Cacao For Peace Final English

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AN ANALYSIS OF THE SUPPLY CHAIN OF CACAO IN COLOMBIA
Technical Report · October 2018

DOI: 10.13140/RG.2.2.19395.04645
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AN ANALYSIS OF THE SUPPLY CHAIN OF
CACAO IN COLOMBIA
This study is made possible by the support of the American People through the United States Agency for
International Development (USAID) and the United States Department of Agriculture (USDA). The
contents of this report are the sole responsibility of Purdue University and CIAT and do not necessarily
reflect the views of USAID, USDA or the United States Government.
AN ANALYSIS OF THE SUPPLY CHAIN OF
CACAO IN COLOMBIA
2
An analysis of the supply chain of cacao in Colombia
AUTHORS
Purdue University and the International Center for
Tropical Agriculture (CIAT)
Philip C. Abbott, Dept. of Agricultural Economics, Purdue University
Tamara J. Benjamin, Dept. of Horticulture and Landscape Architecture, Purdue University
Gary R. Burniske, Purdue Center for Global Food Security
Marcia M. Croft, Dept. of Horticulture and Landscape Architecture, Purdue University
Marieke C. Fenton, Dept. of Agricultural Economics, Purdue University
Colleen R. Kelly, Dept. of Youth, Development, and Agricultural Education, Purdue
University
Mark M. Lundy, Linking Farmers to Markets, Decision and Policy Analysis Research Area,
International Center for Tropical Agriculture, CIAT
Fernando Rodriguez Camayo, Linking Farmers to Markets, Decision and Policy Analysis
Research Area, International Center for Tropical Agriculture, CIAT
Michael D. Wilcox Jr, Purdue Extension and Purdue Center for Regional Development,
Purdue University
The authors would like to thank

…the willingness of multiple actors of the Colombian cacao sector to participate in
interviews, focus groups, workshops, telephone interviews and follow-up calls. In
addition to this, we received key insights from international cocoa traders, experts
in fine flavor cacao and chocolate and a range of development actors. To a large
extent, the current report reflects their wisdom, knowledge and concerns about
the future of the sector and its potential role in post conflict rural development in
Colombia. We gratefully acknowledge the financial and technical support received
from USDA and USAID that made this report possible. Finally, any errors and
omissions remain ours.
CONTENT
ABBREVIATIONS & ACRONYMS ....................................................................................................................................6
GLOSSARY ......................................................................................................................................................................9
EXECUTIVE SUMMARY ................................................................................................................................................12
INTRODUCTION ........................................................................................................................................................... 14
METHODOLOGY .......................................................................................................................................................... 33
HOW CACAO MARKETS WORK – COLOMBIA VERSUS ELSEWHERE ...........................................................................40
POST-HARVEST PRACTICES & PRICES .........................................................................................................................52
THE SUPPLY CHAIN OF CACAO IN COLOMBIA ............................................................................................................55
CACAO PRODUCTION - THE BASICS ............................................................................................................................ 77
Cacao Varieties and Planting Materials .................................................................................................................79
Post-Harvest Management.....................................................................................................................................79
Extension and Technical Assistance Services along the Supply Chain.....................................................................81

Targeting domestic versus export markets.............................................................................................................91
Financing ................................................................................................................................................................ 93
Youth and Labor Constraints ..................................................................................................................................94

4
Post-Conflict Environment ......................................................................................................................................95
RECOMMENDATIONS .................................................................................................................................................99
Recommendations to increase productivity, sustainability, and competitiveness of cacao production ............... 101
Improve Coordination and Consistency in Extension/Technical Assistance ................................................... 101
Increase innovation in Extension/Technical Assistance by leveraging the peace process and utilizing face-to-
face and digital resources ................................................................................................................................ 102
Take into Account Total Factor Productivity ................................................................................................... 106
Prepare Sector for Production Risks ................................................................................................................ 106
Provide Business Development Services ......................................................................................................... 107
Develop Livelihood Indicators and Set Up a Monitoring and Evaluation System to Evaluate the Effectiveness
of the Cacao Sector ......................................................................................................................................... 107
Recommendations to transform associations into competitive and sustainable rural businesses ....................... 107
Define Roles and Responsibilities of Associations ........................................................................................... 107

Develop and Promote Good Business Models for Associations ...................................................................... 108
Provide Extension and Technical Assistance to Associations .......................................................................... 109
Build Credit Worthiness................................................................................................................................... 109
Organize Business to Business Roundtables.................................................................................................... 109
Recommendations to strengthen the sector to respond to markets – consistent quality and volume ................. 110
Fortify Extension/Technical Assistance Services Linking Producers to Market ............................................... 110
Leverage the Safety Net (National Market) ..................................................................................................... 110
Search/Transaction Costs for Multiple Market Segments ............................................................................... 110
Build Analytical and Research Capacity ........................................................................................................... 111
Increase market demand for Colombian cacao ............................................................................................... 113
Brand Colombian Cacao/Certification ............................................................................................................. 115
Improve the institutional architecture of the cacao sector – clear rules and specialization ................................. 115
Strengthen the Role and Credibility of National and Sub-National Institutions in the Cacao Sector .............. 115
Define a Focused Role for Fedecacao .............................................................................................................. 117
Improve and Leverage the Fondo Nacional del Cacao – Fomento .................................................................. 117
Improve the Effectiveness of Finagro in the Cacao Sector and Other Financial Service Providers.................. 118
Improve Coordination among Public Sector Programs and International Donor Programs ........................... 118
CONCLUSIONS ........................................................................................................................................................... 120
BIBLIOGRAPHY .......................................................................................................................................................... 122
APPENDICES .............................................................................................................................................................. 125

Appendix A. List of Documents and Resources Utilized for the Development of the Colombian Cacao Supply Chain
..............................................................................................................................................................................125
Appendix B. List of Organizations and Individuals Interviewed for the Colombia Cacao Supply Chain Study ....... 145
Appendix C. Interview Tools Used to Gather Information for the Colombian Cacao Supply Chain Analysis Study
..............................................................................................................................................................................151
Appendix D. Agenda and Methodology of the Facilitated Discussion Workshop and List of Participants Attending
..............................................................................................................................................................................161
Appendix E. Facilitated Discussion Notes.............................................................................................................. 166
Appendix F. Action Steps and Priorities Defined by the Key Stakeholders at the Facilitated Participatory Discussion
............................................................................................................................................................................. 178
Appendix G. Ecuador Trip Report .......................................................................................................................... 183
Appendix H. Enterprise Budget Tables .................................................................................................................. 205

ABBREVIATIONS & ACRONYMS
ADAM Áreas de Desarrollo Alternativo Municipal
(Municipal Alternative Development Areas)
ANDI Asociación de Industriales de Colombia

(Association of Industries of Colombia)
ANI Agencia Nacional de Infraestructura

(National Infrastructure Agency)
BMC Bolsa Mercantil de Colombia

(Colombian Stock Exchange)
CIAT Centro Internacional de Agricultura Tropical

(The International Center for Tropical Agriculture)
COP Colombian peso
CORPOICA Corporación Colombiana de Investigación Agropecuaria

(The Colombian Corporation for Agricultural Research)
6
CPGA Centro Provincial de Gestión Agropecuaria

(Provincial Center of Agricultural Management)
DANE Departamento Administrativo Nacional de Estadística

(National Administrative Department of Statistics)
DNP Departamento Nacional de Planeación

(National Planning Department)
ELN Ejército de Liberación Nacional

(National Liberation Army)
EPSAGRO Empresa Prestadora de Servicios de Asistencia Técnica

(Companies Providing Technical Assistance Services)
FAOSTAT United Nations Food and Agriculture Statistics
FARC Fuerzas Armadas Revolucionarias de Colombia

(Revolutionary Armed Forces of Colombia)
FEDECACO Federación Nacional de Cacaoteros

(National Federation of Cacao Growers)
FINAGRO Fondo para el Financiamiento del Sector Agropecuario

