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Blog #4 Can food businesses be successfully scaled for public benefit?

elcacaotal.com

elcacaotal.com

I am just five days into my Churchill Fellowship trip to Peru and Bolivia and I’ve already come across over a dozen amazing organisations in the social enterprise and food space (especially chocolate but I may be somewhat biased!)

The social enterprise scene in Peru has started to take off in the last 5 years. There are some 250 self-declared social businesses but if you include co-operatives and associations in the agri-space (who have often been around for 30+ years), this goes up by several thousand. I’m told that food is the most promising sector for social enterprise in Peru – gastronomy and agroindustry in particular. Other observed trends include a more stable economy in the last 10 years, the emergence of Peruvian cocoa and chocolate on the international scene, and an explosion in the national and international consumption of foods grown in Peru such as quinoa, chia and avocados.

With regards to “impact models”, I am mostly coming across businesses supporting vulnerable people through their supply chains – but also some who work with vulnerable employees, and a handful who have a positive social impact through the use of their profits. Here is a round up from my encounters to date, and a few early stage lessons for the UK!

Enterprises

Promoting Peru is a start-up market connector for agri produce, dedicated to finding markets for the producers that don’t have access to the traditional export channels and ensuring that these producers benefit directly from fair prices. They have been finding smaller organisations hard to do business with (slow turnaround of orders and obscure leadership structures) but are committed to building their capacity and to helping them find the right buyers abroad.

Shattell is an award winning artisan chocolate maker. Many of the farmers who Shattell work with used to grow coca trees before cacao, and since coca is illegal, growing it put the farmers in a lot of risk. Shattell’s mission is to help those farmers get a good enough income from their cacao growing, so that they don’t feel the need to go back to growing coca. They pay 50-100% more than commercial buyers for the finest beans, pushing them towards premium quality and new markets.

Cacaotal is a bean to bar chocolate shop and tasting school. Again, whilst not branding herself as a social enterprise, founder Amanda Jo helps cocoa farmers (who are increasingly seeking to make their own, tree-to-bar chocolate) with free advice on quality and marketing.

Yaqua is a bottled water company which re-invests 100% of its profits into clean water projects in the most vulnerable and remote areas of Peru. Apart from co-operatives and associations, dedicated structures for social enterprises don’t exist in Peru as they do in the UK, and Yaqua has dealt with this by running its own water projects and by having 99.9% of shares owned by a foundation, to ensure profits are given away.

Support and finance providers

Nesst is an international non profit which supports the creation and growth of sustainable social enterprises.To be supported by Nesst, there has to be social impact management for vulnerable groups, fair prices, secure contracts, training and good governance/a voice for vulnerable people in the business. Nesst offers two main support mechanisms: an incubation programme offering capacity development and tailored finance (using philanthropic capital) and a $20m investment fund. Nesst is one of the only providers of early stage tailored finance (most social enterprise start-ups are self funded).

Shared Interest is a finance provider to community businesses, offering short and long term financing. They used to only invest in the agricultural and craft sectors, and only into associations and cooperatives.They have broadened their impact definitions quite recently and now independently assess a business against the 10 fair trade principles of the world trade organisation https://wfto.com/fair-trade/10-principles-fair-trade

Lessons for the UK?

1) In Peru, even food businesses that do not describe themselves as social enterprises are often working with vulnerable groups in their supply chains, and find themselves playing a capacity building and knowledge transfer role, as they depend on these groups for their own product development. This a win-win relationship and there is no sense that these groups are “beneficiaries”. Could the UK learn something from this?

2) The social enterprise sector remains young in Peru (with only some 250 self declared social enterprises), and whilst there are now many providers of capital for the agri-sector and co-operatives, Nesst is one of the only providers of early stage tailored finance. Should the UK, with its 90,000 social enterprises, export its experience or franchise its models to other places?

Next week I will take a deep dive into a cocoa co-operative in the Huanuco region of the Peruvian jungle. I will stay with them for five days and explore the co-op’s leadership, how it has grown and what its social impact means in practice for low income communities. I will continue to think about UK issues which can be solved through social food businesses, such as loneliness, food poverty and unsustainable food production.

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