit analyses are critical. To fill this need, the present research will:

  • Compare net income across Côte d’ Iviore cacao producers in the Fairtrade, Rainforest Alliance and Utz Certified certifications, and non-certified controls, to determine if certification has a significant positive effect on net income
  • Identify producer attributes that affect net income, and determine whether certified and non-certified producers differ significantly across these attributes, to quantify the relative effects of certification and other factors on net income.

Read the full proposal (~ 2 pages): CertificationResearchProposalMSchweisguthv2

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Course paper: Oligopolies in the Cacao-chocolate Sector

VNDakLakModelFarmCacaoDryingSmIf you’ve ever wondered about the market forces that get cacao from the farm to your chocolate bar, confection, beverage, etc… you might enjoy a short paper I wrote for my microeconomics course. It’s focused on oligopolies across the supply chain, from producer countries to brands. The introduction is below, with a link to the full paper.

Sweet Nothings or Nothing Sweet?: Market Power in the Cacao and Chocolate Sector

Introduction

As consumers snack on a Hershey bar or M&M’s, they’re probably not musing over how market powers in cacao production, processing-purchasing-exporting and manufacturing meet in the making of their favorite treat. Yet, oligpolists rule across the value chain—seeking to sway the market individually and collectively. They also counterbalance each other, tempering the effects that one level of the value chain has over another. The following paper unwraps this issue by exploring oligopolies in the mainstream cocoa and chocolate industry[1] since the early 2000’s. The discussion begins with an overview of the supply chain for context. It proceeds to a discussion of oligopolists at each level, characterizing the magnitude and locus of their power, and individual and joint actions designed to increase influence. It concludes with an analysis of supply, demand and prices to show how each level counters the other, yielding competitive market outcomes.


[1] I.e., It excludes the specialty sector, with differentiated varietals that sell for price premiums.

Link to full paper (10 pgs/double spaced)

ARE100BPaperMSchweisguth

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Empirical Assessment of the System of Rice Intensification

Haven’t blogged in a while, as graduate school (M.S. in International Agricultural Development, UC Davis, with plans to add a second M.S in Agricultural and Resource Economics) has been pretty time consuming.

For an assignment in a agronomic systems assessment course this spring, we had to undertake an evaluation of the System of Rice Intensification (SRI, also used for other crops), using peer-reviewed scientific literature. SRI has been the subject of a growing number of popular media and NGO articles, which are generally slanted toward the pro or con side, and don’t reference more than one or two peer- reviewed studies, if they reference them at all.

It was a valuable assignment that seemed like a balanced complement to mainstream media and NGO reports, and a good reminder about why we need to refer to peer-reviewed research (using several diverse pieces) to evaluate such reports rather than taking them at face value. It’s attached as a PDF, with the description of the assignment below for reference.

Assignment description: “Imagine that you are working for a non-profit with a global reach. Your boss is very excited about a recently published article in The Guardian, and wants to aggressively promote SRI broadly, as part of a global initiative.  As the agricultural scientist in the room, you are asked to write a two-page memo based on sound science (with references) that briefly explains what SRI is and why it should/should not be widely adopted. Explore the peer-reviewed literature for research that tests the components of SRI in developing world contexts.  Synthesize the conclusions of the research papers you encounter and present a well-supported defense or criticism of SRI, citing any specific biological claims you make.”

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Cacao Travels: Dominican Republic – Yamasá Region & Development Agencies

Welcome to blog #6 on my cacao trip to Grenada and the Dominican Republic (DR), covering visits to development agencies in Santo Domingo; and cacao development projects, YACAO (processor) and FEDOPO (producers) in Yamasá.

1/26/12: USAID-REDDOM. En route to  USAID, I saw people gathered in Duarte Park to commemorate the birthday of Juan Pablo Duarte, one of the nation’s fathers. The park had a series of panels, which I visited later, chronicling Duarte’s life and role in the DR’s revolution for independence from Haiti. (The DR weathered more revolutions after this to gain lasting freedom, including one from Spain, after willingly joining it as a colony then changing its mind.)

