I started this grad school program in social entrepreneurship and change because I wasn't simply interested in making money. I wanted to contribute to creating social change - to help empower those who are in a context that has confined their dreams and possibilities.
Last fall, I finally determined that I was interested in the chocolate business and so discovering that the majority of the world's chocolate comes from child slave labor was alarming to me. This problem seems to be coming from Africa - the Ivory Coast. But simply rescuing slaves can't be the only solution to this because there is still an increasing demand for chocolate globally. If the Ivory Coast remains a major producer supplying this demand, then the business of chocolate will always overshadow the ethics.
So I figure that if we can help create new producers of cocoa in other parts of the world, then we can deal with the human rights violations without the business pressures. For example, it's easier to tell chocolate lovers to buy from some where else as opposed to simply telling them not to buy chocolate at all. By shifting the supply, we take business away from the Ivory Coast. Then we can approach them differently. This part of the issue is beyond my own scope though. For me, I want to focus on supporting producers in the Philippines.
They've got their own issues too. With growing demand for quality cocoa, the Philippines has the potential for becoming a major supplier (as they used to be in the 1980's before an insect infestation devastated crops nationwide). The problem is that small holder cacao farmers (essentially family farms) don't have the capacity to produce large quantities of quality cocoa beans. They lack the technology for more efficient farm techniques. They lack the education for effective pest control. They lack the capital to invest in farm inputs. They lack the business knowledge for operating their farm sustainably.
As I came to the Philippines, I learned of great efforts being made by two organizations. The Cocoa Foundation of the Philippines (CocoaPhil) is a local filipino non-profit organization supporting cacao farmers by offering trainings. ACDI/VOCA is a U.S. non-profit organization operating globally that is doing field work in the Philippines. Both organizations work together (and in fact have a contractual relationship for projects and funding). I'm happy to have had the opportunity to work with both organizations during my month-long stay in the Philippines for my grad school internship experience.
Both organizations have developed great connections and relationships with cacao farmers. CocoaPhil seems to operate more in the northern island of Luzon and some in the Visayas region. ACDI/VOCA seems to operate more in the southern island of Mindanao and some in the Visayas region. CocoaPhil does work in Mindanao as well though, particularly in partnership with ACDI/VOCA. The majority of the agriculture in the Philippines comes from Mindanao because the climate is so ideal.
Cacao farmers are engaged through several workshops that help teach effective farm techniques. Through organic farming, they are able to learn how to compost and to manage pests. Farmers have access to demonstration farms in various parts of the country that they can visit to learn techniques. Both CocoaPhil and ACDI/VOCA have field staff that go out to the farmers to build connections. This helps create engagement with the farmers. I didn't necessarily see ways that farmers participated in decision making, however, I did get the impression that the input from the farmers was valued.
I think both CocoaPhil and ACDI/VOCA are effective in engaging with cacao farmers. When I did farm visits in the provinces of Bicol and Quezon (on Luzon) and in the provinces of Davao and Davao del Sur (on Mindanao), I was impressed with the way the field staff was recognizable to farm leaders and also respected by farmers. That was a good indication of the kind of engagement both organizations had with them. CocoaPhil wants to engage with farmers by offering microloans but they need the financial resources to initiate such a program.
Overall, the internship experience helped shape my own social entrepreneurship endeavors. While I'm still working on developing the business side of what I want to do with chocolate (either a product or a location like a cocoa cafe), I do know that I want to provide a direct connection between the producers and the consumers. I want to tell the stories of these farmers who are cultivating the cocoa beans that eventually becomes what the consumers enjoy. I would like to maintain a relationship with CocoaPhil and ACDI/VOCA and help support their mission of supporting, educating, and empowering farmers. I would also like to allocate a portion of profits to continue supporting farm families. I'd like to help provide financial support for school tuition and supplies, medical facilities, literacy classes, and also business training. I'd also like to resource CocoaPhil in implementing a microloan program so that farmers can reinvest in their farms.
Ultimately, this internship experience in the Philippines motivates me to want to continue exploring ways of using cocoa for good.
Cocoa For Good
This is the chronicle of my journey into the world of cocoa, developing a social enterprise from scratch, and exploring ways to use cocoa for good.
Tuesday, February 28, 2012
Sunday, February 26, 2012
Reflections About The Internship Experience
I think my expectations about this internship experience remained pretty flexible. I guess I wasn't really sure what to expect. I thought that I would meet some really interesting people. I thought that I was going to get my hands dirty and actually do some farming. I thought that I was going to have a really hard time trying to communicate with people.
My expectations were positively met. I'm pretty happy with the experience. I did meet some really interesting people. There were several with happy-go-lucky personalities. There were several that reminded me of my parents. I was surprised that many people did speak some level of English even if it was only a little. I'm okay with the fact that I didn't actually get to do any farming. I visited so many farms that phase 1 was purely observational. I met so many farmers that phase 2 was focused on gathering specific data. So i didn't actually get to sit down and really get to know farmers on a personal level. They were all very accommodating in answering my questions for the study. But there wasn't much time to do more than that because I really wanted to interview as many farmers as possible. We really worked hard at getting to 40 respondents!
By the end of my internship experience in the Philippines, I was surprised at how connected I felt to my heritage. I don't think I was expecting that. I see myself as pretty Americanized since I've lived here my whole life except for the first three years after I was born. For most of my life, I had no interest in visiting this country. I imagined it as a very hot and humid place where mosquitoes ravenously attacked. However, after the internship, I'm surprised at how much I enjoyed being here and how much I want to invest into helping people here. I happened to be here during an ideal weather period that had wonderful cool breezes. This is between the really hot season and the rainy season. So the timing was great.