(The Fund for Financing the Agricultural Sector)
FOB Freight on Board or Free on Board
GOC Government of Colombia
ICCO International Cocoa Organization
ICE Intercontinental Exchange
ICR Incentivo a la Capitalización Rural

(Rural Capitalization Incentive)
INCODER Instituto Colombiano de Desarrollo Rural

(Colombian Institute for Rural Development)
KG Kilogram
MADR Ministerio de Agricultura y Desarrollo Rural

(Ministry of Agriculture and Rural Development)
MIDAS Más Inversión para el Desarrollo Alternativo Sostenible
(More Investment for Alternative Sustainable Development)
MT Tonelada Métrica
PAAP Proyecto Apoyo a Alianzas Productivas (Productive Alliances

Support Project)
SENA Servicio Nacional de Aprendizaje

(National Training Service)
UAF Unidad Agrícola Familiar

(Productive Family Unit)
UMATA Unidad Municipal de Asistencia Técnica

(Municipal Units of Technical Assistance)
UNODC United Nations Office on Drugs and Crime
UPA Unidad de producción Agropecuaria

(Unit of Agricultural Production)
8
UPRA Unidad de Planificación Rural Agropecuaria

(Planning Unit for Rural Agriculture)
USAID United States Agency for International Development
USDA United States Department of Agriculture

GLOSSARY
Bulk cacao The majority of the cacao produced and sold on the world
market that does not meet a certified criteria. One of the
two broad categories of cacao beans the world cacao
market uses.
CCN-51 Colección Castro Naranjal (attempt number 51) is a
disease resistant, high-yielding, and often controversial
cacao variety developed by Ecuadorian Homero Castro in
the 1960s. It has gained a reputation of producing inferior
tasting cacao and is seen as a threat to genetic diversity and
fine-flavor designations. Many farmers, however, find it
easier and more profitable to grow than other varieties.
Cacao criollo Native to Central and South America and the Caribbean
islands, only 5% of the world’s cacao production is criollo.
Criollo varieties are extremely vulnerable to a variety of
environmental threats and have low yields than other
varieties. Their taste is described as delicate yet complex,
low in classic chocolate flavor, but rich in secondary notes.
Cacao fermentation a. “bien fermentado”: A well-fermented bean. A cacao bean
that has been properly fermented is brown in color and
breaks apart without too much pressure. The interior of
the bean looks similar to a brain pattern. The bean is not
violet in color nor is the structure compacted.
b. “pasilla” bean: an insufficiently fermented bean. A cacao
bean with incomplete fermentation will have an interior
cotyledon which is violet or red-violet, with a semi-
compact structure. The husk is difficult to separate.
c. “pizarroso” bean: cacao bean without fermentation. The
interior of the bean is blackish grey and the structure is
completely compacted.
Cacao forastero Forastero is principally cultivated in Africa, Ecuador, and
Brazil and represents 80% of the world’s production of
cacao. It is much more resistant and less susceptible to the
diseases as criollo varieties. This type of cacao is used
principally to impart a deep “chocolate” flavor, however it
often has a bitter taste and that lacks secondary flavors. It
is often mixed with superior cacao.
Cacao trinitario This hybrid resulted from a cross between forastero and
criollo varieties and is characterized with high variability in
shape, form, size, and behavior and predominates in
Colombia. This subspecies is the hybrid that is being used
in the selections of the materials that are being cloned and
recommended by Fedecacao.
Casa elba A drying and storage unit found above the home dwellings
or other structure found on the property.
En baba Refers to cacao beans that are sold wet and have not been
fermented or dried.
Fine and flavor cocoa One of the two broad categories of cacao beans the world
cocoa market uses. A combination of criteria is used to
assess the quality, however flavor qualities (i.e. fruit, floral,
herbal, caramel, nut, and wood notes) rather than in the
10
other quality factors primarily distinguish it from bulk

cacao. Typically, criollo and trinitario cocoa tree varieties
produce these beans while forastero types produce beans
typically sold as bulk. However, there are known
exceptions to these generalizations.
Freight on Board Price quoted for the cacao beans sold at the ports prior to
(FOB) being shipped to an international destination.
Moniliophthora “Frosty pod rot” is a fungal disease that can cause up to
roreri – Monilia 90% loss in a cacao plantation if not controlled through
chemical or physical means.
Pasilla Refers to cacao beans which are flattened, thin and are
difficult to separate when cut length wise and usually
caused from poor fermentation.
Premio Price premium given for improved quality of bean or
increased quantity.
Theobroma cacao Scientific name for cacao or cocoa which in Greek
translates as “Food of the gods.” It has been established
that there is a strong relationship between the content of
methylxanthines, theobromine and caffeine and the genetic
material.
Witch’s broom Escoba de bruja, a disease found on the branches of cacao
trees caused by Moniliophythora perniciosa.
EXECUTIVE SUMMARY
The main goal of the USAID/USDA project, Cacao for Peace (CfP), is “to strengthen
Colombia’s key agricultural institutions for cacao, in the public and private sector, with
cooperative research, technical assistance, extension, and education. The CfP vision is to
improve rural well-being through agricultural development that is inclusive and
sustainable with positive impact on cacao farmers’ incomes, economic opportunities,
stability and peace.” Under this directive, USDA commissioned this report to examine
the cacao supply chain in detail in select regions of the country, discuss opportunities
and strengths with producers and key stakeholders, and offer strategic approaches to
position Colombia’s cacao sector in domestic and international markets.
For the purposes of this study, a mixed methods approach was taken. It is focused on
four research threads which examine (1) the physical cacao flows – from farm to
processor to end user; (2) the prices received for cacao along the chain, including the
costs related to procurement and processing; (3) the actors along the chain – including
their roles, behaviors and recommendations for increasing efficiency in the Colombian
cacao sector; and (4) the contextual issues and considerations that affect market
outcomes in the Colombian cacao sector, including production and processing, and
confection in general.
12
Colombia differs from larger exporting nations (Cote d’Ivoire, Ghana, and Ecuador) in a
number of ways. First, global multi-nationals play a more limited role, with two Latin
America-focused and Colombia-based, multi-national companies – Casa Luker and
Nutresa – purchasing over 80% of Colombian cacao bean production. The smaller
importance of international markets, extent of development and infrastructure in
Colombia, and the presence of these two large buyers means the marketing structure
within Colombia is different from that found in the major cacao exporting countries.
Second, most traders in Colombia maintain at least informal relations with either one of
the two large chocolate companies or with a small chocolate manufacturer. The
majority of cacao produced in Colombia ends up going to one of these buyers.
Significantly smaller volumes of cacao flow from the central traders to small chocolate
manufactures, as well as to the international market. Third, producer prices in Colombia
(prices paid at the Casa Luker and Nutresa buying centers) closely follow the ICCO
world price and are above prices paid to producers in the majority of cacao producing
countries of the world. Finally, significant internal demand for cacao and chocolate
products, such as drinking chocolate, exists in Colombia and constitutes an important
market outlet for many cacao producers.
The Colombian cacao sector presents opportunities specifically in the context of post-
conflict development. Recent efforts to promote the sector have focused on expanding
cacao production,post-harvest management to a lessor extent, the establishment of
producer organizations, and the exploration of niche markets. Despite these
interventions, the sector still underperforms its potential. Rather than focus primarily on
cacao production, we propose a strategy that clarifies roles and responsibilities in the
sector to avoid inefficiencies and overlap and thereby enhances coordination and
collaboration amongst national and regional actors, investments in strengthening
producer organizations to become viable rural businesses and providers of clear market
signals and incentives for improved best management practices. After considering all of
the stakeholder input and available data, we believe these interventions will improve the
competitiveness and productivity of cacao production, and can help the cacao sector live
up to its potential.
This report begins with a general introduction of cacao in Colombia and the region,
followed by an in-depth explanation of our methodology. The next sections cover
specifics on how cacao markets work, information on post-harvest practices and pricing,
a detailed breakdown of the supply chain in Colombia including the major players, and a
description of current cacao production practices in Colombia. The recommendation
section is divided by topic and pulls from evidence discussed earlier in the report, while
the conclusion outlines a few of our most important findings.
INTRODUCTION
Cacao has been produced in Colombia for millennia, tracing its biological origins to the
upper Orinoco region of northeastern Colombia (Motamayor et al., 2002), and has
served as a culturally important part of the national diet ever since. Currently, global
cacao production is heavily concentrated in Africa (primarily Cote d’Ivoire, Ghana,
Cameroon and Nigeria, comprising 63.2%), Asia (primarily Indonesia and Papua New
Guinea, comprising 17.4%) and Latin America (primarily Ecuador, Brazil, Peru,
Dominican Republic and Colombia, comprising 14.1%). However, unlike many other
countries presently producing cacao, modern day Colombian cacao production is
primarily focused on meeting domestic demand rooted deeply in the historical
traditions of drinking chocolate.
Efforts made by Colombia over the past decade have led to expansion of cacao
production (Figure 1). The most recent annual cacao production figures show that
Colombian cacao production has surpassed the historic levels of the 1990’s (Figure 2).
Colombian production has oscillated over the past 50 years, likely based on a variety of
market and non-market factors (prevailing prices, the internal conflict, perceived
demand of the domestic market, etc.). Yield, in terms of MT produced per hectare, has
stayed flat for the past 60 years, but annual production (total MT produced in the
country) has increased through area expansion. These trends can be seen in Figure 3 in
terms of annual production, yield, and area harvested relative to the base year of 1961.
14
The increase in harvested acres between 2012 and 2014 may be the result of
development projects promoting cacao plantings between 2006 – 2011 (e.g. ADAM -
Areas for Municipal-Level Alternative Development Program/Áreas de Desarrollo
Alternativo Municipal and MIDAS - Additional Investment for Sustainable Alternative
Development Program/Más Inversión para el Desarrollo Alternativo). As a result, since
2000, Colombia’s total cacao production has grown from 36,731 MT to 60,535 MT in
20171 (surpassing the historic highs of the early 1990’s) in spite of lagging overall yields
(FAOSTAT, 2016; Fedecacao, 2015).
1
See http://www.fedecacao.com.co/portal/index.php/es/2015-04-23-20-00-33/551-en-2017-colombia-alcanzo-
nuevo-record-en-produccion-de-cacao
Figure 1. CACAO PRODUCTION BY MUNICIPALITY, 2013