I met Pilar Ramirez of the REDDOM Foundation, a Dominican NGO established to implement USAID’s Project REDDOM (Rural Economic Diversification, Dominican Republic). A five-year effort, REDDOM focuses on helping small farmers and allied small/medium enterprises (SME’s) diversify, and compete better in local and global markets, to improve their incomes. It was established after the passage of DR-CAFTA (DR-Central America Free Trade Act, 2007) to help the agricultural sector meet associated challenges (e.g., competition, quality/food safety standards, etc) and tap the opportunities (e.g., increased market access).

Key foci include capacity building, value chain development, small grants, and helping producers obtain affordable credit via partners ($10MM to date). Capacity building is tailored to producers’ needs and opportunities, such as obtaining organic certification or meeting food safety requirements. Developing value chains involves connecting supply chain participants from field to retail to create self-sustained enterprises, such as a yucca-casaba cluster uniting yucca farmers, casaba producers (bread made with yucca) and distributors. Small grants (over $2.8MM to date), support initiatives such as a women’s association in a CONACADO community that makes confections for tourist markets.

A program report indicates this work has yielded measurable gains for Dominican producers and their economy, while providing the U.S. with a secure supply of quality agricultural inputs that sustains American companies such as chocolate makers, and suppliers of chocolate ingredients like milk, almonds and beet sugar. Thanks very much to Pilar for such a welcoming, informative morning.

1/27/12: Cacao project in Boya, IDDI, Cortes Chocolate. I met up with Pam Schreirer, who works for the Dominican Institute for Integral Development (IDDI), and was a Peace Corps volunteer on a beekeeping project in the DR. Thank you Pam, for generously sharing your time and knowledge! IDDI focuses on social, environmental, microcredit and community economic development projects in numerous sectors, including agriculture.

We traveled north to a cacao development project in Boya, Monte Plata, in the Yamasá region. We passed oil palm plantations with stands of dead trees, an unfortunate example of unsustainable agriculture. Boya is a small community with a well-preserved church from 1533. IDDI, Cortes chocolate (Puerto Rico/DR) and the Peace Corps are collaborating on the project, which involves a cooperative of 116 members from multiple sectors, half cacao producers. Mateo DeSantis, a Peace Corps volunteer, is working with the cacao producers on a nursery, ecotourism project and chocolate processing. Cortes has provided training and land for the nursery.

Since many cacao farms were abandoned, farmers are replanting anew. Thus, Cortes has an opportunity to shape their future supply by recommending varietals, training producers on agronomic practices and collaborating on (or handling) post-harvest processing. The nursery has 16,000 trees, comprising seven hybrid varietals. Cortes is working to buy land for drying, fermentation, a demonstration/training farm, and an ecotourism site. This has been a challenging because the owner doesn’t have the title, and already sold portions through verbal arrangements. It’s not uncommon for a landowner to lack a title, since the cost can be formidable.

We met one of the co-op’s leaders, an industrious woman who is also the school principal and runs a small colmado (grocery/sundries). Pam and Mateo discussed a loan and finance with her. (Later, Pam told me a bit about the education system. Teachers are not typically credentialed and students attend for only a half-day due to lack of school space.)

Back in Santo Domingo, we met with Cortes. The company has a post-harvest site in San Francisco de Macoris, and a manufactures liquor, cake, butter, powder, drinking chocolate blocks, candy bars and cocoa mix in Santo Domingo. A staff member noted that Cortes is using hybrid cacao instead of clonal grafts to save labor and costs, and that these have been developed from a “cocktail” of 15 varieties selected to optimize yield and flavor. He also remarked on the project’s strategic benefits, such as building strong buying relationships where they don’t face competition from other buyers, and creating a customized supply.