But overall, I learned a lot about the farmer's lifestyle and how microfinancing can help them. I'm glad I came.
My expectations were positively met. I'm pretty happy with the experience. I did meet some really interesting people. There were several with happy-go-lucky personalities. There were several that reminded me of my parents. I was surprised that many people did speak some level of English even if it was only a little. I'm okay with the fact that I didn't actually get to do any farming. I visited so many farms that phase 1 was purely observational. I met so many farmers that phase 2 was focused on gathering specific data. So i didn't actually get to sit down and really get to know farmers on a personal level. They were all very accommodating in answering my questions for the study. But there wasn't much time to do more than that because I really wanted to interview as many farmers as possible. We really worked hard at getting to 40 respondents!
By the end of my internship experience in the Philippines, I was surprised at how connected I felt to my heritage. I don't think I was expecting that. I see myself as pretty Americanized since I've lived here my whole life except for the first three years after I was born. For most of my life, I had no interest in visiting this country. I imagined it as a very hot and humid place where mosquitoes ravenously attacked. However, after the internship, I'm surprised at how much I enjoyed being here and how much I want to invest into helping people here. I happened to be here during an ideal weather period that had wonderful cool breezes. This is between the really hot season and the rainy season. So the timing was great.
But overall, I learned a lot about the farmer's lifestyle and how microfinancing can help them. I'm glad I came.
Friday, February 24, 2012
Reflections About The Philippines
It is unfortunate that there is so much poverty in a country
so rich in agricultural resources.
It’s a striking contrast to see the flush green fields and
mountains as a backdrop for the overcrowded city centers of nomadic people
looking for ways to support their families. It was surprising to me to see so
many different ways that people were trying to make money. It didn’t seem to me
like a beggar culture. It seemed like an entrepreneurial culture. Sure there
were plenty of people wanting a few pesos, but it was in exchange for them
doing some kind of service or offering some kind of product for it. Indeed
there were also those who appeared incapable and relied on compassion (or pity)
that begged. But the vast majority of people looked like they were willing to
at least try to earn their peso.
On one occasion I rode a horse drawn cart called a calesa
with my mom. We rode around Manila seeing some of the city sites while dodging
cars in insane traffic. There was a moment when we stopped in traffic and saw a
naked toddler girl who was dirty and probably hungry. Our calesa driver
probably wasn’t a wealthy man either. I’m sure he had his own family to
support. He through a coin that bounced on the ground near the little girl
before traffic allowed us to proceed forward. She quickly ran to collect the
coin which would likely contribute to purchasing a meal.
Poverty is relative.
There is a spectrum of those in extreme poverty, those who
are barely making enough to survive, those who are able to own, and those who
are able to support the livelihoods of others. Yet, even in this spectrum, the concept
of living comfortably can be experienced by anyone. There are those that don’t
know a lifestyle outside of their own context.
The shame in this, I think, is that corrupt people leads to
the taking advantage of others. I heard about it often in the way people talked
about government and law enforcement. Corruption was so common place that it
was assumed by the people. I also saw people taking advantage of service
providers or day laborers or farm workers in that they were paid so little for
such long and hard work. I can also see families taking advantage of each other
in those who rely too much on family members who come from the U.S. to pay for
everything. This was a frustrating realization for me. I discovered that some
of it was cultural to assume that the person with the most cash will pay for
the meals when going out in a group, or pay for the groceries, or pay for the
transportation. My American attitude was offended! However, even if some of it
was cultural, I still thought it was rude.
It was a surprising contrast to see the hospitality of
people and hard-working people alongside the willingness to get something free
for as long as it’s being offered.
With so much agricultural resources, why is there still so
much poverty and pollution? I think it is because there seems to be an overall
lack of vision for anything better. As a student of social entrepreneurship, I
know that creating change will take systemic action. This means that it will
require everyone, in all parts of this society, to shift the way they see their
environment. Those in government will have to adopt an empowerment attitude and
lose the power-grabbing attitude. Those in communities will have to adopt an
ownership attitude and lose the apathetic attitude that it’s someone else’s
problem. Those in business will have to adopt a value for fairness and lose the
value for profit-at-any-cost.
When I went to Davao City on the southern island of
Mindanao, I immediately noticed the lack of trash littering the streets. In
contrast to Manila which had trash everywhere, Davao City actually seemed
clean. I saw billboards and signs and
even a sign in my hotel room discouraging smoking on a city level. It said that
it just isn’t good for us. Clearly, this city had a mayor with vision who was
working to help residents adopt certain values.
Overall, I think the Philippines has so much potential. I
have to keep reminding myself that this is a country that has had its
independence (from the U.S. and from Spain) for less than 100 years. They still
have a lot of infrastructure to build. Globalization brings knowledge of what
everyone else in the world has, does, or can do into a context where government
and technology is just trying to keep up. This produces a tension in people’s
attitudes and sense of culture. Gentrification leads to the building of large
cities while displacing those too poor to live there into the slums or outlying
areas. While at the same time, the allures of technology and industrialized
living environments brings people in from the rural areas to overcrowd the
urban cities.
I think a greater sense of equity would help. I don’t think
social hand-outs are the solution. But creating an empowering model in every
level and context of the Filipino society can create an environment that will
allow so many of the hard-working people to receive real value for their work
instead of the scraps they have been accustomed to.