(in Metric Tons, MT)
Figure 2. COLOMBIAN CACAO PRODUCTION, (1961- 2017)
(in Metric Tons, MT)
16
Source: FAOSTAT, 2017; Fedecacao, 2017.

Figure 3. INDICES OF COLOMBIAN CACAO PRODUCTION, AREA

HARVESTED, YIELD AND ANNUAL AVERAGE ICCO PRICE (BASE YEAR= 1961)
Source: FAOSTAT, 2017.
Cacao beans are used across the globe in foods (chocolate and products containing
chocolate and/or cacao butter, powder or paste) and cosmetics. While consumption
varies from country to country, by and large, cacao consuming countries mostly reside
outside of the tropics. Conversely, all cacao producing countries can be found within
the tropics due to the biological requirements of the tree. Generally speaking, there are
three varieties of cacao, forastero (the most common source of ‘bulk’ cacao on the
global market)2, criollo and trinitario (varieties from which the ICCO’s ‘fine and flavor’
designation is derived). Forastero is most commonly found in Africa, while criollo and
2
According to the ICCO (2017), Nacional or arriba variety of trees in Ecuador are of forastero origin, but considered ‘fine
and flavor’ given their organoleptic attributes.
trinitario are common in Latin America and Caribbean as well as a few countries in the
Atlantic, Indian and Pacific Oceans3. All varieties are used in chocolate manufacturing,
with ‘bulk’ cacao used broadly and some ‘fine and flavor’ specifically used in niche
chocolate and ‘bean to bar’ operations (Dand, 2010; ICCO, 2017). The International
Cocoa Organization (ICCO) currently (as of May 2016) recognizes twenty-three ‘fine
and flavor’ origins and offers a rule-of-thumb estimate of the percentage of exports from
those origins composed of ‘fine and flavor’ cacao (Table 1). The notion of ‘fine and
flavor’ cacao is essentially defined by the ICCO as cacao from Latin American varieties.
This being said, there is an extremely important issue that cannot be overemphasized,
the current world market, which includes global export and local domestic markets,
does not differentiate between ‘fine and flavor’ and ‘bulk’ cacao. Origin can matter, as is
evidenced by origin differentials, but these accrue for a variety of reasons, including
volume and overall quality. Furthermore, the distinction of ‘fine and flavor’ is an attempt
to differentiate the market, but the majority of the ‘fine and flavor cacao’ is either
exported as bulk or used domestically, because supply outstrips demand for ‘fine and
flavor cacao’.
Quantities of ‘fine and flavor’ cacao, presented in “pyramid” representations of cacao
market segments by consulting firms and aid agencies promoting this market
segmentation (see Figure 9, p. 44), are overestimated. These pyramids also associate
large premiums (USUS$500-1000 per MT above the ICCO price) that are not
supported by any cacao transactions data on global markets4.
In terms of quantity, most attempts to measure the share of ‘fine and flavor,’ use the
shares prescribed by the ICCO5. However, these estimates are not accurate. Evidence
for the inaccuracy can be found in export data from MAGAP in Ecuador, where the
18
ICCO designated a 75% ‘fine and flavor’ market share and most published estimates
consider Ecuador the largest exporter of ‘fine and flavor’ cacao. However, the share of
‘fine and flavor’ is not supported by 2015 data which shows that CCN51 and A.S.E.
3
Due to phytosanitary restrictions, the current dispersion of cacao varieties is fixed. Latin American cacao is
not able to be transported to Africa and vice versa.
4
The premiums in the pyramid are ultimately paid by the end user (chocolate manufacturer), in comparison
to the prevailing world price. In practice, origin premiums are paid at different stages of the supply chain
including the producer group, at the port, and in the receiving country by the chocolate manufacturers. To
determine actual premiums received, trade data on unit values are used.
5
See https://www.icco.org/about-cocoa/fine-or-flavour-cocoa.html
Table 1
GLOBAL CACAO BEAN PRODUCTION BY COUNTRY, 2014
Source: FAOSTAT, 2017; Authors’ calculations based on

percentages indicated by the ICCO; Comtrade, 2017.
(Arriba superior época) graded cacao, neither of which is considered fine and flavor6,
constituted 72.6% of all Ecuadorian cacao exports between 2012 and September, 2015
(MAGAP, 2015). This finding is confirmed by Rios (2017) who also showed that not
only did the market share not reflect that estimated by the ICCO (73.7% bulk between
2012-2016), but the weighted average of unit values for fine and flavor cacao was US$10
above the average ICCO price (US$2791 vs. US$2781/MT) during the same time
period. Similarly, Rios (2017) reports a bulk market share in Peru of 56.2% (versus the
ICCO estimate of 25% bulk) and Colombian export data suggests 77.5% of exports
were bulk cacao between 2012-2016, nowhere near the 95% ‘fine and flavor’ quantity
estimated for Colombia by the ICCO. These findings suggest that the market share and
associated premiums/prices for fine and flavor cacao exports is drastically overstated in
the pyramids mentioned above. See Cacao Production in Ecuador Box in p. 31 and
Appendix G for more information.
In the analysis that follows, we use the ‘fine and flavor’ convention essentially as a
thought experiment, since no publicly available data exists on actual ‘fine and flavor’
market transactions as an independent category. Instead, cacao trade data for all
countries is reported annually7 and differences between unit values (prices) are simply
averages over time potentially reflecting seasonal variation or overall quality. A recent
study by Rios (2017) proposes a new definition for this market segment by combining
data for unique cacao origins, organoleptically differentiated cacao and certified cacao
into a ‘special cacao’ category but this has yet to be accepted by key market actors (i.e.
producers, processors, chocolate manufacturers). It should be noted that there is some
ambiguity related to the definition of ‘fine and flavor’. The ICCO uses a combination of
criteria, both qualitative and quantitative, to determine the ‘fine and flavor’ designation,
20
6
According to Quingaisa and Riveros (2007), A.S.E. cacao is a member of the arriba family of ‘fine and flavor’
cacao grading system used in Ecuador. However, A.S.E. is the lowest grade and does not receive a premium
given its base-level quality and the authors suggest that Ecuador work towards selling all arriba cacao at the
higher grades to capture the potential premiums. Furthermore, CCN51 is segregated in the Ecuadorian
grading scheme, irrespective of the fundamental quality parameters used to grade Arriba.
7
In theory, all cacao producing countries report on an annual basis to FAO and Comtrade. As the repository
of official international trade statistics, UN Comtrade collects and reports all of this cacao trade data. “The
UN International Trade Statistics Database (UN Comtrade) contains detailed goods imports and exports
statistics reported by statistical authorities of close to 200 countries or areas. It concerns annual trade data
from 1962 to the most recent year. UN Comtrade is considered the most comprehensive trade database
available with more than 3 billion records.” https://comtrade.un.org/labs/dit-trade-vis/pages/about.html
but admits that measurement of some of the criteria for ‘fine and flavor’ is ‘subjective’
(ICCO, 2017).
Dand (2010) summarized the situation this way,
But as dark or plain chocolate makes up only a small proportion of total