Their buying practices exemplify the market dynamics for individual farmers. Cortes picks up cacao or farmers deliver it, pays them on the spot per their reported weight and any certifications (e.g., organic), weighs the cacao and assesses quality at their processing center, then adjusts the famer’s account if needed. They benchmark on market prices and deduct pick up costs. The staff said they prefer to establish pre-harvest contracts to set prices and secure supply, and lamented how difficult it could be to get farmers to commit. Many farmers prefer to remain free to seek out the highest price when they’re ready to sell, and there’s notable competition among buyers. As such, Cortes offers advance payments and credit to encourage farmers to sign contracts.

1/28/12: YACAO and FUNDOPO producer group. Christian of YACAO picked me up at 7:30 am we headed to the San Cristóbal province in Yamasá. He studied marketing, and manages inventory. I was incredibly grateful that he was willing to drive, especially so early – thank you! YACAO is a subsidiary of Pronatec, a Swiss processor/manufacturer (makes bars for Art Bar, Equal Exchange and others) focused on organic and fair trade.

We met with farmers from FUNDOPO (Fundacion Dominicana de Productores Orgánicos), in Villa Altagracia. Founded in 2002 with support from YACAO, they’e incorporated as a “foundation.” (Note: FLO Fairtrade doesn’t restrict producer organizations to legally-defined “cooperatives.”) They’re not obligated to sell to YACAO, but the company has committed to buy all of their cacao at a premium (separate from the Fairtrade social premium), cover organic certification costs, and provide credit, training and seedlings at cost. (Background here.)

We met in a community center that FUNDOPO built with the Fairtrade social premium. Nicolas Gomera, president and agronomist (on the right), presented a power point (en Español) on the group and its activities, with their certification manager, some producers and YACAO staff from Peru. This individual presentation was truly an honor – thank you!

Presentation key points: FUNDOPO has 877 members (15% women, 675 organic, 202 in transition). Farms average 2 ha—very small (though 20% of members aren’t “small producers”), spread across the eastern and central DR. They have several committees (environmental, projects) and multiple certifications including Biosuisse, USDA and EU Organic, CERES, FLO Fairtrade and Utz Certified. They’ve seen steady growth in Fairtrade sales but sell only about 20% of their crop under Fairtrade terms—the reality for many certified producers. They’ve used their Fairtrade premium for diverse needs, split 50/50 across farm and community/infrastructure development, including cacao trees, post-harvest training, demonstration plots, repairing a road; building a bridge, aqueduct, community center, office and multi-use site with a technical school and health clinic; police services, a truck and backpacks for schoolchildren. FUNDOPO also has established 30 cacao collection points, and invested in producer capacity building and quality improvement, with Fairtrade premiums and USAID funds. Of note—78% of their Fairtrade premium goes to projects while 22% covers certification-related costs (annual fees, staff), etc. It’s critical to realize these costs when considering the feasibility and net benefits of certification for small farmers.

We walked through a farm with a yield of 280 kg/ha, quite low relative to the national average of 800. The producers explained that Yamasá’s soil is less than ideal for cacao cultivation—having low organic matter, low pH (4.5 versus ideal 6.5) and sloping land that engenders nutrient loss. Many farms are also owned by older producers with aging trees they don’t prune, since they do just what’s needed to earn a basic income.

From here, we drove one of YACAO’s post harvest processing sites in Medina. (See YACAO photos here.) The site has a nursery to produce hybrids and clones, sold to producers for ten and 100 pesos respectively. Fermentation takes six days, with the cacao turned daily. Like CONACADO, YACAO uses solar dryers (photos at right and top), augmented by artificial dryers (natural gas) in the rainy season. Dried beans are put in a destoner to remove foreign matter, then sacked for shipment.

After this, we headed to Santo Domingo and talked about Dominican agriculture. Christian remarked that the country imports many crops that are grown domestically, while exporting the Dominican-grown varietals, and how this seems to be weakening domestic agriculture. (Presumably, this would be done only when it’s more profitable for the country to buy imports and sell its own exports – Ricardian theory.)