But I know it’s not that simple. It’s just one piece that
can contribute to some real systemic change.
Wednesday, February 22, 2012
Phase 2: Study of Farmers' Need For Microfinance
Preliminary
Summary Results
Survey Period:
February 15 – 17, 2012
Interviewer: Eric Leocadio
Total
Respondents: 40
Group
A: Gumalang, Baguio, Davao City (18)
Group
B: Subasta, Calinan, Davao City (3)
Group
C: Tawantawan, Baguio, Davao City (5)
Group
D/E: Basiawan, Santa Maria, Davao del Sur
(14)
Gender/Age:
Male:
19 respondents
Female:
21 respondents
Age
Range: 38 – 69 years old
Average
Age: 53 years old
History
of Borrowing: 85% of Respondents (34)
Average
Loan Amount: 13,191.18 P
Loan
Greater Than 10,000P 50% of those with history (17)
Loan
Less Than 10,000P 50% of those with history (17)
Average
Interest Rate: 7%
Used
Loan for Farm: 58.82%
Used
Loan for Personal Needs: 55.88%
Repayment
Rate: 100%
Average
Repayment Length: 7 months
Comfort in
Borrowing or Using Credit:
Comfort
Scale: 0 – 2 (Not at all / Little / Comfortable)
(Measured
average score from respondents)
Borrowing
from Bank: 1.05
Borrowing
from Co-op: 1.65
Borrowing
from Relative: 1.50
Borrowing
from NGO: 1.23
Using
Credit for Inputs: 1.60
Using
Credit for Supplies/Tools: 1.63
Cash
Advance from Trader: 1.20
Aware
of Credit Sources in Area: 72.50%
Willing
to Access Known Sources: 51.72%
Preferred
Reasonable Interest Rate: 5%
(average of responses)
Interested
in Receiving a Microloan
to invest in their farm: 98%
Method of
Handling Money:
Has
Bank Account: 28%
Keeps
Cash Wallet/Purse: 98%
Has
Credit Account: 10%
Risk Assessment:
Lost
Crops Due to Weather or Insects: 30%
(Note:
Only 1 respondent cited weather (flooding) as the reason. All others cited
insect or disease as the reason for the lost crops.)
Farm
impacted by Weather:
Typhoon 0%
Flood 3%
Drought 0%
Other
Weather 0%
Participation in
Cooperatives:
Member
of a co-op 78%
Average
Capital Share 4,097
P (average of co-op members)
Cited
benefits of co-op Patronage,
Dividends
Other
benefits from some co-ops Mortuary Insurance,
marketing, organic
fertilizer, Use
of Post-Harvest Facility
Literacy and Math:
Literacy
Scale: 0
– 2 (Not at all / Little / Very Well)
(Measured
average score from respondents)
Read
Visayan 1.88
Read
Tagalog 1.70
Read
English 1.43
Write
Visayan 1.85
Write
Tagalog 1.70
Write
English 1.28
Basic
Math (Add/Subtract) 1.43
Interested
in Literacy and Math Classes: 98%
Interested
in Business Classes: 95%
Cacao Beans:
Ferment
and Dry at Home 27.50%
Sell
Unfermented Beans 27.50%
Sell
Wet Beans 42.50%
Use
Co-op’s facility 2.50%
Income/Expenses:
Average
hectares: 1.98
Receive
income from coconuts 95%
of respondents
Average
income from coconuts 6,815.22
P/month (average of income receivers)
Receive
income from bananas 60%
of respondents
Average
income from bananas 2,593.42
P/month (average of income receivers)
Receive
income from cacao 93%
of respondents
Average
income from cacao 2,622.54
P/month (average of income receivers)
Receive
income from durian 40%
of respondents
Average
income from durian 2,064.38
P/month (average of income receivers)
Minimal
income from other crops: Mango,
Mangosteen, Lanzones, Corn
Receive
income from livestock 38%
of respondents
Average
income from livestock 1,836.53
P/month (average of income receivers)
Receive
non-farm income 48%
of respondents
Average
non-farm income 2,902.26
P/month (average of income receivers)
Cited
non-farm income sources: SS
Pension, Labor, Store/Shop, Rental Income,
Buy/Sell
cacao beans (wet/dry), service fees,
Honorarium,
Direct selling (avon)
Average
Total Income 13,965.84
P/month
Average
Farm Expenses 3,543.28
P/month
Average
Family/Personal Expenses 5,875.00
P/month
Average
Total Expenses 9,418.28
P/month
Difference
(Income – Expenses) 4,547.56
P
Percent
(Income/Expenses) 148.28%
Respondents
with Positive Net Income: 70% (28)
Respondents
with Deficit: 30% (12)
Respondents
with income more than
double their expenses: 20% (8)
Respondents
with income more than
their expenses but less than double: 50%
(20)
Tuesday, February 21, 2012
Interviewing Farmers and Collecting Data
Last week I flew down to the southern island of Mindanao to Davao City to take part in phase 2 of my global internship experience. I came to work with ACDI/VOCA - an awesome international organization that is helping to improve the economic opportunities for people all around the world. Here in the Philippines, they have been working to support coconut, cacao, and rice farmers through their COCOPAL program. With the support of ACDI/VOCA, i'm here to conduct a small study of cacao farmers in the Davao region to examine the need, usage, and accessibility of micro-finance for small-holder farmers.
