From fragmentation to resilience: Building roadmaps for a more sustainable cocoa supply chain
At an event co-hosted by CAF and Acumen, cocoa stakeholders came together to bridge divides and chart a shared path forward.
- Blog
- Sustainable agriculture
- Latin America
Today’s cocoa supply chain is not sustainable. Cocoa smallholder farmers only receive around eight percent of the value of an average chocolate bar, but they take the majority of the risk. When cocoa farmers are unable to adapt their farms and financially absorb a climate shock, their cocoa crops fail, and they lose a key source of income. And when their crops fail, those shocks are felt throughout the rest of the value chain. We’ve seen this through a chronically undersupplied industry, threats to biodiversity, and volatile market prices translating into higher prices for cocoa traders and consumers.
To chart a more sustainable path forward, CAF – Development Bank of Latin America and the Caribbean and Acumen, convened cocoa sector leaders for a two-part exchange in Colombia. The week began with a field visit to Asoseynekun, an Indigenous producer organization in Pueblo Bello that grows and sells cacao to responsible buyers like Acumen investee Cacao Hunters. Through horizontal knowledge exchange, participants shared their respective experiences and actively compared production methods, post-harvest practices, and organizational models.
Discussions then moved to Bogotá, where entrepreneurs, investors, corporations, and sector organizations gathered for a closed-door convening to align on shared challenges and co-create pathways toward a more resilient cocoa supply chain. Participants included social enterprises from across Latin America and West Africa, alongside representatives from international nonprofits like Solidaridad and multinational corporations like Mars.
There is no single blueprint or three-step plan for sustainability. Each participant brought their own unique perspective and priorities: living income, productivity, price stability, biodiversity. But they all agreed that a decent, stable livelihood for cocoa farmers was a critical component of achieving a more sustainable cocoa supply chain and that shared roadmaps were needed to help align the industry. Here’s a look at the major themes that emerged and the roadmaps that participants designed.
Shared goals and structural barriers
We kicked off the main discussion by asking participants to envision what they wanted the cocoa sector to achieve by 2040. We then dove deeper into what it would take for the sector to accomplish these outcomes. By asking participants what they considered to be the biggest challenges and barriers in the industry, and then pushing them to design a roadmap towards a more sustainable sector, we surfaced key conflicts, identified outcomes we could agree on, and recognized where more dialogue was needed.
Four themes emerged:
- Prioritizing productivity or sustainability? There is a wide variety of intersecting and sometimes contradictory problems to solve. For example, some participants noted that farmers are encouraged and incentivized to improve the productivity of their cocoa farms. However, this may at times be at odds with sustainability. If cocoa farms are designed to produce as much as possible, this might come at the risk of deforested land or failing to plant other crops.
- Cocoa is a business of working capital. In order for enterprises to be able to absorb shocks and swings in the global cocoa market, and to ensure that farmers get a fair and stable price, they need affordable and sufficient working capital. However, social enterprises struggle to access affordable working capital given that many lenders view the sector and farmers as “too risky.”
- Traditional business and finance will not work. The loss of funding sources like USAID has meant that cocoa producers and social enterprises can’t rely on traditional financing mechanisms.
- Sustainable solutions will take a village. Private sector initiatives need public sector support and alignment. Even within the private sector, social enterprises can share innovative approaches with corporations, and social enterprises must be in constant dialogue with farmers to ensure they are meeting their needs.
A roadmap for a more resilient, sustainable supply chain
Leveraging these insights, challenges, and opportunities from the discussions, participants moved towards co-creating roadmaps toward stronger cocoa value chains. Participants were divided into three small groups to ideate around action plans and strategies. Groups laid out the following three outcomes with their respective proposed approaches:
Outcome 1: Ensuring that at least 10,000 producers in 3-4 cocoa-producing countries can improve their productivity at a correct, fair, and remunerative price.
Approach 1: While cocoa producers struggle to access capital and investment, interventions through social enterprises can help them learn adaptive practices that can improve the productivity of their farms. In turn, those social enterprises will need technical assistance and short-term working capital in order to deliver training and reliable market access to farmers. This could look like partnering with current working capital providers and understanding what they need to make loans more affordable and accessible, or creating a new facility to help enterprises weather the shocks and volatility of the sector.
Outcome 2: “Premiumization” of chocolate and educated consumers willing to pay premium prices.
Approach 2: Increasing consumer willingness to pay for traceable, high-quality, and deforestation-free chocolate could drive “premiumization,” channeling more income to farmers. Consumer education could take place through mass marketing campaigns or partnerships with corporations.
Outcome 3: Making cocoa production attractive and profitable in the long-term for the next generation.
Approach 3: Participants recognized that they wanted to see a future for cocoa, not only in 15 years, but in 30 years and onwards. To achieve that, actors across the industry need to lay the groundwork now for future generations. In order to do this, participants proposed an educational program that could offer “learning tracks” to youth in agriculture, where they could learn about improving productivity, value-add processing, farm diversification, technology, and farm financial management. Through a program focused on professionalizing the industry and educating younger generations, youth could see a future for themselves in cocoa.
Prioritizing impact across the value chain
As a development bank, CAF will continue to promote multi-actor dialogue, help catalyze capital and partnerships, and support knowledge exchange to advance more resilient and inclusive value chains for the benefit of its 24 Latin American and Caribbean member countries. Acumen will continue to support and invest in innovative social enterprises, offering Patient Capital, insights, and networks that enable market-based solutions to scale.
Together, CAF and Acumen share a long-term commitment to strengthening enabling conditions for supply-chain resilience in the region over the years ahead. We hope you will join us.
More from our Knowledge Hub
Acumen backs Sommalife to build fairer markets and climate-resilient livelihoods for women farmers
A tech-enabled agribusiness empowering thousands of women smallholder farmers through fair markets, traceability, and sustainable land restoration.