After returning, I ran out to shoot some photos in the early evening light, took in a hip hop act on the Malecón, and perused an artisan market with traditional handcrafts and interesting repurposed items, like a handbags made from records. Settling in bed, I felt deep gratitude for all who had shared their time so generously to support my learning journey, and stronger inspiration to foster positive development and sourcing efforts. Next up – a change in pace with a week at “Casa de Las Anas” in Moncion…

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Cacao Travels: Dominican Republic – CONACADO Northwest

Here’s blog #5 on my cacao trip to Grenada and the Dominican Republic (DR), covering a visit the CONACADO cacao cooperative’s offices and northwestern producer communities. This is a bit long, as it’s meant to inform those interested in the details of the cacao sector, and bring alive the people, places and experiences I encountered. See  an overview of the trip and its purpose.

Sunday 1/22/12 (First day in DR): I landed in Santo Domingo, settled in at Hostal Nomadas, and went out to explore the vicinity and find some food. I stayed in the Zona Colonial, which is on the south edge of the City along the Caribbean and has many well-preserved/restored Spanish colonial buildings and museums (great for those interested in history, architecture and culture). It’s known as one of the safest areas in the City, due to the presence of many tourist police.

Being Sunday in a predominantly Catholic country, most stores were closed. However, several restaurants and souvenir shops were open on El Conde, a shopping and tourist hub. This pedestrian-only street has benches and tables where locals played chess and checkers as they enjoyed the late afternoon ambience. Parque Colon and an old cathedral sit at one end. Locals and tourists alike strolled the park as the early evening light gave the cathedral a beautiful golden hue. Tourists filled several restaurants across from the park, drawing roving musicians playing merengue and bachata. Finding a tiny corner store that was open, I bought some deliciously rich cornbread made with coconut milk, which had a consistency between cake and bread pudding. I’m generally not a coconut fan, but this was incredibly delicious and something I sought out again. The store owner’s son said his Grandmother made it fresh. What a lucky grandson—and customers!

1/23/12 (CONACADO office): My day began with a run on the Malecón, a paved boardwalk. The Caribbean view was lovely, though it was sad to see so much litter washing up on shore, and the water is not safe for swimming. Later, I met up with Abel Fernandez, Export Manager of the CONACADO cacao cooperative

CONACADO (National Federation of Dominican Cacao Producers) is a 10,000-member cooperative founded in 1988. It’s of particular interest to me due to its manufacturing of semi-finished cacao products (liquor, butter, powder, nibs) and its multiple certifications (FLO Fairtrade, Rainforest Alliance, Utz, USDA Organic, BioSuisse, EU Organic and Biodynamic, among others). Producers are grouped into seven bloques across the country and elect a governing body for their bloque, and the cooperative. By pooling their production and investing in shared services, the producers can export cacao directly—unlike many farmers who sell through one or more middlemen.

Early on, the co-op made a strategic decision to focus on quality (flavor varietals, centralized fermentation and drying), organic and fair trade, which paid off by helping it differentiate itself and capture nascent, higher-value markets that have since grown. CONACADO represents about 40% of the DR’s cocoa and sells about 85% of its crop under FLO Fairtrade terms, remarkably high for a Fairtrade co-op. About 80% of its members are organic, dropping from 90% as declining market interest and prices have led some to drop organic. (Note: All producers are Fairtrade certified because that requires compliance at the co-op level. Other certifications are done at the farm or bloque level.)

I met Abel around 2003, when I was working at Global Exchange and organized a national Fair Trade cacao speaking tour featuring him. The stories he shared inspired me to work to improve producer livelihoods since, and motivated this trip. We discussed the cooperative’s structure, markets, certifications and goals, and a plan to visit producer communities. CONACADO comprises the producer-owners, a processing operation, administration, export and a credit union. Current goals include increasing efficiency and growing sales of semi-processed products. Abel noted some formidable challenges with the latter: the industry’s model of purchasing beans to process elsewhere is firmly entrenched, many buyers perceive origin processing as being prone to higher microbiological levels and lower quality (since other countries export their best cacao and process lower quality in-country), and brands prefer to control processing.