chocolate sales the relevance of the mainly trinitario beans (pure criollo has all
but disappeared) has diminished. This is in line with its production; one estimate
puts the amount of fine and flavor cocoa at below 5% of the world crop. In fact,
it may be much lower as many traditional growers of trinitario cocoa also
produce the forastero type, and the export figures, on which the estimate was
made, do not distinguish between the two. The role of trinitario for special high-
quality chocolate is also under threat; one expert taster working for a large
chocolate manufacturer admitted privately that very good dark chocolate, equal
to the flavor of that made with fine and flavor cocoa, could be made from
forastero beans.
Dand’s position, held for over a decade now (1999), is supported by the current data,
which summarizes the market share for premium and super-premium chocolate markets
as being “extremely small relative to the other segments” (Market Research, 2017).
However, this is not an academic question; this is an industry issue best answered using
available data and interviews with key industry stakeholders.As previously stated, while
the ICCO estimates that 95% of cacao from Colombia is exported as ‘fine and
flavor’,global production, export, and import statistics do not differentiate between bulk
and ‘fine and flavor’ cacao (Puro, 2016). For the purposes of this study, we use a
combination of FAOSTAT production data (available through 2014) the current ICCO
‘fine and flavor’ export percentages and the list of top fine and flavor consuming
countries to gauge the relative sizes of hypothetical bulk and ‘fine and flavor’ supplies
and consumption and multiple interviews with actors within the global cacao supply
chain (Figure 4).
Figure 4. GLOBAL CACAO PRODUCTION
22
In contrast to the international ‘fine and flavor’ market, data show evidence of a strong
internal market for bulk cacao in Colombia. Colombian households consume large
amounts of mass market chocolate bars as well as chocolate de mesa or drinking
chocolate as part of their basic diet. This product, which takes several forms, tends to
contain relatively high concentrations of cacao solids as well as palm oil, sugar, and
occasionally flavors such as cloves, cinnamon or vanilla. In addition to large companies
such as Casa Luker and Nutresa (the holding company which owns Nacional de
Chocolates), a number of smaller more regional chocolate firms exist. These smaller
firms tend to focus nearly exclusively on chocolate de mesa and have much less space to
maneuver when cacao prices rise.
As a staple in the basic household food basket in Colombia, consumers of table

chocolate remain extremely price sensitive, which can limit brand loyalty. In times of
high cacao prices – such as those seen through mid-2016 – raw material cost growth
outstripped the capacity of firms to pass along this cost, which contributed to shrinking
margins in the drinking chocolate segment. Chocolate firms reacted in two distinct
ways. Large and well capitalized firms such as Casa Luker and Nutresa invested in
technology to increase processing efficiency and in product development for large range
of value added products including powdered instant drink mixes based on cacao as well
as expanded snack and bar offerings for the internal market. The resulting efficiency
gains and additional income from value added products allowed them to manage higher
raw material costs with minimum disruption. Smaller regional chocolate firms, on the
other hand, were at a disadvantage. These firms often pay more than large firms to
access sufficient cacao and tend to manage a much smaller portfolio of traditional
products (mass produced chocolate bars and drinking chocolate) focused on price-
sensitive consumers. In interviews in Santander, the difficulties faced by these firms in
terms of cash flow and access to raw material were clear. With the recent fall in global
cacao prices, smaller firms should be in better financial shape but still face challenges to
compete with large companies in terms of raw material prices, limited capacity to
diversify into higher value products and difficult access to the formal financial system for
capital investments/technological advancements to improve efficiency.
In light of stagnating international conditions for cacao8, the Colombian domestic market
constitutes an important safety valve in terms of demand. From a producer perspective,
however, while this demand ensures a ready market, the income received is still subject
to global market conditions given the relationship between domestic prices and cacao
prices on the commodity exchanges in New York and London (an average of the two
results in the standard international price, the ICCO price). Lower domestic cacao
prices clearly benefit the Colombian processing industry, both small and large firms, who
are able to access lower cost raw materials for drinking chocolate and other cacao
based products for both the domestic and export markets.
All of the above relies on bulk cacao. In terms of the current opportunities for ‘fine and
flavor’ cacao in Colombia, both Casa Luker and Nutresa have created product lines that
are dependent upon cacao appropriate for higher end niche markets that are usually
origin specific (for example, Tumaco, Huila, Santander). In addition, Colombian firms
have begun to deliver chocolate products to market that do not fall into the traditionally
mass-market categories. Cacao Hunters is one example who is sourcing at origin and
supplying bean to bar artisanal chocolate to urban consumers in Colombia. As can be
seen in Figure 4, this market is incredibly small and will have little impact on the majority
of cacao farmers in the country.
Quantitatively speaking, we can explore the qualitative trends described above and how
they have impacted, in aggregate, cacao supply and demand in Colombia. According to
data from Baquero Lopez for 2015, total domestic consumption of cacao is slightly more
than 47,000 MT. Exports accounted for slightly more than 24,000 MT in 2015, leading
Colombia to import nearly 17,000 MT to meet domestic demand in that year (Baquero
24
Lopez, 2016). This situation represents an improvement over previous years where
Colombia imported cacao from neighboring countries despite registering little or no
exports (Figure 5). The achievement of near parity between Colombian supply and
demand comes from significant donor and government investment in the expansion of
cacao area as an alternative crop to coca production and not from any improvement in
8
Cacao supply and demand is ever evolving. At the time of writing cacao supply was estimated to outstrip
demand and world prices were on a downward trend. See Economist Intelligence Unit, July 2017 EIU’s
monthly cocoa outlook, and https://www.reuters.com/article/us-cocoa-surplus/supply-glut-risk-as-cocoa-
expansion-plans-backfire-idUSKBN16S266
historically low levels of productivity on most cacao farms. Between 2000-2015, the
total area cacao was harvested in Colombia grew from 83,138 ha to 165,006 ha, nearly
doubling (98.5% change). During the same period, production increased from 36,731 MT
to 54,796 MT, a 49.2% increase. With harvested acreage far outpacing production,
calculated yields have decreased by 24.9% from 441.8 kg/ha to 332kg/ha. While there
are a variety of agronomic factors at play each year, the basic lesson learned is that the
intended effect of efforts to expand acres will be muted if productive capacity is not
addressed concurrently.
Figure 5. COLOMBIAN CACAO PRODUCTS (NET OF EXPORTS),

EXPORTS AND IMPORTS IN METRIC TONS (MT), 1961 – 2015
Source: FAOSTAT, 2017; Comtrade, 2017. Note: the production net exports plus exports
equals total Colombian production (supply). In contrast, production net exports plus
imports equals total Colombian consumption (demand).
Starting in 2012, Colombia became a net exporter (Table 2). In most situations, this is a
result of excess supply or the only market available being in chocolate producing
countries. In the case of Colombia, given strong domestic demand, export markets are
being sought for a percentage (10.4-25.1%) of total production as an alternative to the
domestic market. However, an economic development consideration is the value of the
total amount exported less than the value of the quantity of imports required by
domestic firms to replace exported cacao. For example, from 2007-2015, Colombia
generated nearly US$129 million in export revenue from cacao, but spent nearly
US$147 million importing cacao. More recently, from 2012-2015, Colombia has
generated nearly US$95 million in export revenue and spent US$46 million on imports,
primarily from (in order of importance) Ecuador, Venezuela, Peru and the Dominican
Republic. It is unlikely that this situation will change in the near term given the
importance of drinking chocolate in the Colombian diet. This means that
Colombia, unlike most other cacao origins, can effectively target both the
domestic and international market with increased production volumes while
prices will continue to track international market values.
Table 2
EXPORTS OF COLOMBIAN CACAO & IMPORTS 2012 - 2015 (in Metric Tons, MT)
26
Source: Comtrade, 2017.

