High quality Peruvian cocoa for fine chocolates

Globally, chocolate consumption has boomed over the course of the last decade. Consumption in Asia and Latin America is rising rapidly. At present, the European Union and North America represent 60% of the world's chocolate consumption. Especially the consumption of dark chocolate, with a high cocoa percentage, has seen the most dramatic increase. As a consequence, cocoa production and processing has enjoyed substantial growth worldwide.

In Peru, the cocoa supply chain is a growing part of the economy, currently generating 10 million daily wages and 266 million USD of exports, primarily to the European Union. The industry involves more than 100,000 families across Peru, in terms of people employed, cocoa is the second most important agricultural product after coffee, and has a significant socio-economic impact.

1.7 % of the world’s cocoa beans are produced in Peru, making it the 8th largest producer according to global rankings and 3rd in Latin American after Brazil and Ecuador. In addition, it is the 2nd largest organic cocoa producer (after the Dominican Republic) and the number one fair-trade organic cocoa producer worldwide. In 2017, the country’s cocoa production reached 120 thousand metric tonnes. Peru is considered one of the 17 high quality fine flavour cocoa producers, country’s cocoa export has been considerable growth over the last decade.

CAC Pangoa has been a close partner of Rikolto since 2011 and a pioneer in including women and youth in the country's cocoa and coffee sector. The cooperative’s principal business used to be coffee, but as a result of the coffee rust crisis and with the purpose of diversifying risk, it has chosen to develop strategies focused on expanding and developing its fine flavour cocoa business, which is specific to the region.

The cooperative established itself at a national level because of its model which strikes a balance between business profitability and social needs to improve the life quality of its members, i.e. the producers. Since 2010, its leader training centre has trained staff to increase the participation of women and youth and support the cooperative’s management staff throughout their careers. The field innovation process is geared principally to the development of sustainable cocoa production through agroforestry systems, supplementing cocoa with food crops, native fruit and lumber, and secondly, developing data systems that improve the cooperative’s management and decision making.

Rikolto wants to enhance both the professionalism of the fine flavour cocoa producers and the quality of the cocoa they produce so that it can be used by fine chocolate makers. We do this by working closely with rural youth, fostering inclusive commercial links with cocoa buyers, and by working together with strategic partners in order to have greater clout in the Peruvian cocoa sector. These partners include APPCACAO, the Peruvian Association of Cocoa Producers, and Biodiversity International.

As of 2008, cocoa production has been a booming business in Peru, but some important challenges remain to be tackled:

• Currently, the global demand for cocoa is unmet and growing. A huge gap between the production and consumption of chocolate is projected for the next five years.
• The cocoa cooperatives are not very sustainable: the average age of a cocoa farmer is 50 years old, and year after year there are fewer young people on the land due to migration to big cities in a search for opportunities.
• Draughts and plagues as a consequence of climate change harm the crop.
• The quality of the cocoa has to be improved so that it can be used in fine chocolate. This must be done by both reviving fine native varieties and improving post-harvest and quality control practices.

1. Professionalising farmer organisations

• We strengthen the socio-entrepreneurial capacities of CAC Pangoa, and measure them by using the SCOPE tool and with implementation of the improvement action plan.
• We support close collaboration between CAC Pangoa and Biodiversity International with the purpose of developing a clonal garden of cocoa heritage trees destined for the fine flavour cocoa market through agro-forestry practices. Thanks to this project, APPCACAO will be able to share these practices with its 26 affiliated organizations.
• We support the Women Development Committee (Spanish acronym CODEMU) and the leader training centre, as well as training for partner organisations. The goal is to improve their management performance and strengthen succession planning in order to ensure the social and commercial sustainability of the cooperative.

2. Improving the quality of fine flavour cocoa

• Together with the APPCACAO and SINEACE programmes supported by the Ministry of Education, we have launched a certification programme for skills required by young people employed in cocoa quality control.
• We improve the cocoa tasting capacity and quality management skills of technicians and field staff of the 26 member organisations of APPCACAO.
• We support the development of a database of fine flavour cocoa varieties.

3. Promoting inclusive commercial relationships

• We promote inclusive commercial relationships between CAC Pangoa and its clients, so as to have a more efficient and sustainable social and environmental impact over time. The lessons learned from these experiences can help us create a platform from which to build bridges between farming organisations and private actors.
• We encourage rural youth to establish cocoa sector start-ups in order to stimulate learning through the development of apprenticeships and events.

4. Creating impact

• We bring more dynamism into multi-actor cocoa platforms, by focusing on the professionalisation of producer organisations, the development of sustainable and inclusive business models, quality and data management, and the inclusion of women and youth. The goal is to gather information and lay the groundwork for the elaboration of a National Plan for Cocoa and Chocolate Development with the participation of key players from the public and private sectors, including civil society and academia.

Duration: Rikolto's cocoa programme in Peru has a duration of 5 years, from January 2017 until December 2021.

Farmers involved:

• The programme will directly impact the 680 members of CAC Pangoa cooperative, located in Junín, Selva Central, Perú. Of these 680 members, 545 are men and 135 are women.

