Can a farming family earn a living income by producing cocoa? - 3 keys for Latin America

Can a farming family earn a living income by producing cocoa? - 3 keys for Latin America

23/10/2021

Can a family make a decent income from their cocoa plantation? What conditions should be in place to ensure that small-scale producers obtain this income? Fausto Rodríguez, a Latin American expert on sustainability, inclusive business and development of services in the cocoa sector, shares concrete experiences in Latin America and other continents where Rikolto works that shown that farming families can earn a living income, increase their resilience, and contribute to a sustainable production model in the cocoa chain.

The interview was held during the recent 2021 Cocoa and Chocolate Salon held in Peru.

First of all, what is a living income?

Fausto: A living income is defined as the net household income necessary for an agricultural household to be able to afford a minimum decent standard of living.

It is calculated by defining a benchmark income sufficient to purchase food and pay for services such as water, housing, education, health care, transportation, clothing and other essential needs. It should also include a contingency fund for unexpected events.

In Peru, for example, we find cocoa-producing families with cocoa plots of five hectares (ha) with yields of an average of 800 kilogrammes per hectare. To define a living income for these families, only the income derived from the sale of cocoa is considered, not including income from other products or activities.

What conditions must be met a cocoa-producing family in Peru to achieve a living income?

Fausto: In Peru, this varies in each region and depends a lot on the area available, the yields that the cocoa plot reaches, if there are other crops and activities within the farm and if there is other income from the sale of their labour, or if the family receives remittances for example.

An average family in Peru may consist of five members, have a cocoa plot of five hectares and yield about 800 kilogrammes, which could generate on average four metric tonnes of cocoa, equivalent to about $10,000 to $12,000 (estimating a price between $2,500 and $3,000) of gross income.

Under these conditions, a family could achieve a living income even without considering other farm or outside income, since the estimated income is $6,099 per year according to Anker's living wage benchmark.

For some countries, these experiences and figures in Peru could be seen as utopian.

Under current conditions, Central America yields an average of 300 kilogrammes per hectare and prices are between $2,500 and $3,000 per metric tonne.

Central America yields an average of 300 kilogrammes per hectare and prices are between $2,500 and $3,000 per metric tonne.

However, any variation in price, plot size or yield will influence this estimated income.

Therefore, at Rikolto we believe that the evidence of the Peruvian experience can help countries such as the Central American countries in this journey to achieve living incomes and develop a sustainable chain.

Which initiatives in Peru should be followed further?

Fausto: The organisation Technoserve has estimated local income in the coffee value chain in the province of Jaén.

Also, from The Living Income Community of Practice, it is planned to establish the benchmark of dignified income for coffee and cocoa in three regions of Peru: San Martin, Cajamarca and Junin or Cuzco.

What lessons has Rikolto gained through this approach at the global level?

Fausto: Rikolto is implementing two projects with this approach in the cocoa value chain, one in Ghana and one in Côte d'Ivoire. Although it is still too early to conclude, we have identified lessons around:

  • Promoting diversification of activities beyond cocoa cultivation (production of other crops, processing and value addition),
  • The use of local financing mechanisms (through the so-called "Community Savings and Loan Associations"),
  • Inclusion of youth and women, to identify and offer roles for youth in the development of innovations, for example.

And in Latin America...

Fausto: Although our focus has been directed towards the sustainable development of the cocoa sector and contributed to increasing the income of the producing families, the interventions are also aligned with the living income approach. I list some of them below:

Harvesting knowledge on cocoa in Central America

Funded by the Swiss Development Cooperation and in alliance with World Cocoa Foundation (WCF) in its first phase, the project has contributed to the strengthening of multi-stakeholder spaces in four Central American countries through the creation of a Regional Platform (SICACAO). The initiative has also facilitated the creation of two communities of practice: Inclusive business and Climate Smart Cocoa and Governance in the sector.

Read more

MOCCA: Maximising Opportunities in Coffee and Cocoa in the Americas:

Rikolto is implementing MOCCA cacao activities in Ecuador, together with Lutheran World Relief (LWR) who leads the cocoa part of MOCCA in the 6 countries. The MOCCA program is a five-year initiative (2018- 2023) funded by the United States Department of Agriculture (USDA´s) Food for Progress Program.

MOCCA will help farmers to overcome the barriers that limit their capacity to effectively rehabilitate and renovate their coffee and cacao plants – increasing their productivity while improving their marketing capacity, incomes, and livelihoods within these key value chains.

Read more about our work in Ecuador

A new generation of cocoa producers in Central America

The programme includes an export agreement for the cocoa produced between the young men and women partners of La Campesina, and the Belgian supermarket´s Colruyt Group (through its Collibri Foundation). The young people apply modern and sustainable production and handling techniques for the cocoa, which is then transformed into chocolate for the supermarket’s consumers in Belgium.

Read more

What is the key contribution of Rikolto to these interventions?

Fausto: In collaboration with partners and allies such as the World Cocoa Foundation (WCF), CIAT, FHIA, CATIE, INIAP and ESPOL, Rikolto is generating concrete evidence and good practices to contribute to obtaining a decent income in both coffee and cocoa.

An outstanding example is the experience of SICACAO, the regional platform for sustainable cocoa in Central America and the Dominican Republic.

At the level of farmer organisations, Rikolto accompanies their professionalisation process to increase their access to inclusive markets, not only for cocoa but also for the other products of the plot.

At the level of the producer families, Rikolto promotes, supports and finances the establishment of cocoa and coffee production plots under diversified systems, agroforestry systems or dynamic successional systems that allow the diversification of products and income.

In parallel, we link producer organisations with financial service providers, non-financial services and suppliers (seedlings, inputs and forest species).

Did you miss the presentation? Watch the recording of the session at the Cocoa & Chocolate Salon 2021, you can activate the English subtitles.

Looking to the future with Rikolto's living income cocoa projects...

Fausto: We will continue to focus on contributing to living incomes and increasing the resilience of producer families.

Rikolto will actively participate in The Living Income Community of Practice, developing joint projects with other partners on this issue, systematising and sharing evidence in multi-stakeholder spaces, forums and other events and putting the issue in the development of national and global policies and strategies.

Producers and their families can't achieve a decent income without the collaboration of all the actors in the sector, especially buyers, chocolate makers, financiers, service providers and public sector institutions. That is what we aim to do, to continue facilitating spaces for meetings and collaboration.

For more information about Rikolto's work on living incomes, resilience and sustainability in Latin America, please contact our colleague Fausto by mail or comment in the article via Linkedin.

Fausto Rodriguez
Fausto Rodriguez
Director para Latinoamérica | Nicaragua