A deeper examination into the destinations of Colombian exports reveals that,

Colombia has exported cacao beans to thirty different countries since 2007 (Comtrade,
2017). From 2007-2011, Colombia exported 10,996 MT to sixteen destinations,
generating US$34 million in export revenue. Primary partners during this time, in
descending order of importance were Spain (25.7%), Germany (16.7%), Netherlands
(14.7%), United States (14.7%) and Canada (9.3%), accounting for 80.8% percent of all
exports. In contrast, between 2012 and 2015, Colombia exported 33,776 MT of cacao
to 25 destinations, generating nearly US$95 million in export revenue. The top six
destinations accounted for 80.7% of total exports and included Spain (24.7%), Mexico
(23.9%), Malaysia (10.6%), Estonia (9%), Netherlands (7%) and the United States (5.5%).
From a regional demand perspective, destinations can be grouped to examine market
share and unit values (Table 3). From 2012 to 2015, more than half of Colombian cacao
exports went to Europe (51.2%), accounting for 52.7% of export revenue, generated by
Colombian cacao. North America (30.2%) was the second most important destination
and Asia (16.6%) was third. Central and South America were a distant fourth.
Interestingly, the unit values for these transactions suggest that, on average, Colombian
cacao has a higher value in Europe and Latin America, than in Asia and North America.
A closer look at Asia, often highlighted as a premium cacao market, reveals that Malaysia
is purchasing cacao at a lower unit value than Japan, but at much higher volumes.
Table 3
EXPORTS OF COLOMBIAN CACAO & IMPORTS 2012 - 2015 (in Metric Tons, MT)
Source: FAOSTAT, 2017; Authors’ calculations based on percentages indicated by the ICCO;
Comtrade, 2017.
Additional analysis of unit values, from 2012-2015, highlights one of the challenges facing
Colombian cacao exports (Table 4). Based on a comparison with the ICCO price,
Colombian cacao was sold, on average, at a unit value that ranged from -0.8% in 2014 to
-3.1% below the ICCO price in 2015. Colombian cacao did sell, on average, above the
ICCO price in 2012 (2.4%). With a local market that is competing to keep Colombian
cacao in the country for domestic use, buying center prices are approximately 90% of
the ICCO price, and considering the transactions and search costs associated with
identifying, developing and supplying export markets, entrants are having to make
commercial decisions based on their expected return on investment and their ability to
foster key business relationships (not to mention the quality and volumes necessary to
attract interest). These lower unit values, calculated using trade data reported by the
Colombian government were corroborated by interviews with exporters and calls into
question the prevalence of premiums accruing to Colombian cacao exports that was
claimed by some stakeholders that we interviewed.
Table 4
UNIT VALUES FOR COLOMBIAN CACAO EXPORTS IN COMPARISON WITH
ANNUAL AVERAGE ICCO PRICES 2012 - 2015 (in US$/MT)
28
*Represents the total exports of Colombia to the world, without differentiating the country
of destination.
As stated earlier, currently, the ICCO estimates that 95% of Colombia’s cacao exports
are ‘fine and flavor’. However, globally, statistics on production, exports and imports do
not differentiate between bulk and ‘fine and flavor’ cacao. This practice generally
conforms to how the export market operates. Even in countries designated as ‘fine and
flavor’ by the ICCO, cacao is typically blended to meet international standards based on
bean size, fermentation, defects, etc. To look into the destinations a bit further, it is of
interest to examine the top ‘fine and flavor’ destinations as determined by the ICCO
(Table 5). Between 2012 and 2015, 23.7% of all Colombian cacao exports went to
countries that are major ‘fine and flavor’ consumers. However, this percentage has
dropped from a high of 25.2% in 2012 to 14.8% in 2015. In terms of prices (unit values),
exports focused on ‘fine and flavor’ destinations had a high and similar ‘premium’ (over
US$400) in 2012 in terms of the unit value of exports compared to all cacao exported
from Colombia and the ICCO price. This ‘premium’ has not been stable even during
years where the global price has been similar (2012 and 2013 or 2014 and 2015). If
there is a premium for ‘fine and flavor’ demand from Colombia, it is much less than the
estimates of others and is only applicable to a relatively small proportion of Colombian
cacao exports.
Table 5
COLOMBIAN CACAO EXPORTS COMPARING TOTAL EXPORTS TO ‘FINE
AND FLAVOR’ (FAF) DESTINATIONS, 2012 – 2015 (in Metric Tons, MT)
Source: Comtrade, 2017.
* World represents Colombia’s overall cacao exports with the world, without differentiating
by country. Note: ‘Fine and Flavor’ destinations,
A Note on Cacao and Peace
While Colombia’s attachment to cacao is longstanding, one cannot examine the current
status of the industry without recognizing the impact that the past fifty years of civil
strife has wrought on the country and the industry. The Colombian armed conflict has
affected virtually all of the potential cacao producing regions of the country. However,
some departments were the location of more armed conflict related events than others.
By comparing the median and average total number of armed conflict related events by
department, we developed a list of conflict and non-conflict zones.9 Departments
included as conflict zones (ordered from most events to fewest) were: Antioquia,
Bolivar, Magdalena, Nariño, Cauca, Chocó, Cesar, Valle de Cauca, Caquetá, Córdoba,
Tolima, Norte de Santander, Sucre, Putumayo, and Meta. On the other hand, the
departments identified as non-conflict (ordered from most events to fewest) were:
Huila, La Guajira, Caldas, Arauca, Cundinamarca, Guaviare, Casanare, Risaralda, Boyacá,
Atlántico, Bogotá D.C., Vichada, Quindío Vaupés, Guainía, Amazonas, and San Andrés,
Providencia y Santa Catalina. Santander was not included in the classification due to its
ambiguous conflict situation in this analysis, being above median and below average, and
its overall importance as a cacao producer.
Non-conflict zones accounted for 22.7% of all area planted to cacao and 24.9% of all
production in Colombia in 2015 (Table 6). In contrast, conflict areas accounted for
46.1% and 34.2% of area planted and production, respectively. On its own, Santander
accounted for 31.2% of total area planted and 40.9% of total production. Yields were
highest in Santander (435 kg/ha) and lowest in the conflict areas (246 kg/ha). This
outcome is likely influenced by the resources, or lack thereof, in each of the zones. It is
30
also indicative of the regional differentiation that was observed in Colombia resulting in
the need for regionally-oriented approaches that explicitly recognize the variation across
all of the community capitals.
Consequently, smallholder farmers in conflict zones have received sporadic assistance
and marketing channels have been challenged by limited access. With the advent of
peace, opportunities for transforming Colombia cacao sector abound. However, many
9
An event is defined as an occurrence of a victimizing fact to a person, in a municipality and a certain date
from 1985 until 2017. Unidad Administrativa Especial para la Atención y Reparación Integral a las Víctimas.
Red Nacional de Información. Cutoff date: February 1, 2017.
http://cifras.unidadvictimas.gov.co/Home/Departamento?vvg=1
challenges remain and considerable investment is needed in order to elevate the

importance of the cacao sector to Colombia’s vitality through its contribution to rural
Colombian incomes and gross domestic product. Case in point, in 2013, the gross
production value of Colombian cacao beans was approximately US$103.5 million while
the gross production value of the Colombian agriculture sector was US$22.1 billion or
5.8% of gross domestic product (FAOSTAT, 2016). Cacao may have a place in rural
development with peace, but it is currently a very small part of the Colombian economy
and its agricultural sector.
Table 6
COMPARING CACAO AREA PLANTED, PRODUCTION, AND YIELD BY
CONFLICT/NON-CONFLICT AREAS AND SANTANDER.
Source: Fedecacao, 2016 and Author’s Calculations