• Indirectly, the programme will have 26,797 beneficiaries, of whom 24,570 men and 5,430 women.

Budget 2017 - 2021

• EUR 140,000 during 2017-2019 (CAC Pangoa).

• EUR 240,000 total amount until 2021 (APPCACAO and CAC Pangoa).

• CAC Pangoa’s increased professionalism at many levels: internal, financial, operational, external risk and market management. We used the SCOPE insight tool to measure the performance of the cooperative: it improved from 3.7 in 2017 to 4.3 in 2019, meaning that it evolved from a developing organisation to a professional one. This is the result of funding, support, advice and capacity expansion in primary areas of the operational and business sides of the organisation. Crucial steps to achieving these goals included accounting and fiscal standardisation, and its adoption in aspects of accountability, trade and credit which allowed Pangoa to receive drawback and export incentives from the Peruvian Government. A huge milestone for the cooperative!

• Compared with 2017, Pangoa succeeded in diversifying its client portfolio by up to 50%. At present, thanks to the high quality of the product and its organic fair trade certifications, Pangoa’s fine native cocoa products are in growing demand: Compared with 2017, when the cooperative exported 250 tons of high-quality cocoa beans, 2019 saw a 20% increase in exports, totalling 300 tons principally destined for the European market. Furthermore, we succeeded in promoting inclusive business relations between Óbolo Chocolates and the Pangoa cooperative, a process that has borne fruit through a long-term commercial agreement regarding the inclusive sourcing of cocoa beans and semi-processed products such as cocoa powder and butter.

• 130 young people (90 men and 40 women) improved their skills in a variety of areas related to cocoa quality control such as cupping, information technology, cocoa value chain approach, gender, teamwork and management, including chocolate and other cocoa base products.

• We succeeded in certifying the post-harvest, cocoa batch sampling, physical analysis, and cupping skills of 80 young people (50 men and 30 women). This has been possible thanks to the participation of key allies such as SINEACE (National System of Evaluation, Accreditation and Certification of Educational Quality), APPCACAO (Peruvian Association of Cocoa Producers), la Mesa Técnica Regional de Cacao de Junín – Satipo (Cocoa Technical Board of Junín – Satipo Region) and public sector authorities in Satipo Province.

• We have succeeded in establishing a promotional group which relies on the participation of public institutions, private companies, civic society and academic institutions. The goal of the group is to further develop the National Plan of Cocoa and Chocolate Development, and it is currently drafting the strategic document with a vision for 2030 that will allow sustainable and competitive development of the cocoa sector, so benefiting more than 100,000 families.

• Together with Biodiversity International we were able to classify the 42 Pangoa native cocoa trees, 13 of which have been selected with regard to the best quality, productivity and plague resistance characteristics. We also installed 4 hectares of clonal garden in a resilient agroforestry system covering farms belonging to small-scale producer partners in the cooperative. They will be needed in future to help revive and rehabilitate aging or unproductive cocoa plots to maintain the profitability and sustainability of the crop. Based on this experience, APPCACAO will be able to share these practices with the 26 partner organisations with which it is associated.

• A cocoa environmental footprint study using the Life Cycle Analysis methodology has been conducted in collaboration with the Pontificia Universidad Católica de Perú (PUCP). The purpose of the study was to investigate the most critical phases of greenhouse gas emissions during production, primary transformation, post-harvest, selection, storage and transport processes, which will in turn allow us to develop an end strategy designed to minimize greenhouse gas emissions and meet environmental standards in international trade to ensure sustainable cocoa production.

• The leader training centre allows us to train 60 women and young managers, with the purpose of improving managerial performance and of establishing a manager succession plan across the various Executive Boards of the cooperative so that the commercial and social sustainability of the cooperative can be maintained.

CAC Pangoa

Cooperativa Agraria Cafetalera Pangoa was established the 2nd Octuber of 1977 following the initiative of 50 coffee producer partners with a common target in mind: getting a better and fairer price from the selling of their products. Currently, its main export activity are the production and supply of coffee and cocoa products. They raw materials are provided by its 680 partners settled along Pangoa valley in Satipo Province.

APPCACAO

The Peruvian Association of Cocoa Producers is the national trade association that represents Peruvian cacao producers on national and international policy issues that are important to the cacao sector.

Biodiversity International

Bioversity International (BI) is a global research-for-development organization. Its vision is – that agricultural biodiversity nourishes people and sustains the planet. BI deliver scientific evidence, management practices and policy options to use and safeguard agricultural and tree biodiversity to attain sustainable global food and nutrition security. It works with partners in low-income countries in different regions where agricultural and tree biodiversity can contribute to improved nutrition, resilience, productivity and climate change adaptation.

Óbolo Chocolate

ÓBOLO Chocolate is Chile’s first bean-to-bar chocolate company. It has been producing small batches of international award winning quality chocolate since 2013. ÓBOLO is passionate about chocolate and committed to fair trade, sustainability and minimal environmental impact. ÓBOLO Chocolate is in process of certification as a B-Corporation, which means we meet the most rigorous standards of social and environmental performance, accountability and transparency.