Abel and a colleague who manages certification shared that, as the mainstream market has embraced certification, more buyers view it as a baseline expectation and are not willing to pay the price premiums the co-op has received in the past. Growth of certified supply is also certainly reducing producers’ negotiating power. (Note – No certification except FLO Fairtrade guarantees a minimum price, and the world cacao price has been above the FLO Fairtrade floor price for years, making that the effective floor. FLO Fairtrade involves and added social premium, but that’s for cooperative, social and farm development projects only, not farmer income. Many producers use some part of it to pay certification fees, reducing effective benefits to producer communities.)  Changing dynamics in the fair trade landscape, such as the increase of large farms, and buyers’ increasing involvement in allocating fair trade premiums have further impacted small producers.

After the meeting, I visited Parque Colon, took in the neighborhood’s evening happenings and checked out the major grocery, Jumbo. The DR has many more domestically produced foods than Grenada, including a few brands of hot cocoa, drinking chocolate blocks and eating chocolate (with lots of sugar and vanillin).

1/24/12 (CONACADO NW – Factory & Bloque 8): The day began with a 2-hour  bus ride to San Francisco de Macoris (SFC), gateway to the country’s northwest, and largest, cacao region (61% NW, 20% E 10% Central).  We traversed verdant country with mountains, rice fields, cattle pasture and other agriculture. Jaime Gomez, who manages agronomic training/improvement and development projects for five CONACADO bloques, met me in SFC. He’s a co-founder of CONACADO, and founded two of its bloques. He has deep experience and expertise, and I truly appreciate the generous time he shared.

Our first stop was CONACADO’s factory (see more photos) in SFC, used to make semi-finished products. It’s an impressive and inspiring operation for smallholders to own. Several wood-fired drying bins—a large open circular unit and closed drums—sit outside (beans must be dried to 7 percent moisture). A machine to sort beans from chaff also sits outside the factory wall, with conduit directing cleaned beans inside. Processing equipment includes standard machines such as a winnower (breaks beans, separates shells from nib/bean pieces), roaster,  grinder, refiner, cocoa butter press and cocoa powder machine. A closed piping system moves product through each step without contamination. The plant processes only organic, and both alkalized and non-alkalized powder.

It has 25 employees, representing a great economic boost to the community. For many employees, it’s their first job with a company. The plant is in an economic development zone with several other ag plants that are absolved of their tax burden, incentivizing job creation in low income rural areas. Semi-processed products represent only a small percentage of the co-op’s sales and production is below capacity since demand isn’t higher, representing a significant marketing need and opportunity. Equal Exchange uses CONACADO’s powder in their baking cocoa and hot cocoa. Buying this kind of product  delivers a real economic boost to small-scale producers and their economies.

After this, we visited a cacao nursery (see more photos) run by Jaime, which produces hybrids from seed (trinitario and criollo blend), and grafts of trinitario and criollo. The nursery has a small test plot and clonal garden with cacao varietals, fruit and leguminous trees. Seed germinates in about a week, and the bloque delivers trees to producers to transplant when they’re three months old.

Our next stop was the Bloque 8 Center (more photos from Bloque 8) in Castillo. Each bloque has one of these, serving as the point of sale for farmers, a central fermentation and drying site for the co-op, and the home of the bloque’s administration and credit union. The Credit Union’s interest rates are 1.5% vs 2.5-3% at banks, and it makes loans possible for farmers who may lack land title (due to added costs), and thus have no loan collateral. Everyone welcomed Jaime warmly and he remarked later how it felt like a big family given his extensive, longtime involvement. Bloque 8 has 468 members (260 organic) with an average farm size of 5 ha and average production of 450 kg/ha (industry range 320-960, average ~ 500).

