Reflections About Supporting Cacao Farmers

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.

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)

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.

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.

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

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

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.

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.

Davao Could Be A Key Global Supplier of Cocoa

The Philpress News & Features reported earlier this year that global cocoa buyers have high hopes for the Davao area's cacao producing potential. According to the article:

"Among Asian countries, the Philippines has the smallest production of cacao beans at around 5,000 metric tons of cacao beans last year. Its highest production was in 1980 with 20,000 tons and 1990 with 35,000 tons, declining over the years as farmers abandoned cacao farming for other more profitable crops. "

Asia has a large cocoa processing industry but hardly enough fermented cacao beans to process. Indonesia has the biggest cocoa production at 600,000 tons last year. Papua New Guinea had 50,000 tons and Malaysia had 17,000 tons. India produced 7,000 tons last year and the Philippines produced only 5,000 tons. Vietnam only produced 1,000 tons last year.

Japan, China, Malaysia, and Indonesia all have large cocoa processing centers importing 220,000 metric tons of raw cacao fermented beans last year from the Ivory Coast in West Africa.

Meeting the Philippine goal of producing 100,000 tons of cacao by 2020 will elevate the country, especially its high cacao-producing port city of Davao, to becoming a key global supplier.

High Hopes from Malaysian Trader

The Philpress News & Features earlier this year reported about a Malaysian trader who said that his company is poised to buy all of the cacao produced from the Philippine region over the next 10 years. He says that Davao is a perfect location for producing cocoa because of the great soil, the good rain fall, and the area is not often hit by extreme weather.

Quite simply, the demand for cacao is greater than supply sources. Even with the Philippines meeting its goal for producing 100,000 metric tons by 2020, there would still be larger demand both locally and internationally for cocoa.

The 2020 Challenge

Earlier this year, the Philpress News & Features announced a goal for the Philippines to plant 58 million cacao trees by the year 2020. It will require 130,000 filipino farmers planting 7 million cacao trees every year. This will produce 100,000 metric tons of cocoa by 2020.

This was a challenge set by ACDI/VOCA who has been actively assisting the filipino cacao farming industry.

With a modest price of $2500 per metric ton, this is a potential of $250 million in export earnings for the Philippines cocoa industry. The global market price is about $3400 per metric ton.

Since cacao is a great crop that can be planted along side existing ones, farmers who already planting coconut, banana, and mango trees can easily plant cacao and be part of the growing opportunity.

The Work of CRS in the Philippines

I found this video today that talks about some of the work that Catholic Relief Services is doing to support cacao farming in the Philippines.

According to their web site, in an article entitled "Making the World Safe for Chocolate" by Laura Sheahen, the pod borer insect is a menace to cacao farming. It worms its way into young cacao pods and destroys the beans. They appeared in the 1980's and severely impacted the Filipino cacao market. Prior to this, several decades before, it was a successful crop. At one time, the Philippines produced about 20% of the world's cocoa.

As an effort to revive this crop, Catholic Relief Services (CRS) has a program funded by the U.S. Department of Agriculture aimed at supporting Filipino farmers, providing free seedlings, and paying for areas to be paved so that farmers have a clean place to dry their seeds properly.

It's interesting to see how CRS is helping the cacao farm industry while combating poverty.

ACDI/VOCA's SUCCESS Alliance Program

I have started researching cacao farming and I came across this article online from Agriculture Business Week posted October 18, 2008 called "Cacao: The Resurrection Crop for Farmers in the Philippines."

From this article, I learned that cacao has been cultivated in the Philippines since the 17th century and that there has been a major decline in cocoa production there since 1988. It would appear that by 2006, cacao was planted on less than 10,000 hectares across the country with the majority of it coming from the Davao region.

According to the article, the estimated volume of cocoa production in 2008 was only 6,000 to 7,000 tons with more than 95% of it used locally.

But it seems there is growing local interest in cacao farming credited mostly to the SUCCESS Alliance Philippines Phase II program funded by the U.S. Department of Agriculture and implemented by U.S. non-profit ACDI/VOCA (Agricultural Cooperative Development International and Volunteers in Overseas Cooperative Assistance) and its local partner The Cocoa Foundation of the Philippines (also called CocoaPhil). According to the project profile page on the ACDI/VOCA's web site, "SUCCESS" stands for Sustainable Cocoa Enterprise Solutions for Smallholders. Starting in 2006, it was a $2.6 million program over 3 years to help improve cocoa production and marketing linkages.