Upon my arrival to Davao City, I immediately noticed how clean the streets appeared. I departed from the airport in Manila so I saw the contrast of Manila which had so much litter. It was definitely evident to me that an intentional effort was being made to keep their streets clean. I asked a few residents and I got the impression that the mayor here is pretty strict. Some like her and some don't but nevertheless I think a clean street is good for tourism which benefits their economy. So good for them.
I met with the director of ACDI/VOCA's operations there in the Philippines, along with the staff of about 12 locals. The director is Australian and he's been there for several years now. This part of the internship seemed much more formal as compared to my visit with the CocoaPhil staff. Probably because I had only met with the CocoaPhil staff in person for three hours at their headquarters before going out to visit farms. This time, I would work out of the ACDI/VOCA office. I was given some work space and I interacted with the other staff as needed. This was good because I still had a degree of autonomy. They gave me some direction and they took care of the logistics of me going out to the farmers. But I still got to do the core of the work on my own.
On my first day, I developed my survey tool and methodology. I had to first identify what kind of information I wanted to collect. What would be valuable for me to know? What would be valuable for ACDI/VOCA to know? How would I measure the responses into something quantifiable? With the input of some of the staff, I was able to develop my sets of questions for the farmers, for the bank, for the microfinance NGO, and for the cooperatives.
On my second day, I went to meet with the Mindanao Microfinance Council (MMC). They are a network of microfinance institutions in Mindanao. I thought it was interesting to see how they were encouraging these lending institutions to be socially conscious and to find ways of supporting the farmers. Typically, microfinance is out of reach for many farmers because the interest is so high, the repayment period is too quick, and the collateral is costly. Farmers can lose their farm land, literally. After meeting with the MMC, I met with a representative at one of the major banks called the Development Bank of the Philippines (DBP). Since this was a major institution, I could see that this bank's services would be out of reach for many of the small-holder farmers. Though they want to be accessible, their services are more conducive for farm cooperatives and large farm owners.
The rest of the week was spent traveling to several parts of the Davao region and interviewing the farmers. I had the help of an interpreter who already knew many of the farmers. That made it easier to find farmers who were willing to be interviewed. It was an anonymous interview so I didn't collect names. I just collected demographic information and each person was asked the exact same questions. In total, I was able to interview 40 farmers from four distinct areas of the Davao region.
In addition to meeting farmers, I also had the opportunity to visit some post-harvest facilities. I didn't get to see any when I went to Bicol or Quezon provinces because they are at an early stage of cacao farming. It's much more developed in Davao. I also got to meet with and interview representatives from the Bansalan Cooperative Society, a cooperative that serves over 37,000 members. They offer microloans to its members.
After a long week of interviews, my last few days here with ACDI/VOCA is dedicated to compiling the data into a spreadsheet so that I can present some preliminary results to the director. Once I get back to the U.S., I'll write a paper on my study and submit it to both ACDI/VOCA and CocoaPhil. Though not actually part of my class assignment for this internship, I'll be able to use this paper for my final semester's academic portfolio.
Upon my arrival to Davao City, I immediately noticed how clean the streets appeared. I departed from the airport in Manila so I saw the contrast of Manila which had so much litter. It was definitely evident to me that an intentional effort was being made to keep their streets clean. I asked a few residents and I got the impression that the mayor here is pretty strict. Some like her and some don't but nevertheless I think a clean street is good for tourism which benefits their economy. So good for them.
I met with the director of ACDI/VOCA's operations there in the Philippines, along with the staff of about 12 locals. The director is Australian and he's been there for several years now. This part of the internship seemed much more formal as compared to my visit with the CocoaPhil staff. Probably because I had only met with the CocoaPhil staff in person for three hours at their headquarters before going out to visit farms. This time, I would work out of the ACDI/VOCA office. I was given some work space and I interacted with the other staff as needed. This was good because I still had a degree of autonomy. They gave me some direction and they took care of the logistics of me going out to the farmers. But I still got to do the core of the work on my own.
On my first day, I developed my survey tool and methodology. I had to first identify what kind of information I wanted to collect. What would be valuable for me to know? What would be valuable for ACDI/VOCA to know? How would I measure the responses into something quantifiable? With the input of some of the staff, I was able to develop my sets of questions for the farmers, for the bank, for the microfinance NGO, and for the cooperatives.
On my second day, I went to meet with the Mindanao Microfinance Council (MMC). They are a network of microfinance institutions in Mindanao. I thought it was interesting to see how they were encouraging these lending institutions to be socially conscious and to find ways of supporting the farmers. Typically, microfinance is out of reach for many farmers because the interest is so high, the repayment period is too quick, and the collateral is costly. Farmers can lose their farm land, literally. After meeting with the MMC, I met with a representative at one of the major banks called the Development Bank of the Philippines (DBP). Since this was a major institution, I could see that this bank's services would be out of reach for many of the small-holder farmers. Though they want to be accessible, their services are more conducive for farm cooperatives and large farm owners.
The rest of the week was spent traveling to several parts of the Davao region and interviewing the farmers. I had the help of an interpreter who already knew many of the farmers. That made it easier to find farmers who were willing to be interviewed. It was an anonymous interview so I didn't collect names. I just collected demographic information and each person was asked the exact same questions. In total, I was able to interview 40 farmers from four distinct areas of the Davao region.
In addition to meeting farmers, I also had the opportunity to visit some post-harvest facilities. I didn't get to see any when I went to Bicol or Quezon provinces because they are at an early stage of cacao farming. It's much more developed in Davao. I also got to meet with and interview representatives from the Bansalan Cooperative Society, a cooperative that serves over 37,000 members. They offer microloans to its members.
