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Rainforest Alliance and NYU Stern Sustainable Cocoa Investment Challenge

Cocoa farmerThe Rainforest Alliance Sustainable Cocoa Investment Challenge sought to identify proposals for the design of an investment mechanism that would attract public and private capital to finance the renovation of aging and unproductive cocoa farms held by smallholder farmers in cocoa producing countries (Cote d'Ivoire, Ghana, Indonesia, etc.).

Smallholder cocoa farmers are the backbone of a global industry worth billions of dollars, yet the vast majority of these farmers still live in extreme poverty, scraping a living from aging cocoa plantations with declining productivity. In Côte d'Ivoire, supplier of 40 percent of the world’s cocoa, yields are some of the lowest in the world, primarily due to aging trees, deteriorating soils and disease. In the absence of long-term financing options to renovate and rehabilitate their farms, many cocoa farmers are switching to other crops that provide better income opportunities. Investing in sustainable cocoa farming is crucial to ensuring a steady cocoa supply for the world’s chocolate industry, and to improving the livelihoods of cocoa farmers across geographies.

Through its different programs, the Rainforest Alliance is working to revive the cocoa industry in countries such as Côte d'Ivoire by providing capacity building services to farmers and their cooperatives. This includes training farmers on farm renovation and rehabilitation techniques. In 2013, the Rainforest Alliance’s Sustainable Finance Initiative embarked on a multi-phase project aimed at designing and implementing a sustainable finance mechanism that would enable smallholder cocoa farmers to access the financing and services they need to improve and upgrade their plantations. The first phase of this project consisted of a feasibility study conducted in Côte d'Ivoire during the summer of 2013 that demonstrated the business case and viability for this project. The second phase of this project includes the design of the financing mechanism.

The winning team was awarded 10-week summer fellowships with the Rainforest Alliance supported by NYU Stern.

Webinar

Sustainable Cocoa Investment Challenge

In this webinar, we provide an overview of the Rainforest Alliance’s work, our Sustainable Finance Initiative, and answers to participants’ questions about the challenge.

View the webinar »

 

Conclusions

The goal of this competition was to 1) provide students with an educational exercise that would also hopefully 2) provide the Rainforest Alliance with creative solutions to a real challenge we face in the field. We provided background research on the topic, a webinar to further explain the issue, and met with groups one on one. Overall, the students gained significant insight into our work in sustainable finance and the specific topic of financing smallholder cocoa farmers in West Africa. After two rounds of judging, the winning team was awarded summer fellowships with the Rainforest Alliance.

Winning Team: Jessica Guo and Aayush Gupta

While all participants were presented with the same question, the three teams offered very different solutions to financing smallholder cocoa farmers in West Africa. Each of the presentations proposed a unique idea, however, the winning solution was chosen because it demonstrated a thorough understanding of the situation on the ground – i.e. the risks and challenges in financing smallholder farmers, and the solution offered an innovative “bottom up approach” that demonstrated the team’s understanding of the role of cooperatives and their potential to increase producers’ access to finance. The research, quality of the presentation, and creativity made this proposal stand out as a winner.

Congratulations to Jessica Guo and Aayush Gupta and thank you to all participants and judges in the competition.

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