Blog #5 – The cocoa factor – a success story from the jungle of Peru
The Peruvian Amazon is a beautiful and mysterious place. It has one of the most diverse faunas on the planet, and an endless variety of cacaos that have already become a great social tool. Cocoa crops have largely replaced coca crops in certain regions of Peru. Coca is traditionally a sacred plant and its leaves are a natural remedy to altitude sickness as well as a natural stimulant. Mountains of coca leaves tower in the Andean markets of Peru and are offered for sale but in the past decades, coca has also been used for the production of cocaine in the western world. In recent years, Peruvian and US programs have been focused on providing viable alternatives so that farmers are incentivised away from coca production.
Within this context, the Alto Huallaga cocoa cooperative stands out as a model of good practice. It has received a relatively low government subsidies-mainly in the form of a warehouse and processing plant – but apart from that it is very much a sales-driven and commercially sound operation. It has an exciting vision, undeniably strong social impact and presents a true example of sustainable food production.
Leadership and growth
The cooperative has been operating since 2009 and in 2017 it sold over $5 million-worth of cocoa to customers in Italy, Switzerland Austria and France. It buys high-quality, certified fair trade and organic cocoa from 440 farmers in the region. The cooperative operates with a democratic structure through an elected assembly to which the management team reports on a monthly basis.
There are 60 paid members of staff who work together and are very innovation-focused, from a team of six field technicians who visit 50 farms each per month to provide technical support and teach the latest cocoa farming methods, though to a taste profile and chocolate team who are developing the cooperative’s own chocolate brand for national and (in due course) international consumption.
The vision of the cooperative is to continue increase sales by bringing in new members, increase productivity (farmers are constantly testing new approaches, such as planting cocoa trees closer together and using better varieties), and to start selling higher value products such as cocoa butter, liquor and chocolate. In fact their chocolate has been selected as one of the top five Peruvian chocolates to be judged at this year’ international awards in Paris!
Social impact in practice for low income communities
The Alto Huallaga cooperative aims to improve the living conditions of its members, by providing them with guaranteed sales at a better price than on the open market, technical assistance to improve their farming, low interest loans and emergency grants for their healthcare needs. The cooperative receives a fair-trade premium of 200 USD per tonne of cocoa sold. This is used to pay for certifications, to offer advanced training, to improve the cooperative’s infrastructure and to collect the cocoa directly from the farm gate, saving the farmers high transport costs.
Finally, a bonus per kilo sold is paid out directly to the farmers at the end of each year. Producers are not tied to the cooperative and have the power to choose what they do with their cocoa, including selling it on the open market if they so wish (though to remain a member they must sell a minimum of 500kg per hectare to the cooperative). However most choose to produce the best quality cocoa possible and to sell to the cooperative, as it pays consistently more than the open market.
Though the benefits to producers are largely economical, there are also numerous social aspects to the cooperative, such as competitions, social gatherings and collaborations between farmers. Finally the ecological benefits of the cooperative are undeniable- all farms are organic and free of harmful fertilisers and pesticides, and the cooperative runs long-term reforestation programmes in conjunction with an NGO and one of its buyers.
Lessons for the UK?
1) Scale is possible in community food businesses – This case study shows that community enterprises can scale. The co-op has a simple business model despite the complex social structure behind it, demonstrates good leadership and has empowered and self motivated staff. It provides multiple benefits for its producers, who are starting to live more comfortable and contented lives in what used to be an area dominated by illicit crops and violence.
2) The “cocoa effect” – The cooperative is a shining example of food production that is healthier for people and planet. It brings people together and builds skills to enable vulnerable groups who were once on the edge of criminal activity, to become self sufficient – and indeed to start winning international prizes for their products! Can this “cocoa effect” be applied to working with vulnerable groups or people at risk of being drawn into crime in the UK, or to improve the prospects of today’s youth through creative ventures that engage their talents, potential, and passion?
3) The role of UK cooperatives – In developing countries the role of organic, fair trade cooperatives can be particularly strong because they are empowering and opening markets to small producers and enabling sustainable food production. When I return I will dig into UK co-ops and draw up some comparisons.
Next week I will be popping back to Lima briefly for some last meetings then heading to Bolivia to explore more community business models-namely around the promotion of locally sourced ingredients. I will continue thinking about UK issues which can be solved through social food businesses, such as loneliness, food poverty and unsustainable food production.
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