After a long week of interviews, my last few days here with ACDI/VOCA is dedicated to compiling the data into a spreadsheet so that I can present some preliminary results to the director. Once I get back to the U.S., I'll write a paper on my study and submit it to both ACDI/VOCA and CocoaPhil. Though not actually part of my class assignment for this internship, I'll be able to use this paper for my final semester's academic portfolio.
Friday, February 17, 2012
Interviews Completed
This
week, I visited 5 farm cooperatives, interviewed 40 cacao farmers and also
interviewed 1 large 37,000 member cooperative, 1 bank (and snubbed by 2 other
banks), and 1 microfinance non-governmental organization. Whew! We drove all over Davao City and other parts of the region. This was a long but
productive internship week with ACDI/VOCA.
Next week I will start compiling the data.
Next week I will start compiling the data.
Wednesday, February 15, 2012
Crazy Drivers
You
know what I miss in the U.S.? Street intersections with traffic lights, cross
walks, street lanes, a double yellow divider line, and drivers that actually
follow traffic laws, stay within the lines, and are patient enough to stay
driving behind the same car for more than two minutes.
Seriously folks in the Philippines drive like maniacs! Lanes are merely suggestions. Cars play leap frog by driving into oncoming traffic to pass someone on their left side, then swerve back in to avoid head to head collision.
And the streets are anarchy. There was a moment today when literally people were going in every direction. U turn while in the right hand lane. Everyone honks their horn every two minutes because that's how they alert everyone else "ready or not, here I come!"
Seriously folks in the Philippines drive like maniacs! Lanes are merely suggestions. Cars play leap frog by driving into oncoming traffic to pass someone on their left side, then swerve back in to avoid head to head collision.
And the streets are anarchy. There was a moment today when literally people were going in every direction. U turn while in the right hand lane. Everyone honks their horn every two minutes because that's how they alert everyone else "ready or not, here I come!"
Saturday, February 11, 2012
Phase 1: Introduction to Cacao Farming - Part 3
Here are my notes on some of the things I have learned so far about cacao farming and the cocoa industry based on my time with the CocoaPhil team, farmers, and agriculturalists (part 3):
Problem for
Farmers
- Farmers aren’t profitable
enough to sustain themselves
- Farmers don’t have the
money to invest in their own growth
- Current microfinance
institutions require too much collateral or too high interest rates for it
to be a viable option for farmers
- 12% interest rate
- 4% to 5% interest per
month
CocoaPhil Roadmap
- Transparent & Dynamic
Market and Market Information System
- Establish and operate
fermentation and drying centers
- Accreditation, licensing
PH centers
- Means of Markets, price
info dissemination
- Packing houses
- Improved Production
Techniques
- Quality planting
materials
- Farming inputs,
assistance for crop nutrition and protection
- Research /institution to
formulate and continue improving Good Agricultural Practices
- Efficient & Effective
Extension Services
- Enabling farmers on Good
Agricultural Practices
- Business Skills
- Core of capable extension
agents
- Farm-based technology
resource centers
- Enabling Policies and
Regulations
- Loan schemes and credit
windows
- Implementation of
Philippine National Standard (PNS) for cacao
- Program on Research &
Development
- Policies on trading,
exporting, logistics
- Contract Growing Scheme - The
key is massive production of quality planting materials and facilitate
sustainable production
- Seedlings (Plant now, pay
later)
- Other inputs (fertilizer,
IPM materials – paid on deliveries)
- Training and other
extension services
- Post-harvest facilities
and marketing
Developing
Research and Technologies
- solar drying – shortening
the drying time
- better environmental
approaches
- composting
- insect protection
management (no pesticides)
Investing in Small
Farm Holders
- Because of the work that
CocoaPhil has been doing with training small farm holders, they can
properly identify those that are best suited for a microfinance program.
CocoaPhil can leverage the existing relationship and knowledge of small
farm holders so that collateral would not be required for a microloan.
This means that they have a ready-made borrower pool.
- CocoaPhil would start with
$1 million (43 million pesos).
- Microloans would be issued
in the amounts of 100,000 pesos per hectare over 3 years.
- One hectare - $2,500
(100,000 pesos)
- Two hectares - $4,700
(200,000 pesos)
- Three hectares - $7,000
(300,000 pesos)
- Microloans would support
approximately 230 farm families
- One hectare – 80
microloans x 100,000 pesos = 8 million pesos
- Two hectares – 100
microloans x 200,000 pesos = 20 million pesos
- Three hectares – 50
microloans x 300,000 pesos = 15 million pesos
- Farmers will use the
microloan for:
- the purchase of cacao
seedlings – 500 seedlings per hectare
- farm equipment, supplies,
and materials
- family subsidy (farm
worker salary)
- CocoaPhil continues to
offer assistance programs to ensure farmer success
- In 3 years, farmers will reach
the post-harvest stage of the Cocoa Value Chain. They sell their cocoa
beans to CocoaPhil’s post-harvest centers.
- This ensures that the
farmers will be able to sell their beans at a good price and thus be
profitable. Farmers can either sell their beans for the profit so that
they can pay back their microloan or they can give their beans to the
post-harvest center in-kind towards the payback of their microloan. Once
the microloan is paid back, the farmers can continue to harvest and sell
their cocoa beans to the post-harvest centers.
- This ensures the
quality-control. Farmers focus on the agriculture. The post-harvest
center takes care of the quality processing.
- Post-harvest centers
continue the value chain with processing and production. They can now sell
quality cocoa beans to global buyers.