Most farmers sell wet cacao (fresh beans in pulp) for centralized post-harvest processing, rather than processing it themselves, ensuring higher, more even quality. Most farmers deliver, though bloque workers pick up if needed. It must arrive at the Center within four hours of harvest to maintain quality. Producer prices are based in the daily market and bean quality, rated as Grade 1 or 2 beans. They also get an annual bonus, dependent on revenue.

Wet cacao is dried if it will be sold as unfermented (“Sanchez”), or fermented for five days under plastic sacks if it will be sold as fermented (“Hispanola”). The cacao cycles through three fermentation boxes, one day in the first and two each in the following two. The boxes are tiered for easier work and even fermentation (i.e., beans on top of one box easily transferred to the bottom of the next).

After fermentation, beans are dried, currently for two days in “solar dryers”— plasticized greenhouses with a vented roof (where they are raked to turn them), then finished in an “artificial” dryer (powered by some external energy). Wetter than usual weather—attributed to global climate change, which is hitting poor, tropical communities first and hardest—necessitates artificial dryers. Dried beans are bagged for export or processing. CONACADO carefully separates product with different certifications throughout each step, using dedicated fermentation bins, drying areas and color-coded sacks

To cap off the day, we visited one of the first farms to join the bloque (see photos). It was diversified, as is typical for CONACADO’s members, with pigs, chickens and citrus as well as cacao. We enjoyed sucking the pulp off cacao beans (always my favorite) and oranges peeled in a spiral with a machete, an art and a treat.

The co-op is rebuilding the family’s home with FLO Fairtrade premium funds ($200/metric ton above bean price, to be used for social or farm development as voted upon by producers). Jaime told me about other Fairtrade premium projects such as installing pipes to bring water to homes, building and rebuilding schools, constructing an athletic area for a school and supporting a women’s association in making products to sell. Bloques request funds for projects annually and the national office reviews proposals and determines allocation. Some Fairtrade buyers also influence funding allocation by requiring proposals to approve and requesting progress reports, desiring concrete results.

Wednesday 1/25/12 (CONACADO NW– Bloque 9 and IDIAF Research Center), After a hotel stay over in SFC/Castillo, I took a short, early run to get a feel for the area, packed some breakfast to go, and jumped in the car with Jaime to head north to Bloque 9 in Los Pajones. Along the way, we discussed current funded development projects, which tend to focus on quality improvement and critical social needs. Quality efforts include improving tree stock, especially replacing forestero varietals with trinitarios, post harvest training and setting up facilities to make beans into liquor for taste tests.

One significant effort is a five-year joint venture between USAID, TCHO and Equal Exchange (EE) involving 2,000 CONACADO members (see below). Jaime is also developing projects with other chocolate companies, including Cocova (productivity improvement using high yield grafts/clones with different flavor profiles, tested on five demo farms,) and Green & Black’s (funded through FLO fairtrade premiums—productivity improvement and social projects such as school building/improvement, water pipe installation, rebuilding homes) and ICAM (processor/co-manufacturer). Green & Black’s has also sent volunteers to help install a community water line and plans to implement further volunteer projects at origin, representing another positive model.

Our first stop was Bloque 9’s Center (see more photos). The bloque has 1017 members, 76% of which are organic and Rainforest Alliance (RFA) certified.  The average farm is 3.5 hectares, yielding an average income of $410 US per month. The bloque’s current needs are drying space, communication, particularly for emergencies, and farm improvements (productivity, farm management1, shade management, pruning, better tree stock).

At the Center, I saw CONACADO’s system for tracking (“internal control” in certification lingo) related to certifications. They use software to track deliveries by farm, with each farm’s certifications and other data noted (e.g., involvement in EE-THCO-USAID project), allowing them to generate reports by certification and other parameters. Staff also train and assess producers to help them get certified, and audit farms to self-report for annual recertifications. (Some certifications allow self-audits/reports.) This brought home the reality of the resources involved to obtain and maintain certifications, and fulfill reporting requirements for certifiers, customers, funders and others.  I also got a glimpse of Jaime’s excellent project management system when he shared the overall workplan and detailed implementation plan (farm selection methodology, farm activity plan, etc.) for the EE-TCHO-USAID project, which involves 160 farms in the bloque.

