With a vision to commit not only to sustainable cocoa but also to the sustainable sourcing of every ingredient in its high-quality chocolate products, Barry Callebaut is a company that understands the relationship between cocoa farmers and business growth. Farmer productivity and community development lie at the heart of a sustainable cocoa strategy that has seen Barry Callebaut make an early and concerted commitment to cocoa cooperatives.
Barry Callebaut is present at every stage in the cocoa value chain—from sourcing and processing cocoa beans to production. Through its French subsidiary Cacao Barry, the Barry Callebaut Group has been active in Côte d’Ivoire since 1964. Today, the Barry Callebaut Group has two subsidiaries: Barry Callebaut Négoce and Société Africaine de Cacao SA (SACO). Barry Callebaut sources beans from cooperatives and from local exporters for its own factories and exports cocoa beans worldwide through SACO.
In 2010, Barry Callebaut’s global sustainability program—Cocoa Horizons—was launched to promote certification of cooperatives and improve yields and quality of beans. The aim: to scale up Barry Callebaut’s sustainability program by increasing engagement with unorganized cocoa smallholders (farmers who are not members of farmer groups or cooperatives, and who represent about 70–80 % of the estimated 600,000 cocoa farmers in Côte d’Ivoire).
In 2014, Barry Callebaut completed the acquisition of the Biolands Group: comprising Biolands International in Tanzania, Bio United in Sierra Leone, and Biopartenaire in Côte d’Ivoire. Biopartenaire, a private local company specializing in sourcing traceable and sustainable cocoa from smallholder farmers, had been supporting 30,000 unorganized farmers who had limited or no direct access to value-chain services and benefits (including training, planting material, inputs, markets, micro-credit and loans, and bargaining power). Farm productivity under such conditions was low or stagnant and some farmers were abandoning their cocoa farms due to the swollen shoot virus.
CPQP has allowed Biopartenaire and Barry Callebaut to develop and test a range of innovations from start-up to maturity, many of which are being integrated into the general sustainability approach of Barry Callebaut both in Côte d’Ivoire and beyond. Under CPQP, Barry Callebaut and Biopartenaire approached productivity improvement through two distinct models. The first model aimed to build up a private extension system to implement dynamic agroforestry, which would diversify risk for farmers by creating self-sustaining systems less reliant on external inputs. The second model aimed to double yields to over 1,000 kg/ha by converting around 8,000 ha of cocoa farms to higher production intensity. This approach used Good Agricultural Practices (GAP) and established a system to increase access to inputs, including crop protection and fertilizer.
Discover the stories behind five years of partnership with CPQP
- Dynamic agroforestry: a proven track record
- Intensified cocoa production: the evolution of a credit-savings scheme
- Service Delivery Models: the journey towards increased revenue streams
- Future finance: Barry Callebaut’s contribution to productivity package credit
Dynamic agroforestry: a proven track record
Dynamic agroforestry is a farming system developed and used in Latin America to improve soil fertility and transform abandoned pastures with degraded soils into highly productive and biodiverse ‘agroforests’. Also known as agro-sylviculture, agroforestry combines trees and shrubs with crops and/or pastures in an imitation of the natural succession of vegetation. Key to the dynamic agroforestry concept is the replacement of some species in the ecosystem with productive varieties for use by the farming household—such as corn, vegetables, and cocoa trees.
Barry Callebaut’s Côte d’Ivoire model of agroforestry was based on an already-proven organizational model used effectively by Biolands in Tanzania and Sierra Leone. It included advanced pruning techniques, increasing biodiversity and rehabilitation through the introduction of new plant material, and full replanting of degraded or superannuated farms. Barry Callebaut used direct sourcing from unorganized farmers, with Biopartenaire acting as a service provider and sourcing channel.
Adoption rates were initially varied, with Ivorian farmers happy to take on easily learned elements of the system (such as non-burning of organic matter) but less able to manage technical elements in more complex agroforestry setups. The planting system was simplified to bring it more in line with concepts that farmers already understood—such as planting in rows—and the system for rehabilitation planting was adapted to use fewer species (which provides less biodiversity but is more manageable).
The project aimed to develop a knowledge-based agricultural system, with extensions delivered by select farmers within cocoa-producing villages. Trainers first established the agroforestry system on their own farm, then selected and coached other farmers who were also willing to implement it. This farmer selection method has become the foundation of the Barry Callebaut coaching approach and is now seen by the company as the tool of choice to bring about change at farm level.
The agroforestry model taught Barry Callebaut useful lessons about crop management. The company has not been slow to act on these lessons, building key knowledge on pruning and organic matter management into its coaching system. Farms that have not been pruned properly tend to be beyond repair (the unsalvageable nature of poorly pruned farms has been identified as a possible explanation for low adoption rates of GAP). In response, Biopartenaire has trained a small group of dedicated trainers who have been deployed extensively to train pruners. As their work progresses, they will constitute a resource pool for future replanting and rehabilitation projects.
While the effectiveness of the agroforestry system’s planting method for cocoa yield has not yet been fully evaluated (due to the time it takes for cocoa trees to reach maturity), qualitative results indicate that soil fertility has been rapidly restored. With more efficient management of organic matter cycling (the process by which organic compounds are transformed in normal ecosystem behavior), in-situ production of biomass, and avoidance of burning biomass at the onset of the plantation cycle, shorter-maturing household food crops have been successfully produced.
Encouragingly, agroforestry is being promoted with women: in the short term, to help restore soil fertility on small areas of land used for household food production, and in the longer term to develop land for cocoa planting. This work includes securing permanent access to the land by women. Barry Callebaut’s women’s agroforestry training has attracted interest from several donors and clients. The company is now making moves to build this approach into the CocoaAction strategy on gender empowerment (part of the larger, voluntary, industry-wide CocoaAction strategy convened by the World Cocoa Foundation) as well as into the marketing strategy for Cocoa Horizons clients.