- Profits of post-harvest
centers can be used to further benefit the livelihoods of farm families
and farm workers
- health care centers for
farm families
- day care centers for farm
families
- set up approximately 30
around the country
Financial Impact
- Farmers can sell dry beans
to CocoaPhil for 40-60 pesos per kg
- 50 pesos x 1,500 kg = 75,000
pesos / 42.3 = $1,773.05 per metric ton extra income for farmers
- CocoaPhil can sell to
buyers for 80-120 pesos per kilo
- 100 pesos x 1,500 kg = 150,000
pesos / 42.3 = $3,546.10 per metric
ton
Friday, February 10, 2012
Phase 1: Introduction to Cacao Farming - Part 2
Here are my notes on some of the things I have learned so far about cacao farming and the cocoa industry based on my time with the CocoaPhil team, farmers, and agriculturalists (part 2):
The Cocoa Industry
- Since 2007, global production
of cocoa beans has averaged 3,656,660 metric tons:
- Africa 69.9%
- Asia 16.6%
- Americas 13.5%
- Cacao bean prices by
December 2010 was at $3,470 US per metric ton
- Global cocoa consumption
is about 3.5 million metric tons and has grown 2.5% annually over the past
10 years
- Chocolate product
consumption has been growing at about 3% annually (except in 2009 due to
recession)
- Consumption has been
growing fastest in Brazil
- Per capita consumption of
cocoa is highest in Western Europe and North America where incomes are
higher and is lowest in Latin America and Asia where incomes are lower
- Major manufacturers want
to do more to meet rising demand:
- Kraft Foods in 2009 was
22,000 metric tons; target in 2012 is 50,000 metric tons
- Nestle in 2009 was 4,000
metric tons; target in 2012 is 30,000 metric tons
- Mars in 2009 was 5,000
metric tons; target in 2012 is 100,000 metric tons
- Hersheys in 2009 was
10,000 metric tons; target in 2012 is 855,000 metric tons
- Domestic production in the
Philippines in 2009 was only 6,263 metric tons
- Domestic demand continues
to outpace production
- In Asia, there is
increasing consumption but also a large grinding industry that continues
to expand
- The regional production of
quality fermented beans is only 26% of the 680,000 metric tons of beans
produced annually in the region. As a result, regional processors import
almost 220,000 metric tons of fermented beans from West Africa and South
America.
- Because of higher shipping
costs due to rising fuel prices, the Philippines has an increased competitive
advantage in gaining access to the Asian market compared to West African
and South American
- Race to the Top of the
Global Cocoa Market:
- Indonesia in 2006 was
680,000 metric tons; target in 2020 is 900,000 metric tons
- Papua New Guinea in 2006
was 55,000 metric tons; target in 2020 is 100,000 metric tons
- Philippines in 2006 was
6,000 metric tons; target in 2020 is 100,000 metric tons
- Malaysia in 2006 was
30,000 metric tons; target in 2020 is 50,000 metric tons
- Vietnam in 2006 was 3,000
metric tons; target in 2020 is 30,000 metric tons
Philippines Goal
by 2020
- produce 100,000 metric
tons of cocoa country-wide
- Philippines can intercrop
with 10% of existing coconut areas – that gives approximately 107,874
hectares for planting cacao trees.
- will need to plant 10
million seedlings per year over the next 5 years – 50 million cacao trees
will result in approximately 105,000 metric tons in anticipated cocoa bean
production by 2020
Thursday, February 9, 2012
Phase 1: Introduction to Cacao Farming - Part 1
Here are my notes on some of the things I have learned so far about cacao farming and the cocoa industry based on my time with the CocoaPhil team, farmers, and agriculturalists (part 1):
The Cocoa Value
Chain / The Cocoa Supply Chain
Small Holder Farmer
- Nursery - Seedings
·
Plantation and Maintenance
·
Harvest
·
Post Harvest
o
Fermentation
o
Drying
Trader
Grinder
Industry
- Confectionary Industry
- Food Industry
- Industrial, Artisanal,
Pharma & Tobacco consumers
Retailer
Consumer
Cacao Farming
- Small holder farms are
family operated – 1 to 3 hectares.
- Seedlings require 80-90%
shade. Medium sized trees only require 50% shade.
- Coconut trees provide
permanent shade cover. Banana trees provide temporary shade cover.
- Cacao trees are best
interplanted alongside coconut trees and banana trees.
- Seedlings take 18-24
months to flower. It takes about 6 months for flowers to reach pod
maturity.
- Primary pollinator is the
mitges – little moths.
- Pollination times are 5am
– 7am and 7pm – 8pm.
- Smoking on the farm can
affect the mitges and hinder pollination.
- Pods should be harvested
at 75-80% ripeness. Pods that are too ripe are likely to have beans that
are germinated.
- 18-25 pods = 1 kilogram of
wet beans
- 3 kg of wet beans = 1 kg
of dry beans
- 50 kg needed to ferment
- 1 metric ton = 1,000
kilograms
- 1 cacao tree produces 2 kg
of dry beans per year
- Best soil conditions is
loam soil – porous
- Best temperature is 18
degrees Celsius
- Best pH is 4.5 – 6.5
- 1 hectare = 1,100 cacao trees
open with 3 meters apart (good only if 18 degrees Celsius and no summer –
rainy season year round. otherwise, needs shade cover)
- 1 hectare = 750 cacao
trees interplanted with other crops (coconut & banana)
- 1 hectare of 750 cacao
trees will produce (2 kg/yr) 1,500 kg of dry beans per year
- 1 hectare = 50,000 pesos
in expenses (25,000 pesos for seedlings, 25,000 pesos for labor)
- Labor can include
fertilizing, clearing, holing, staking, weeding, etc.