Cacao Production in Ecuador
After nearly twenty years of historic growth (GDP rose from $18.3B to $100.1B in real terms between 2000
and 2015 according to the World Bank), agriculture continues to be important to Ecuador, and is considered
its largest employer (US Embassy). Similar to Colombia, Ecuador is home to indigenous cacao varieties
(Nacional or arriba), which have been cultivated in a number of specific regions of the country (Esmeraldas,
Amazonas, Manabí, and others). Ecuador has been exporting cacao for more than a century and it continues
to be a key agricultural sector accounting for ~8% of GDP or US$814 million (Ministry of Agriculture),
nearly eight times larger than Colombia. Nearly all the production is exported due to little chocolate
consumption by Ecuadorians. This results in relatively low domestic demand (3% goes to local consumption,
the rest to exports).
Now, Ecuador has become a global leader in exporting cacao (5th largest in the world, behind Ivory Coast,
Ghana, Indonesia and Cameroon). Ecuador’s long history of producing cacao, and its current position as the
largest cacao exporting nation in Latin America, provides an excellent backdrop for examining the current
opportunities and challenges facing the cacao sectors in Latin America and the best practices that have led to
Ecuador’s ascendance in the global marketplace.
Since 2000, Ecuador has seen huge increases in cacao exports, as total production went from 51,000 MT in
2000 to 265,000 MT in 2016, a 5-fold increase in a little over 15 years. There are a number of reasons for
this increase, including governmental and non-governmental investments in programs focused on the cacao
sector (for example, the Government of Ecuador, USAID, CRS and many others committed significant
resources during this time) and private sector contributions that included upstream supply chain innovations,
such as collective fermentation and drying facilities, and the evolution of large scale plantations. In addition,
Ecuador experienced an increase in plantings of CCN51, a prolific variety (yielding up to 2500 kilos per
32
hectare) that has been tested for more than 50 years, is considered somewhat disease resistant, can be
produced with little to no shade, though it has been derided for its flavor-related challenges (a result of improper
fermentation) and its monoculture cropping system. Several interviewees in Ecuador estimated that Nacional
varieties yield between 250 – 400 kg/ha on average versus estimates for CCN51 that ranged from 800 – 1500
kg/ha or more. FAOSTAT data reveal that Ecuador’s estimated national average yield rose from 248 kg/ha in 2000
to 419 kg/ha in 2014 based on reported harvested acres and production. Due to the introduction of high yielding
varieties, many new hectares of area were converted to cacao as the production extended into multiple areas of
the country, some of which had previously been in banana or cattle production (based on personal
interviews with Ecuadorian officials, Blare and Usechi, 2013 and Wunder, 2001). According to FAOSTAT,
over 100,000 ha of land where cacao was harvested was added between 1999 and 2013, rising from 301,160
to 402,434 hectares harvested. (Continue)
(cont.) Cacao Production in Ecuador
Currently, the Ecuadorian sector can be best described as being in transition. In one respect, it is heavily
vested in the past, relying on the flavor profiles and historic bond to traditional low-yielding Nacional cacao
varieties that are being used to develop new niche products that are differentiated by origin at the regional
level.
On the other hand, farmers are realizing higher yields and benefiting from the resulting production gains
through the adoption of CCN51 and introduction of international exporters interested in the marketing of
bulk cacao on the global market. Based on our observations, a tension pervades in the Ecuadorian cacao
sector and the line is definitively drawn between Nacional and CCN51.
Because of the yield differentials but no price differentials, there seems to be an ongoing debate that has
pitted supporters of the Nacional varieties against supporters of CCN51. Both can be important tools for
development strategies in the country. What needs to occur is some real technical assistance for producers
to either ferment CCN51 well or bring the beans to fermentation or drying stations where trained people
can take on the task of quality assurance. Poor fermentation can cause a vinegar tasting chocolate due to
high levels of water in the mucilage. Leaving the system, the way it is, or continuing the debate, will not help
the country to move beyond the problems since CCN51 is not going away.
The productivity of the variety and the fact that it has been in production for decades and all over the
country, makes it the choice for many producers. The new higher yielding Nacional hybrids (some even
crossed with CCN51) need to be tested over a longer period of time and in different ecological zones and
nursery programs need to be scaled up to be able to meet the demands and needs of the producers.
In this vein, there is some interest by researchers, governmental organizations, chocolate manufacturers,
and other key stakeholders, with regionalization and diversification in mind, to maintain Nacional genetic
pools throughout the country for disease resistance, pest issues, or flavor profiles. Maintaining Nacional
genetic pools makes sense, but doing so should be the responsibility of the government or chocolate
corporations since the farmers are not compensated for the reduced yields. In other words, the current
yields of Nacional are so low that any existing premiums do not come close to making up the difference in
revenue relative to farmers who are farming in higher yielding systems (i.e. CCN51). (Continue)
(cont.) Cacao Production in Ecuador
As discussed in the introduction, most Ecuadorian cacao (more than 70%) is sold as bulk for mass-market
chocolate. Some buyers will pay market price or a premium (US$100 – 300 MT) for certification, quality or a
special story, but we found that the overall Ecuadorian origin premium was about US$10 MT.
Our research in Ecuador solidified our conclusion that the differentiated (not-bulk) cacao market is small and
growing, but could not absorb the thousands of metric tons needed to raise thousands of cacao producer’s
incomes through stable price premiums (based on current market shares and price premiums). Given this
situation, along with the tangible yield differences (between CCN51 and Nacional), it is not clear if simply
embracing Nacional and certification (organic, fair trade, Rainforest Alliance, among others) can raise farm
income at the same magnitude or rate as using high yielding varieties, irrespective of their flavor profile, and
selling into relatively efficient bulk markets.
34
METHODOLOGY
The main goal of the USAID/USDA project, Cacao for Peace (CfP), is “to strengthen
Colombia’s key agricultural institutions in the public and private sector for cacao with
cooperative research, technical assistance, and extension education. The CfP vision is to
improve rural well-being through agricultural development that is inclusive and
sustainable with positive impact on cacao farmers’ incomes, economic opportunities,
stability and peace.” Under guidance from USDA, this report was commissioned to
examine the cacao supply chain in detail in a number of different regions in the country.
In this report, we will discuss the reasons Colombia has struggled to keep production
up to meet local demand, through an in-depth analysis of the cacao supply chain. We
also offer some possible ways forward to utilize the many assets that could be
capitalized on to help cacao become an avenue for peace.
For the purposes of this study, a mixed methods approach has been taken. It is focused
on essentially four research threads which examine (1) the physical cacao flows – from
farm to processor to end user; (2) the prices received for cacao along the chain,
including the costs related to procurement and processing; (3) the actors along the
chain – including their roles, behaviors and recommendations for increasing efficiency;
and 4) the contextual issues and considerations that affect market outcomes, including
production, processing, and confectionary in general. In order to provide the baseline
analysis needed to guide the implementation of Cacao for Peace’s goals of leveraging the
potential of this sector to achieve sustainable and inclusive peaceful development, CIAT
(International Center for Tropical Agriculture) and Purdue utilized a holistic supply
chain framework (Figure 6) to guide the research (Lundy et al., 2007; Lundy et al., 2014).
Our task was to provide a coherent package based on the available information, which
was science, data, and stakeholder driven. The community capitals model guided the
stakeholder input in the October meeting of stakeholders and the development of the
recommendations. This model was selected because it is a framework that reflects the
holistic model that takes into account all of the different assets that have impact and can
be utilized to create efficiencies and improve the cacao supply chain in Colombia.
Figure 6. INTEGRAL MODEL OF THE PRODUCTION CHAIN WITH COMMUNITY CAPITALS
The Community Capitals model, an asset based approach, provided the framework for the October workshop. Participants collaboratively
constructed a vision of what “Cacao for Peace” meant to them and how the cacao sector could be leveraged to produce inclusive, sustainable
development. The authors used participant’s feedback to inform the construction of the recommendations found in this report.
In preparation for interacting with stakeholders, the working group from Purdue
University and CIAT collected and analyzed more than 160 studies, assessments, and
articles (Appendix A). The team sought to understand business and producer
organization models, examples of support services (extension, rural credit, market
information), and analyses of the contextual issues (policy, economic, social, technology,
environment) in which the cacao supply chain operates. This literature review led to the
creation of ten interview instruments used during stakeholder interviews that took
place between June and August, 2016.
This study focused on some specific geographies selected in consultation with the USDA
and USAID missions at the US Embassy in Bogota for the stakeholder interviews. These
included Santander, areas around the Sierra Nevada de Santa Marta, the Departments of
Valle del Cauca, Cauca, Guaviare, Caquetá, Nariño, Cesar, Montes de María in Bolívar,
Caldas, Huila and the central part of the country. These sites were chosen because they
were important cacao producing areas or were selected by USAID and USDA as key
places for the project Cacao for Peace. The team conducted more than 110 interview
sessions, predominantly in Spanish, across the cacao supply chain. We interviewed many
types of cacao farmers (in terms of yields, size, and income), as well as whether they
were associated or not-associated with local cacao producer organizations. We spent
time meeting with governmental organizations such as the Ministry of Agriculture and
Rural Development, Corpoica, local municipal government representatives, such as the
San Vicente de Chucurí mayor’s office, Santander Secretary of Agriculture, and
municipal extension units (UMATAs). A number of interviews were conducted with
members of Fedecacao (the national federation for cacao producers), including the
president, technical advisors, people at purchasing points, demonstration farm managers,
and field technicians. Included in the interviews were non-governmental organizations
and international donor organizations. We also conducted interviews with farmer
associations and cacao buyers and aggregators. We took time to understand the supply
chain from local traders to large international corporations, such as the Colombia-based
Casa Luker and Nutresa as well as ECOM, an international commodities trader. We
also interviewed a number of small and medium sized chocolate manufacturers.
(Appendix B).
Ten interview instruments were created using semi-structured questions pertaining to
the description of the individual, firm or organization, their role in the cacao supply
chain, provision and utilization of extension services, sales of cacao, price structures,
post-harvest practices, infrastructure, market opportunities, cacao and chocolate
business models among other topics (Appendix C). We conducted field interviews in
the aforementioned geographical areas as well as interviews with domestic and
international organizations in Bogota. Data collected from the interviews was analyzed
qualitatively. The methodology used was not set up as a countrywide survey where
these sorts of results could have been extrapolated, rather, the team triangulated results
between sources to gain a better understanding of the sector dynamics, trends and
underlying drivers. Unfortunately, there is very little regional secondary data that can be
utilized for extrapolation either.
At its most granular, quantitative data is available at the departmental level for
production, area and yield, resulting in a loss of information on variation across
municipalities. Conversely, our qualitative data from the interviews was either regional
in scope (with respect to political boundaries) or municipal/community level in scale.
This results in information that does not adequately address variation within
departments or agronomic regions. Nationally representative random samples of
farmers and/or formal traders would better reveal cacao buying and pricing strategies
throughout the country.
The stakeholder interviews were complemented by a workshop with forty stakeholders
from the Colombian cacao sector. In addition to serving as a forum to review and
complement preliminary findings from the study (Appendix D), the goals of the
38
workshop included:
 Determine ways to foster prosperity and peace through a thriving cacao