Larger-scale replanting of cocoa will be carried out through a more simplified agroforestry system that combines food production with cocoa and other, multi-purpose trees (fruit, timber, etc) supported by a longer-term credit system. Barry Callebaut intends to develop a support plan capable of helping farmers to invest in replanting their farm in stages over several years (through purchase of seedlings and the provision of bridge financing for potential lost income).
Costs in the agroforestry project were very competitive compared to certification models based on cooperatives, giving Barry Callebaut’s dynamic coaching system a high potential for scaling up. The approach now uses village coordinators acting as coaches for farmers, and has been adopted by co-ops (see Intensified cocoa production: the evolution of a credit-savings scheme, in this chapter).
See also: Training
Intensified cocoa production: the evolution of a credit-savings scheme
In parallel to the agroforestry approach, Barry Callebaut delivered a program of intensified cocoa production through Société Africaine de Cacao SA (SACO). In this model, co-ops acted as service provider and sourcing channel. They provided a range of standard services (including training, particularly on pruning—see Dynamic agroforestry: a proven track record, in this chapter) to a small number of farmers, along with access to inputs. In the initial stages of the intensified-cocoa-production model, credit services were tested starting with crop protection and tools. The challenges of delivering credit to cocoa farmers living with uncertain finances proved obstructive: the approach was changed to allow farmers to deposit savings with the company for the purchase of crop protection.
The model has since evolved into an enhanced credit-savings scheme, which offers the full productivity package to selected credit-worthy farmers. It draws on lessons from the agroforestry model whereby farmers need to implement GAP effectively—pruning, management of shade trees, weeding, phytosanitary practices—before chemical products are introduced.
With farm development plans in place that identify annual needs for inputs and credit, finance-ready farmers are coached for a 12-month period. Around five or six contact points are made with each farmer at critical steps throughout the farming year (for example pruning, fertilizer application). If the implementation of GAP is verified, farmers are required to open a savings account and save part of the value of the productivity package before obtaining it on credit. The establishment of a savings account also enables the farmer to develop a financial track record. The farmer buys inputs at a margin from Biopartenaire/Barry Callebaut, which covers a portion of the Service Delivery Model’s operational costs. A partnership has also been established with Advans for a credit-savings scheme enabling co-ops to buy fertilizer.
Barry Callebaut’s current strategy is to scale up the enhanced credit-savings scheme to reach 100,000 farmers by 2020.
Service Delivery Models: the journey towards increased revenue streams
As the concept of Service Delivery Models (SDMs) was reconceptualized during CPQP, it triggered a significant reflection process in Barry Callebaut. The company began thinking about the services farmers require, the gaps in the market around service delivery and availability, and the methods by which service delivery could be made viable.
Operating two distinct models of cocoa production in close relationship with unorganized farmers (see Dynamic agroforestry: a proven track record and Intensified cocoa production: the evolution of a credit-savings scheme, in this chapter) has enabled Barry Callebaut and Biopartenaire to observe and better understand the challenges that cocoa farmers face.
The original focus for the company was on long-term sustainability of cocoa supply: as a buyer, Barry Callebaut has a strong interest in creating farmer loyalty to ensure that the investment in services results in higher volumes of cocoa. In 2015, IDH carried out SDM analysis work that highlighted the contribution of effective service delivery in meeting this objective: as a result Barry Callebaut redesigned its SDM in Côte d’Ivoire, aiming to make it more commercially viable while at the same time delivering effectively to farmers. The SDM is designed to generate revenue streams through sourcing activities rather than through donor funding—for example by farmers paying for the services they receive and value. For this to work, farmers need to be convinced that it is worthwhile for them to pay for the services.
The project found that farmers were not able to pay for rehabilitation/regeneration of their farms, although they agreed that the benefits from pruning, for example, were tangible and economically positive. This was identified as a cash-flow challenge, which will be addressed through the enhanced credit-savings scheme (see Future Finance: Barry Callebaut’s contribution to productivity package credit, in this chapter).
Viewing farmers as clients or buyers of services, and not simply as suppliers, requires a different approach. Barry Callebaut has embarked on a journey in which the provision of quality of inputs and timely advice and support (such as that provided by Biopartenaire) are explicitly designed to generate predictable yields and sufficient additional income to pay for services. This is challenging and requires experimentation, but Barry Callebaut is working with farmers to create a process that is worthwhile, providing high-quality services that translate into direct benefits.
Future finance: Barry Callebaut’s contribution to productivity package credit
Initial investment in beyond-certification innovations involves providing credit at very large scale to farmers who do not have a financial track record. The risk is too much for the emergent local financial sector in cocoa-producing countries to bear. To mitigate local risk, Barry Callebaut has entered into a risk-sharing partnership with the International Finance Corporation (IFC, a member of the World Bank Group) and IDH.
The approach will enable farmers to open a bank account with Advans CI and build up a savings discipline: thereby giving them the opportunity to build a positive operational and financial track record with a local financial institution. Such a track record opens the farmer to increased bankability: giving farmers access to a broader range of financial services over time. This is a significant achievement for cocoa-farm financing. The new model will not only allow farmers to maximize their farm’s yield potential, but also enable the emergence of a farm-services sector providing rural employment and income opportunities. As the cocoa sector as a whole looks for new ways to empower access to the core productivity package of fertilizer, training, and finance, it is initiatives like this joint effort between Barry Callebaut, IFC, and IDH that will strengthen the supply chain, secure volumes of sustainable cocoa, and deliver long-term benefit to cocoa communities.