18 Aug 2016, in Cocoa - Making cocoa farming more sustainable and profitable for farmers
In a ground breaking partnership, Barry Callebaut, the world’s leading manufacturer of high-quality chocolate and cocoa products, IFC, a member of the World Bank Group, and IDH, the Sustainable Trade Initiative, announce a risk sharing partnership of USD 9 million to cover up to 103,000 smallholder cocoa farmers in Cote d’Ivoire by 2020.
Barry Callebaut, with support from IFC and IDH, will provide in-kind credit to farmers in the form of inputs and farm services. After a few successful years, farmers will have a positive operational and financial track record and thus become bankable, making it possible for local financial institutions to provide loans directly to farmers, a giant leap forward for cocoa farm financing.
This program is in-line with Barry Callebaut’s commitment to Cocoa Action. Cocoa Action is a voluntary industry wide strategy on cocoa sustainability, convened by the World Cocoa Foundation (WCF), to improve cocoa farmers’ productivity, profitability and livelihoods.
Two productivity packages will be provided directly to farmers and farmer cooperatives on a credit basis. The basic package will provide training in areas like pruning and crop protection and the second advanced package additionally provides fertilizers to professional and credit worthy farmers, with trees under 20 years of age. Crucially, both packages will be supported by on-farm individualized coaching through Barry Callebaut’s accredited agents trained on business management, agronomy and adult education.
To receive the productivity package on credit, farmers are assisted in opening a bank account where they are required to save part of the package value up-front. The accounts are opened at Advans, one of the leading microfinance institutions (MFIs) in West Africa.
This combined plan will empower farmers, transforming them into entrepreneurs with a positive operational, financial and profitability track record. Eventually increasing the comfort of local and international financial institutions to independently invest in these types of high-impact programs.
Antoine de Saint-Affrique, CEO, Barry Callebaut, comments: “Sustainability is at the heart of our business model and values. The start of this initiative represents an important step in promoting professional, sustainable cocoa farming and in enabling cocoa growers to develop from being subsistence farmers into small entrepreneurs. Barry Callebaut is proud to lead the efforts to professionalize cocoa farming, and is excited about the support of our partners in this endeavor.”
IFC Director for Manufacturing, Agribusiness and Services, Alzbeta Klein said “Demand for cocoa is rising, but supply has not kept pace as farmers—many of them working just two to three hectares—must cope with typical agricultural risks such as weather and limited access to credit. This partnership between IFC, Barry Callebaut and the Sustainable Trade Initiative will help farmers in Cote d’Ivoire gain access to credit and training that will enable them to upgrade operations and become part of a value chain linking them to cocoa buyers and global chocolate consumers.”
Joost Oorthuizen, Executive Director of IDH said “IDH is really excited about this step forward. By de-risking investments we will be able to amplify our impact at the farmer level. In this program we expect that by leveraging public funding with private sector contributions at a ratio of more than 1:10, 103,000 farmers will increase their bankability and ultimately the quality of their livelihood.”