In a ground breaking partnership, Barry Callebaut, IFC, a member of the World Bank Group, and IDH, the Sustainable Trade Initiative, announce a risk sharing partnership of $9m to cover up to 103,000 smallholder cocoa farmers in Cote d’Ivoire by 2020.
Barry Callebaut, with support from IFC and IDH, will provide in-kind credit to farmers in the form of inputs and farm services. After a few successful years, farmers will have a positive operational and financial track record and thus become bankable, making it possible for local financial institutions to provide loans directly to farmers, a giant leap forward for cocoa farm financing.
This programme is inline with Barry Callebaut’s commitment to Cocoa Action. Cocoa Action is a voluntary industry wide strategy on cocoa sustainability, convened by the World Cocoa Foundation (WCF), to improve cocoa farmers’ productivity, profitability and livelihoods.
Two productivity packages will be provided directly to farmers and farmer co-operatives on a credit basis. The basic package will provide training in areas such as pruning and crop protection and the second advanced package in addition provides fertilizers to professional and credit worthy farmers, with trees less than 20 years of age. Crucially, both packages will be supported by on-farm individualised coaching through Barry Callebaut accredited agents trained on business management, agronomy and adult education.
To receive the productivity package on credit, farmers are assisted in opening a bank account where they are required to save part of the package value upfront. The accounts are opened at Advans, one of the leading microfinance institutions (MFIs) in West Africa.
This combined plan will empower farmers and transform them into entrepreneurs with a positive operational, financial and profitability track record. The goal is eventually to increase the comfort of local and international financial institutions to independently invest in these types of high-impact programmes.
Antoine de Saint-Affrique, CEO, Barry Callebaut, comments: 'Sustainability is at the heart of our business model and values. The start of this initiative represents an important step in promoting professional, sustainable cocoa farming and in enabling cocoa growers to develop from being subsistence farmers into small entrepreneurs. Barry Callebaut is proud to lead the efforts to professionalise cocoa farming, and is excited about the support of our partners in this endeavour.'
IFC Director for Manufacturing, Agribusiness and Services, Alzbeta Klein, said: 'Demand for cocoa is rising, but supply has not kept pace as farmers — many of them working just 2–3 hectares — must cope with typical agricultural risks such as weather and limited access to credit. This partnership between IFC, Barry Callebaut and the Netherlands Sustainable Trade Initiative will help farmers in Cote d’Ivoire gain access to credit and training that will enable them to upgrade operations and become part of a value chain linking them to cocoa buyers and global chocolate consumers.'
Joost Oorthuizen, Executive Director of IDH, added: 'IDH is really excited about this step forward. By derisking investments, we will be able to amplify our impact at the farmer level. In this programme we expect that by leveraging public funding with private sector contributions at a ratio of more than 1:10, 103,000 farmers will increase their bankability and ultimately the quality of their livelihood.'