- CocoaPhil membership is
1,000 pesos per year.
- Farmers also pay land tax
and business license annually.
Wednesday, February 8, 2012
My First Farm Visits
I spent the last several days in the province of Bicol and
also the province of Quezon. I stayed in a cheap hotel in Naga City across the
street from a mall. CocoaPhil arranged for me to connect with one of their
technical advisors. She served as my escort, translator, and teacher.
Our first stop was to go to Naga City’s Department of
Agriculture in City Hall. There I got to meet the Rural Based Coordinator and
also the Agricultural Engineer. After spending the day with them visiting farms
and learning about the city’s efforts, I learned that Naga City is doing a
pretty good job at balancing urban growth and agricultural support. The city
has a motto for being all “S.M.I.L.E.S.” which stands for
See-Meet-Invest-Live-Enjoy-Study. They
presented their city as an innovative and wholistic place.
My first farm visit was to a fairly large one owned by a
farmer who was also the president of the Naga City Cacao Planters Organization.
His goal is for the organization to evolve into a cooperative. Since he is also
an engineer, I was impressed with the way he designed his irrigation water
ways. After taking a walking tour through his newly planted cacao trees, he had
a meal prepared for us.
More Filipino hospitality!
In addition to seeing a farm in Naga City, we also visited
several farms in the city of Lupi. Lupi was about an hour away from Naga City
so it was more rural. I got to meet about a dozen farmers who had already
gathered to meet me. Together, our group took walking tours through three cacao
farms. I also got to see much of their barangay called Bulawan Junior. A
barangay is kind of like a subsection of a city district, like a rural area
with several neighborhoods. After the tour, of course they prepared a meal for
everyone to eat.
On another day, we drove even further to the neighboring
province of Quezon. A province is kind of like a county. We visited the town of
Tagkawayan. I got to meet the Municipal Agriculturalist (the department head)
and some of their staff. Then a pair of agricultural aides took us out to visit
a few more farms.
In total, I was able to visit 10 farms and meet about 25
farmers. I was not expecting to see such diversity in cacao farming. It was interesting to see that all 10 farms had very different
landscapes. Some farmers planted their cacao trees on very hilly terrain. Some
planted on very flat land. Some had plenty of shade and others inappropriately
had too much sun. Intercropping means that they plant two or three different
kinds of trees next to each other. It’s common to intercrop coconut trees,
banana trees, and cacao trees. Cacao trees require 80-90% shade while they are
seedlings and about 50% shade while they are medium sized. So the coconut trees
provide the permanent shade cover higher up and the banana trees provide the
immediate shade cover closer to the ground. It was interesting to see the
various designs that the farmers used to plant their trees. Some used a
triangle design. Others planted the different trees in rows. Others seemed to
have a more random design. I got to see very good designs that resulted in
healthy trees. I also got to see poor designs that resulted in unproductive or
slow-producing trees.
I learned that agriculture is an art – both in growing and
in design. The farmer can be as creative as he or she likes in the landscape of
their crops. I loved that I could see the personality of the farmer through the
way he or she artistically (or not artistically) placed the trees, built
irrigation systems, and the maintenance of weeds.
Saturday, February 4, 2012
Getting Around
In
one week, I've been on 15 different modes and types of transportation: huge
airplane 777, smaller airplane, van, car, calesa (horse and carriage), tricycle
(motorcycle with a passenger carriage attached), jeep-nee (a little mini bus), motorcycle, bus, taxi cab, propeller airplane, airport shuttle, hotel shuttle, zipline
(that was way fun!), and of course, my own two feet!
Tuesday, January 31, 2012
First Day Culture Shock
On my first day of arrival to the Philippines, I flew in to
Clark International Airport on the island of Luzon. Interestingly, this is
where I was born – back when it was Clark Air Force Base. At the time, my dad
(a Filipino) was in the U.S. Air Force. After being born here, my family left
the Philippines for the U.S. when I was only 3 years old. This was the first
time being back to the Philippines since having left.
It was warm and humid, as I expected. It was about 1:00AM in
the morning. Upon exiting the doors of the airport and entering the waiting
area, I was immediately greeted by an over-helpful local who wanted to assist
me with my baggage and transportation. I
was to be picked up by my mom and I didn’t need or ask for the gentleman’s
help. Once my mom arrived, he lingered around with a big suspicious smile. I
got the impression that he wanted a tip. I felt very uncomfortable and I
thought it was very rude of him to assert his unsolicited help and then to
expect me to give him money for it. So I pretended not to understand what he
was saying. I had been warned by family ahead of time that this sort of thing
happens, but I didn’t expect myself to feel so uncomfortable about it.
That was my first culture shock.
My mom lived in the province of Bataan. After getting some sleep,
we traveled later that afternoon about 3 hours to get to Quezon City (next to
Manila).
My global experience will consist of two phases: the
introduction phase and the study phase. The first phase involved receiving an
introduction to cacao farming with time spent with the Cocoa Foundation of the Philippines, and the second phase involved conducting a study
on the need, usage and accessibility of microfinance for small holder cacao
farmers with time spent with ACDI/VOCA.