Outside, we walked through the fermenting and drying areas, and talked to the QA staff. QA does a visual inspection to assess overall bean quality and the proportion of white (desirable/fresh) versus black (not) beans. Lower quality cacao is generally used for Sanchez (unfermented). Here, fermentation bins have four levels, doubling capacity Liquid from fermentation is currently drained off but the bloque wants to capture and digest it into biogas. Here, beans are dried for three days in sun then finished in an artificial dryer powered by wood from producers and local tree farmers. Dried beans are cleaned to remove chaff (in a wood fired machine) and bagged for export or processing.

Then, we visited a test plot for the EE-TCHO-USAID project ( see more photos), which is is focused on improving productivity, crop quality, postharvest handling and semi-finished goods quality. The project spans Peru and the DR. TCHO and EE are contributing significant resources and expertise, and both companies are engaged in several producer development and support efforts at any given time. Their practices are a model for how companies can and should go beyond practices like simply purchasing fair trade or other certified ingredients to yield essential, mutual benefits. (Knowing about this project prior to my trip, I packed chocolate from both brands to share with CONACADO staff and producers at each stop, which was always thoroughly enjoyed.)

Project test plots are located on producers’ farms and serve to evaluate varieties and agronomic practices for wider adoption, and provide hands-on/experiential learning for famers. Test plot activities include replacing old trees, pruning, weed control and shade management, with maintaining biodiversity serving as a foundational guide.

We then visited a producer community (see more photos) and saw a small two-room school that was built with FLO Fairtrade premium funds to replace an old, deteriorating school next to it (new construction costs about $400 US per sq meter). The adjacent homes were clearly in need of repairs or improvements.

After this, Jaime, the QA manager and I enjoyed lunch in Nagua on the north coast, which is also home of the La Red Guaconejo cooperative (TAZA Chocolate is doing great work with them). We ate at Chen restaurant, featuring typical Dominican food (beans, rice, guandoles, tostones…mmmmm), seafood and, of course, the DR’s own Pesidente Light beer (a light, bubbly pilsner served quite chilled). The ocean view was beautiful.

After lunch, we visited IDIAF (Instituto Dominicano de Investigaciones Agropecuarias y Forestales – Dominican Research Institute in Agriculture, livestock and Forestry) (see more photos) where one of the cacao agronomists guided us around the site. This serves as an important gene bank and research center for many of the country’s crops. It has four hectares of cacao planted with 59 varieties from across the Americas (and beyond?). Seeing and tasting different varieties was fascinating. The spread of cacao diseases in other countries has hampered the acquisition of further varietals, since the country can’t afford to risk its cacao production by bringing in affected trees.

A given varietal is planted in different growing environments (e.g., amount of sun) and managed with different agronomic practices (e.g., pruning) to evaluate how these impact productivity and crop qualities. Researchers in the US and Puerto Rico have assessed each variety’s DNA and flavor characteristics to optimize breeding and production practices. IDIAF also does quality and flavor testing on cacao for processors and brands, and produces grafted cacao trees and seed from its stock.

This concluded my visit. After profusely thanking Jaime, I hopped on the bus to Santo Domingo. We had to switch to another bus after a breakdown en route, which Caribe Tours and the passengers handled quite smoothly. Not yet over-cacao-ified, I stopped at Jumbo Grocery to get some domestic cacao powder to try. There are two main brands, Sobrino (Cortes) and Munnei. Both are alkalized and add soy lecithin. I tried the Sobrino, which was quite astringent and dry.

Next entry: USAID-REDDOM, IDDI-Peace Corps-Cortes Chocolate cacao development project, YACAO post-harvest facility, FUNDOPO producers’ organization

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