sector
 Build relationships among players in the cacao sector
 Understand the issues, needs and opportunities within the cacao sector
 Initiate the development of a collective vision for a thriving Colombian
cacao sector
 Inform potential international partners interested in helping to address
needs
As can be seen in Figure 7, a visual timeline provides an explanation of when and how we collected information.
Notably, we talked to people multiple times to get clarification and we triangulated information as best as
possible. During the year of the project (May 2016 – April 2017), virtual discussion meetings were held between
the authors, an average of 3 to 4 times a month, as the data were collected.
Figure 7. PROJECT TIMELINE

(February 2016 - June 2017)
HOW CACAO MARKETS WORK –
COLOMBIA VERSUS ELSEWHERE
Many studies on cacao supply chains across the globe bring attention to “long supply
chains” (Cappelle, 2008). Typically, the amount paid to a farmer for the chocolate he or
she produces is seen as quite small relative to the high prices that can be paid for
premium chocolate bars in developed country markets. They allege that multi-national
traders and chocolate manufactures exercise market power, resulting in low farmgate
prices. Those firms counter by arguing that transportation and transactions cost, as well
as processing and manufacturing costs, are substantial and easily account for the margins
between prices that are observed along the supply chain. In the major exporting
countries, cacao farmers can be quite remote and substantial effort is involved in
evacuating large volumes of cacao from the countryside to ports, and several levels of
traders are encountered along the chain. Those traders might also exercise market
power, as well as governments who tax cacao exports. Work in West Africa was
consistent with the arguments of the multi-nationals, and using new industrial
organization methods, no evidence of market power exercised by multi-nationals was
found (Wilcox & Abbott, 2006; Abbott, 2013; Homann & Frank, 2016).
The situation in Colombia is somewhat different from the cases of larger exporters
(Cote d’Ivoire, Ghana, Ecuador). Global multi-nationals play a much more limited role,
with only ECOM and OLAM showing a significant presence in Colombia10. Two
40
Colombia-based multinational companies – Casa Luker and Nutresa – buy over 80% of
Colombian cacao bean production (TechnoServe, 2015). They also process beans into
intermediate products; supply a large domestic demand (relative to supply); export
beans, butter, powder, paste and chocolate; and own buying, processing, production and
distribution facilities in other Latin American countries. The smaller importance of
international markets, extent of development and infrastructure in Colombia, and the
10
Firm level export data are not publically available and notoriously difficult to obtain.
presence of these two large buyers means the marketing structure within Colombia is
different from that found in the major cacao exporting countries.
Much can be learned about the cacao bean buying process by looking at price data at
various points along the supply chain. But that data needs to be interpreted with an
understanding of how the supply chain is organized and how marketing functions in a
country. While attention in much of the writing about cacao markets, and in policy
discussions, focuses on farmgate prices, oftentimes the producer prices that are
published are ones obtained at well-organized points in markets, generally
corresponding with some wholesale price. While analyzing the outcomes at buying
centers are welcome analytically - to ensure consistent, comparable information - it is
also necessary to recognize that farmgate prices will not only vary across buying centers
due to regional attributes, but also across market types (outside of buying centers),
where substantially lower prices are received by remote farmers located far from those
organized markets. Significant transportation costs may need to be incurred, and those
costs vary depending on how remote the farmer is located. Our findings regarding
prices draw on published price data as well as interviews conducted with key actors
during the field component of this project from 4 different organized markets.
Colombia is different from the major exporters in another respect that is crucially
related to how the marketing system operates. In the latter countries, itinerant traders,
who may or may not be formally related to large scale central traders, travel to remote
farms to buy cacao directly from farmers. This aspect of the supply chain is one most
likely subject to abuse, because those remote farmers likely have poor information on
current cacao prices. In the areas we visited in Colombia, which included the Santander
region, one of the major producing departments, we did not encounter such itinerant
traders. Rather farmers transport their cacao themselves to large central traders.
Anecdotally, farmers select a buyer based on previous relationships and prices. Where
there is enough cacao there is competition. For example, we visited the cacao market in
San Vicente de Chucuri, where traders are clustered, and observed farmers bringing
cacao to these traders.
Itinerant traders may well exist in new and remote cacao producing regions of
Colombia, but they are not a significant part of the established marketing channels for
the vast majority of Colombian cacao, at least right now. Farmers will generally only
make the journey to market when they have a sufficiently large amount to sell, or when
they have other reasons to travel. For those cases where transportation is challenging
or from more remote areas in the country, buyers may collect cacao and bring it to
larger buying centers.
Most of the central traders we encountered had at least informal relations with either
one of the two large chocolate companies or with a small chocolate manufacturer,
though they could be independent and can change those allegiances. Those associated
with Casa Luker or Nutresa would ship their cacao to one of the buying stations
operated by those firms, typically on large trucks owned by an independent shipper.
Buying stations are located in Bucaramanga, Medellin, Manizales, Cali, and Bogotá. The
majority of cacao produced in Colombia ends up going to one of these buying centers.
There are also much smaller flows of cacao going from the central traders to small
chocolate manufactures, and even to the port for export. There is no data that has been
collected as to the quantity that this represents. In Colombia, and unlike West Africa,
cacao processing/chocolate manufacturing firms are traveling into the more rural areas
to acquire cacao, but still remain far from the farmgate.
As can be seen in Figure 8, the producer prices (prices paid at the central buying
centers) are reported by Fedecacao and published in the databases of FAO, have
followed world cacao prices of the ICCO and are above the majority of producer
countries in the rest of the world. Based on our interviews and follow up conversations
with Fedecacao and secondary literature, we encountered areas that traditionally have
not been cacao production zones (remote areas, post-conflict zones, indigenous
communities) where the prices are much lower, reflecting the high cost of collecting and
transporting the cacao to buying centers (Figure 8: Medellin, Bogotá, Cali, Bucaramanga,
42
Manizales) and the lack of market information. For example, the prices that producers
received in July in Santander near the city center were COP$8,000 per kilo, while some
producers in the Sierra Nevada region were paid COP$6.300 per kilo (21% less). In the
case of Colombian cacao producers, the prices they receive are based on international
prices and real transaction costs.
Figure 8. GLOBAL CACAO MARKET SEGMENTS, FROM THE LATIN AMERICAN

