PACTS: an ethical, quality cocoa-production alliance in Côte d’Ivoire

3 Jun 2017

The Processors’ Alliance for Cocoa Traceability and Sustainability (PACTS) was set up in 2010 by three international chocolatiers: Cémoi, Blommer, and Petra Food. Initiated by Cémoi, the alliance brought together these three family-controlled groups to improve the quality of locally grown cocoa through the adoption of an ethical approach and a broadly focused sustainability strategy. The PACTS strategy aims to develop quality (and thereby farmer profitability) by addressing key issues in farming practices, supply-chain professionalization, and fermentation processes. Its ultimate goal: to deliver single-origin Côte d’Ivoire cocoa beans with a quality that matches cocoa sourced from South America.

Fermentation in a controlled environment has a significant influence on taste and flavour because it produces cocoa that is of consistent and higher quality. This better-quality product commands a higher price, which translates to increased income for farmers. In the PACTS model, which serves the niche market for single-origin Ivorian cocoa (representing around 10 % of Ivorian cocoa production), quality assurance was delivered by centralizing the processing of the beans in fermentation and drying centers. The model was based on more than 10 years of knowledge accrued in Ecuadorian cocoa production by Kaoka (a subsidiary of Cémoi).

The pricing system set margins along the value chain: ensuring prices were neither too high for purchasing nor too low for selling. As a result of this value-chain control, farmers supplying PACTS’ centralized fermentation and drying plants were paid a premium for the delivery of wet, high-quality beans.

During CPQP, PACTS was given the opportunity to create value in the cocoa production chain by scaling up its existing 10–15 fermentation centers.

Discover the stories behind five years of partnership with CPQP

Transparence Cacao: the next steps for PACTS

PACTS’ joint venture has evolved since its inclusion in CPQP. The main implementer in Côte d’Ivoire has been Cémoi: the company’s own program, Transparence Cacao, will take up the challenge of service delivery as the fermentation-center model is superseded.

It has proven difficult to introduce a new cocoa flavour to the global market and the model of centralized fermentation centers will not expand beyond the current structures. Cémoi has, however, gained a wealth of experience and knowledge from the PACTS project. The company’s new expertise in organizing services for farmers and supporting co-ops to become service providers will be scaled up by the company as Transparence Cacao takes flight.

Transparence Cacao will serve as the main focus of Cémoi’s sustainability activities going forward, and will:

strengthen the structure and role of co-ops through capacity building (some of which will be supported through IDH’s Cocoa Learning and Innovation Program [CLIP] Challenge Fund
support community development through provision of health insurance to low income farmers and their families
strive to halt deforestation by working on forest-friendly cocoa with the Ivorian government and the Agence Française de Développement (AFD)
continue to promote Côte d’Ivoire as a single origin country.

At the productivity level, the project will introduce agroforestry to the coaching process for shade management and additional revenue.

From centralization to service delivery: the evolution of PACTS’ fermentation centers
PACTS: early adopters of the coaching methodology
Doubling production: finance, fertilizer, and the PACTS Service Delivery Model
PACTS project fact sheet

From centralization to service delivery: the evolution of PACTS’ fermentation centers

Initially, PACTS offered support to the farmers supplying its fermentation and processing centers in two ways: through training, and through rehabilitation of farms (via the introduction of improved planting material). However, PACTS found that farmers needed more support to be able to produce sufficient quantity and quality of beans.

The alliance was quick to respond. Following a proposal from PACTS stakeholders, fermentation centers were transformed into service delivery hubs able to meet farmer needs more effectively. Services offered included access to planting material, fertilizer, and more effective training.

Initially, grafting—a technique that had been effective in Ecuador—was to be offered. However, a change of government policy and subsequent ban on grafting meant this strategy needed to change. Instead, PACTS introduced nurseries at fermentation centers. The nurseries supply seedlings to encourage replanting and regeneration of tired cocoa farms, and are made possible by support from Le Conseil du Café Cacao.

PACTS also developed a strategy to increase farmers’ access to fertilizer. With IDH providing field-level funding for the construction of warehouses, it was possible for fertilizer to be stored at the fermentation centers. The architecture of financing and repayment (a core component of the CPQP productivity package) was developed to allow fertilizer-ready farmers to purchase fertilizer with cash.

Cémoi, however, was pre-financing the fertilizer: a risky operation, outside of the core business of the company. To reduce the risk, IDH introduced Cémoi to Advans CI in 2015 and farmers started to access credit for the direct purchase of fertilizer from input suppliers.