The demand is there. Locally, the Philippines needs about 32,000 tons of cocoa production to meet local demand which means the majority is imported from elsewhere. There is also a shortage of high-quality cocoa.

There is currently more than 2,000,000 hectares of coconut lands where cacao can be inter-planted. The coconut trees provide the necessary shade coverage for ideal cacao planting conditions. The profit potential is huge. More than $1,500 per hectare of net income can be generated from 500 mature trees each year. The international demand for cocoa beans is growing at about 90,000 tons annually. Regional demand from Southeast Asian grinders is at 220,000 tons that is imported from Africa and other distance countries. According to their web site,

"ACDI/VOCA achieves this through activities that deliver farmer training and extension, establish post-harvest processing sites, build capacity in nursery plant production, rehabilitate old cocoa trees and establish internationally acceptable cocoa bean quality standards. A major focus is promoting the opportunities and participation of smallholder farmers in the cocoa value chain as a means of poverty reduction and economic growth."

They have trained more than 150,000 local farmers. They have helped approximately 800 farmers improve productivity and quality of 400,000 cacao trees. They have distributed over 1.12 million plants to farmers.

It's clear that ACDI/VOCA has made tremendous strides towards improving cocoa production. I'll reach out to them to explore the possibility of doing my global internship with them. It would be really interesting to see how they would measure their own success now that the program has concluded in 2009.

Note: Photos here taken from ACDI/VOCA's Facebook page.

Growing Interest in Filipino Cacao Farming

While I do not personally have a farming background, I do have a particular interest in cacao farming and how it is cultivated to produce cocoa. Eventually, I’m interested in establishing some sort of retail business involving chocolate, perhaps a cocoa café that allows people to sample various applications of cocoa and taste chocolate produced from different regions.

In preparation for my future business, I know that I will need to learn the intricacies of cultivating cacao and educate myself about the relevant issues to cacao farming. Either way, I would like to source my cocoa from the Philippines so that it can benefit Filipino farmers. As a Filipino-American, I am particularly interested in learning more about my heritage and this will be a great way to do this. I still have family living in the Philippines. Depending on conditions, I would even consider investing in cacao farming, purchasing land, and hiring local farm workers. Perhaps I can help contribute to the cocoa production output from the Philippines.

It'll be interesting to start learning more about Filipino cacao farming and the related issues associated with it.

The New Field of Cacao Farming

For the past couple of years, I've been increasingly interested in social entrepreneurship. What's that, you ask? I would define social entrepreneurship as the use of a for-profit or non-profit organization that utilizes business models in order to gain resources intended to support or sustain social impact.

It's all about operating for more than one's own personal economic benefit. Rather than the traditional bottom line of "profit," it's about the triple bottom line of people, planet, and profit. The sustainable benefit of all these three are the goal.

Some of the hallmarks of social entrepreneurship is sustainability, systemic thinking, and innovation. We're finding creative ways to solve the world's most pressing problems by developing systemic solutions that have a cascading impact on interconnected communities, industries, and eco-systems.

For me personally, I wanted to help find broader, innovative, systemic solutions to social and environmental challenges. For the past five and a half years, I've founded and operated a non-profit organization called the Catalyst Network of Communities that creates spaces for individuals and organizations to connect, to collaborate and to share resources as an effort to combat the fragmented, competitive, and redundant atmosphere among community organizations. We are a network of over 90 community organizations and businesses but we measure our impact by the number of participating partners.

As I help Catalyst establish a solid foundation for its mission, I've been wanting to embark on new ventures. I wanted to create a social enterprise with a for-profit model that helped people. So I'm exploring the new field of cacao farming. Cocoa! Chocolate! But how can I create a cocoa business that helps people?

That is what I'm about to figure out. This blog will help me chronicle my journey, process my thoughts, and share my research.

I am currently a graduate student at Pepperdine University's Graduate School of Education and Psychology working towards a Master of Arts in Social Entrepreneurship and Change. As part of the program, I am doing research and will participate in a global internship experience. I get to choose the country, the social issue, and the organization to work with.

My choice of study and exploration will be Cacao Farming and Cocoa Production in the Philippines. I'm still searching for (securing) a host organization.

This will be fun!