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Engaging the private sector

Cocoa farmers find a market

A French chocolate maker is buying as much organic cocoa as farmers can produce in Sao Tome and Principe

Philippe Bastide (left) of the local research station, plantation director Rodrigo Guilherme and Kaoka's Andre Deberdt check the results of a solar dryer.Cocoa sales represent 90 per cent of Sao Tome and Principe’s export earnings, but extreme price volatility has caused many producers to abandon their farms.

In 2000, IFAD commissioned Kaoka, the organic branch of a large French chocolate producer, to analyse the country’s cocoa sector. The study concluded that because of its rich genetic origin, Sao Tome cocoa varieties could produce superior aromatic cocoa beans, fetching higher and more stable prices than common cocoa. The study also found that traditional farming methods could be adapted easily to organic production. By combining the dual qualities of fine taste and organic production, the cocoa farmers could greatly boost their income.
Later that year, IFAD launched a three-year pilot project involving 500 farmers in 11 communities. Kaoka agreed to supervise the project and to purchase as much certified organic cocoa as the farmers could produce. Farmers received technical advice and extension services to help them make the transition from producing medium-quality cocoa butter to high-quality dried cocoa. A solar cocoa dryer and storage facility reduced spoilage of the cocoa harvest. A local research station certified the cocoa’s aromatic qualities, and an international organic organization certified that the cocoa was organic.

By the end of the pilot project, the farmers had produced 100 tonnes of certified organic cocoa that sold for two and a half times the price of common cocoa. The farmers have now formed a cooperative and signed a five-year contract directly with Kaoka, guaranteeing them a stable price. Smallholder families who participated in the programme saw their yearly income increase by more than 14 per cent, from US$270 to US$309. The internal rate of return on the investment was 17 per cent. (The internal rate of return is the average rate earned by each and every dollar invested.)

This experience taught IFAD several lessons about partnering with the private sector. For one, partnerships are easier when the target group is already linked to international markets, for instance farmers producing commodities like cocoa. Secondly, by providing stability and support, IFAD was able to counter the negative impact of poor infrastructure, distance from markets and the inexperience of local farmers.

IFAD is scaling up organic, aromatic cocoa farming to another 12 communities in Sao Tome within its ongoing Participatory Smallholder Agriculture and Artisanal Fisheries Development Programme.

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