For effective service delivery, it is important to create loyalty in the business relationship with farmers. In the PACTS model, loyalty was tracked through the frequency and quantity of delivery to fermentation centers compared to overall potential production. Potential production was initially measured though self-declaration by farmers who estimated the size of their farm and expected yields.

Despite the poor availability of accurate data to measure yields, qualitative assessment of yields indicated an increase at farmer level through the introduction of maintenance to the farm (pruning, weeding, etc) and fertilizer application. Increased incomes through the fair payment offered by PACTS have contributed to various activities initiated by the community, including the building of school classrooms and the provision of school materials.

See also: Finance, Good Data

PACTS: early adopters of the coaching methodology

CPQP developed a focus on coaching during its five-year period of activity: PACTS, though, had started coaching early. PACTS began CPQP with a focus on one-to-one coaching, intended to train farmers on specific post-harvest techniques that would increase the quality of wet beans supplied to the fermentation centers. Adoption rates were high, but the approach itself reached only a small number of farmers—who lived close to a fermentation center, and whose requirements had a specific technical focus. Six-monthly program evaluations by Solidaridad and IDH highlighted the limitations of this model, and PACTS adopted the Farmer Field Schools (FFS) approach to augment its coaching.

While coaching is a focused, targeted endeavor to train farmers in ways that will impact directly on their individual farm and family needs, FFS deliver broad curricula designed to raise knowledge and uptake of Good Agricultural Practices (GAP). PACTS’ FFS widened its training to GAP and farm maintenance, and was delivered by PACTS employees trained by ANADER. Attendance was high, but adoption rates were lower than coaching: underlining a core issue experienced during CPQP. It is one thing to train farmers in GAP, but quite another to translate training into adoption (where skills and practices learned in training are applied in the field).

During CPQP, PACTS learned that both training approaches are needed to create impact. Without its early adoption of coaching, PACTS would not have been able to train fertilizer- or investment-ready farmers on techniques essential for delivering the high-quality wet beans it processes. But without FFS and GAP training, the alliance would have limited its reach significantly, diluting the impact of its sustainability commitments.

PACTS has recently combined FFS and coaching into a new strategy, which has been funded in part by IDH. The aim: to use FFS to reach a large number of farmers and expose them to GAP, and then to coach those farmers who are the most committed. PACTS bases teams of agronomists at its fermentation centers, which deliver coaching to individual farmers to ensure successful adoption of GAP, and introduce additional practices intended to further increase impact (including effective fertilizer application). The goal is to select 30 % of farmers for coaching over the next five years, with selection made according to three factors:

how well the farm is maintained
the age of the farm (less than 20 years old)
the openness of farmers to try new approaches.

PACTS has developed its own curriculum for coaching, based on a common training curriculum developed at national level by the government and other partners (a process that was coordinated by IDH).

See also: Finance

Doubling production: finance, fertilizer, and the PACTS Service Delivery Model

The fermentation centers became the heart of the PACTS Service Delivery Model (SDM). An analysis carried out by IDH and NewForesight on service delivery through these centers clearly showed that the model provided a higher income for co-ops and farmers.

The study indicated that farmers could double their annual production of cocoa beans on the same size of land and with the same number of trees by using more fertilizer. PACTS then expanded the supply of credit in the SDM through a partnership with Advans CI, to increase farmers’ access to fertilizer (through their member co-ops).

Uninformed financial management within co-ops has been the main challenge to delivering access to finance. During CPQP, PACTS provided training in governance, business, simple accounting, and logistics to bolster co-ops’ ability to become finance ready.

Cémoi is currently carrying out an assessment of its 100 co-ops to assess their bankability before applications are submitted to Advans CI for credit. The aim is to achieve bankability for all co-ops by 2020, with support from IDH’s Cocoa Learning and Innovation Program (CLIP) and other donors. PACTS has also worked with Advans CI to develop a cashless banking system that facilitates electronic payments to farmers on delivery of beans, through an e-wallet on their mobile phone. This was tested in one of the largest centers in 2015, with 700 farmers receiving payment for the delivery of beans worth USD 117,829 on their mobile money account. The transactions were faster, easier, and provided more security for farmers and co-ops. The system is also seen as a tool for helping farmers to save money—they use the mobile money account as a savings account—and an instrument for increasing loyalty by strengthening the relationship between co-ops and farmers.