In Côte d’Ivoire, which produces 40 percent of the global cocoa supply, smallholder farmers face the urgent challenge of maintaining productive cocoa farms while sustaining a decent living.
Typical obstacles include: aging tree stocks, soil deterioration, climate change, the inappropriate use of harsh agrochemicals, and a dearth of training on best agricultural practices (such as pruning). Long-term investments and the development of financing mechanisms adapted to the barriers of smallholder finance and cocoa culture are essential to successfully mitigating these challenges.
“Without access to long-term financing, smallholders are unable to invest in the rejuvenation of their farms and to sustainably increase their cocoa productivity. In that scenario, they miss the opportunity of higher income and better livelihoods,” says Hélène Roy, who works to increase sustainable financing for landscape restoration and livelihood improvement. To support smallholders working to create and maintain more sustainable and resilient farm operations, the Rainforest Alliance has developed a multi-stakeholder partnership involving a large union of cocoa cooperatives (Ecookim), a social lender (Alterfin), a donor (the Swiss Development Agency, via responsAbility’s Technical Assistance Facility Association) and a partner that focuses on project design and technical assistance (the Rainforest Alliance).
The partnership allows smallholders to access the inputs and services necessary to renew old tree stocks and adopt best agricultural management practices. To successfully unlock renovation and rehabilitation (R&R) financing for smallholders over a four-year period, the project relies on technical assistance and capacity-building, which are supported by continuous monitoring and evaluation activities.
This effort is designed to meet several urgent needs:
- Facilitate financing for smallholders in the form of in-kind loans that are tailored to cover the inputs and services necessary to implement R&R activities;
- Build business skills among ECOOKIM’s cooperatives so that they can manage their members’ loans;
- Help smallholders implement best management practices and provide them with business training so that they can manage and repay the loans they receive.
In total, the project landscape includes 1,400 hectares of cocoa plantation. The 334 participating cocoa farmers receive one-on-one coaching from field technicians as well as training on best agricultural practices and record-keeping. Three financing options are available, representing different services and repayment schedules that are tailored to the financing needs of the smallholders.
In addition to cocoa, the Rainforest Alliance is working to advance sustainable financing for R&R and climate-smart agriculture training in the coffee, tea, and palm-oil sectors across Latin America, West Africa, and Southeast Asia. In Côte d’Ivoire, the Rainforest Alliance has been researching designing, and executing R&R financing solutions for smallholder cocoa producers who’ve already earned Rainforest Alliance certification or are in the process of getting certified.
In 2013, the Rainforest Alliance conducted a study demonstrating that long-term loans for cocoa R&R were feasible when they were accompanied by adequate farm management plans, and that producers could repay these loans from what they earned through productivity improvements. This particular project with Ecookim, Alterfin and responsAbility offers one solution to the challenges of financing R&R among smallholders.
“Throughout its work on R&R finance, the Rainforest Alliance aims to engage investors and financial institutions on the needs and benefits to unlock long-term financing to tree crop producers. Long-term sustainability not only relies on the application of best management practices over the years, but also on the ability of farmers to make the necessary investments to maintain or improve their plantations,” says Roy about the important connection between sustainable agriculture and sustainable financing.