To start my introduction phase, I was to meet with the
President and staff of the Cocoa Foundation of the Philippines (also known as
CocoaPhil). My appointment was for 1:00PM but we arrived early during lunch
time. Everyone was in the staff lounge. I felt weird about interrupting their
lunch and I expected to either wait in the lobby until 1:00PM or that they would
end their lunch to have the meeting. I was surprised that instead they invited
me to hang out with them. It was very casual. My mom and cousins had
accompanied me and so they took the liberty of coming inside to join us. Then
everyone started talking and getting to know each other. They offered my mom
durian (a fowl smelling fruit) and so she just casually pulled up a chair and
started eating with them.
I was pretty surprised at how casual and hospitable everyone
was being. I was expecting to have a formal professional serious meeting and
instead I watched everyone chit chatting and socializing – the staff and my
family meeting for the very first time but interacting like it was a family
potluck. In hindsight it was actually pretty funny to watch it all happen!
This was my second culture shock.
We did eventually have our formal professional serious
meeting. My family waited outside while I met with the staff in a conference
room.
The Cocoa Foundation of the Philippines is a filipino non-profit organization of farmers, cacao buyers and processors, and professionals that was established in 1993 and serves as an umbrella organization for the cocoa industry in the Philippines. They are currently connected with over 15,000 farmers and have about 50 staff and volunteers country wide. They have a well-developed and established training program for nursery, plant maintenance, and post harvest. Approximately 50% of their participants are women.
During our meeting, they gave me an overview of the cacao industry, insights into cacao farming, an explanation of the training and services that CocoaPhil offers, and their aspirations if they had the funding. Then we discussed some of the farm visits that I'll be doing. Instead of driving to some farms like I originally planned, they recommended going to the province of Bicol. That would be a 7-8 hour drive. So instead I decided to fly a plane to Naga City in Bicol. CocoaPhil would then connect me with someone on their staff there. I spent the rest of the week with my mom in Bataan, then on Sunday I would go to Naga City on my own.
The Cocoa Foundation of the Philippines is a filipino non-profit organization of farmers, cacao buyers and processors, and professionals that was established in 1993 and serves as an umbrella organization for the cocoa industry in the Philippines. They are currently connected with over 15,000 farmers and have about 50 staff and volunteers country wide. They have a well-developed and established training program for nursery, plant maintenance, and post harvest. Approximately 50% of their participants are women.
During our meeting, they gave me an overview of the cacao industry, insights into cacao farming, an explanation of the training and services that CocoaPhil offers, and their aspirations if they had the funding. Then we discussed some of the farm visits that I'll be doing. Instead of driving to some farms like I originally planned, they recommended going to the province of Bicol. That would be a 7-8 hour drive. So instead I decided to fly a plane to Naga City in Bicol. CocoaPhil would then connect me with someone on their staff there. I spent the rest of the week with my mom in Bataan, then on Sunday I would go to Naga City on my own.
Overall, I found my first day in the Philippines
interesting. My cultural expectations and actual experiences were varied. Prior
to this trip, my knowledge of the country came only from stories and the
internet. But seeing it for myself for the first time was surreal.
This is going to be fun!
Friday, January 20, 2012
The Human Cost of Chocolate
This is an important issue in the world of cocoa!
http://thecnnfreedomproject.blogs.cnn.com/2012/01/16/chocolate-explainer/
http://thecnnfreedomproject.blogs.cnn.com/2012/01/16/chocolate-explainer/
Thursday, January 19, 2012
Global Internship Approved
For the past two months, I've been corresponding with a contact at ACDI/VOCA in the Philippines. We finally developed the details of my internship and I was able to send in the approval of the organization to the Dean of my grad school program at Pepperdine.
So it'll be with ACDI/VOCA (Agricultural Cooperative Development International and Volunteers in Overseas Cooperative Assistance).
They provide assistance in developing countries for agricultural business, community development, and food security. They have an operation in the Philippines that has been working to improve the cocoa industry.
I will be conducting a small study for the organization examining the access, needs, and usage of finance for cocoa-based farming families. It will involve visiting farms, interviewing farmers, collecting data, and preparing a report for the organization. I will explore the opportunities and constraints for farm families in the industry, including the accessibility of micro-finance to farm families. The study will also examine farm family income including non-farm income and farm income to look at profitability from farming activities.
My internship will be for two weeks on Feb. 12th through Feb. 25th in Davao City on the southern island of Mindanao, Philippines. I will be arriving early on Jan. 31st through Feb. 11th to visit my mom in the northern island of Luzon. I'm going to try to visit some farms in the North while I'm up there though so the internship experience will be a little longer than two weeks.
Everything is coming together quite nicely and I'm so excited to be going soon!
So it'll be with ACDI/VOCA (Agricultural Cooperative Development International and Volunteers in Overseas Cooperative Assistance).
They provide assistance in developing countries for agricultural business, community development, and food security. They have an operation in the Philippines that has been working to improve the cocoa industry.
I will be conducting a small study for the organization examining the access, needs, and usage of finance for cocoa-based farming families. It will involve visiting farms, interviewing farmers, collecting data, and preparing a report for the organization. I will explore the opportunities and constraints for farm families in the industry, including the accessibility of micro-finance to farm families. The study will also examine farm family income including non-farm income and farm income to look at profitability from farming activities.
My internship will be for two weeks on Feb. 12th through Feb. 25th in Davao City on the southern island of Mindanao, Philippines. I will be arriving early on Jan. 31st through Feb. 11th to visit my mom in the northern island of Luzon. I'm going to try to visit some farms in the North while I'm up there though so the internship experience will be a little longer than two weeks.
Everything is coming together quite nicely and I'm so excited to be going soon!
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