INITIATIVE FOR CACAO
Note: This map is based on interviews made by the authors.

Colombian producer prices, reported by Fedecacao and found in the FAOSTAT
database, are the prices paid at the buying stations maintained by Casa Luker and
Nutresa (Figure 9). Determination of farmgate prices requires information on
transportation and transactions costs. In regions where cacao is abundant (such as,
Santander, Antioquia, Arauca, Huila, Nariño, Tolima), there are many central buyers,
and marketing infrastructure is well developed, so those costs will be low. In more
remote regions and in departments where cacao is less prevalent and/or new,
infrastructure will be less well developed, and there may even be relatively few central
traders to handle movement of cacao to buying stations. In those cases, transactions
costs will be higher, and in some cases central traders may exploit a degree of market
power. Unfortunately, data does not exist to substantiate these potentialities. It is
difficult analytically to disentangle market power from high transactions costs, as the
remote locations potentially subject to exploitation are also those where realistically
high transactions costs are very likely.
The standard global price for cacao is the ICCO price, shown in Figure 10. As can be
seen for August 2016, prices were at nearly an all-time high. The high price was driven
by surging demand, especially in Asia, and shortages in West African cacao production.
When global demand for cacao was growing at 5-6% per year from 2009 to 2013, the
ICCO price averaged US$2,500/MT. In recent years, weak global macroeconomic
performance may have limited demand expansion, but supply issues in West Africa led
to higher international prices – peaking at over US$3,100/MT. Demand trends may
have slowed, but high prices were largely due to those perceived supply constraints
rather than the demand trend. According to The Economist Intelligence Unit, demand is
44
forecasted to remain weak at 0.5% for 2016/17 (October – September) and 0.8% for
2017/18.
Figure 9. ANNUAL AVERAGE CACAO PRODUCER PRICES (AT PURCHASING

CENTERS) in US$/MT for select countries, 2000 - 2014
Source: FAOSTAT, 2017 and author’s calculations based on news reports in Factiva
Figure 10. MONTHLY COLOMBIAN CACAO PRICES PAID AT OFFICIAL
PURCHASE CENTERS AND BY ICCO (in US$/MT, January 2010 – May 2016)
46
Source: FAOSTAT, 2017 and author’s calculations based on news reports in Factiva Database.
Commodity markets (and especially cacao) generally exhibit significant volatility, and
long run prices are difficult to predict. Simplistically assuming high prices are here for
the foreseeable future, and can only increase, is not a good basis for business planning.
The past six months has shown that to be the case, as cacao prices have plummeted
below US$2,000/MT in February 2017. The expected longer run cacao price may well
be in the US$2,500-$3,000/MT range, but assuming it will be much higher in the future
would expose an investor to significant financial risk. Projects to expand cacao
production should not presume excessively high prices when assessing economic
viability. Several of the cost-benefit analyses of cacao expansion proposals we saw, in
Colombia and elsewhere, are based on unrealistic assumptions on future prices.
There has been an effort to promote a regional branding strategy based on the trinitario
and criollo varieties that differentiate Latin American ‘fine and flavor’ cacao, from cacao
from other regions in the world. Many companies, institutions, and farmers believe that
large premiums can be gained for ‘fine and flavor’ cacao that can be produced from
varieties that thrive in Colombia. We have received numerous unverifiable claims on the
magnitude of such premiums, many of which cite presentations made by a small number
of promoters of ‘fine and flavor’ (Homann & Frank, 2016).
While there are no published premiums to ‘fine and flavor’ cacao on either the New
York or London commodity exchanges, the origin premium now on beans from
Colombia over the ICE (New York and London) or ICCO price is only US$80 per MT.
Origin premium corresponds to a country based premium in the future’s markets.
Premiums and discounts accrue to countries of origin based on reputation for quality
and consistent quantity. This is the same premium that other Latin American countries
receive and is lower than the country premium to Cote d’Ivoire or Ghana (historically
they have received approximately US$200 per MT according to a variety of sources).
Unit values from COMTRADE trade data for various Latin American origins are also
consistent with low premiums simply based on origin (COMTRADE, 2016). The higher
premiums on cacao sales that are found are on individual transactions between
suppliers, specialty exporters and direct trade, and high end or luxury manufactures or
processors. There is a wide range of premiums on such transactions, based on anecdotal
evidence – as organized data reporting for prices differentiated by cacao quality does
not exist.
Confusion arises because there are small niche markets for high quality beans from
around the world. Anecdotal accounts claim premiums can be very high, but this
market seems quite small. While there are over 175 specialty chocolate manufactures in
the U.S. potentially demanding these ultra-premium beans, few purchase more than 100-
150 MT per year, and all have existing suppliers (who might be displaced). Many acquire
their quality chocolate from the bulk processors in West Africa and struggle financially.
In one interview with a buyer from Europe, it was suggested that most of these firms
purchase 30 MT, that 100 MT is quite a large enterprise, and that these firms often fail.
While it is asserted that this sector is growing rapidly, it is from a very small base 11. It is
unreasonable to expect that this segment will become a large share of the cacao market
in the foreseeable future.
In other markets that pay slight premiums over the ICE or ICCO price, such as the
certified market, there is some data, and it shows supply racing well ahead of demand
(IISD State of Sustainability Initiatives, 2014). Any excess supply gets sold into the bulk
market. Moreover, fair trade premiums are too low to be relevant to current market
conditions, even after the recent fall in global prices. There is ongoing discussion as to
whether price targets for fair trade and associated premiums should be raised, but
excess supply of certified cacao suggest it would be hard to market that cacao at higher
prices (Fountain & Hütz-Adams, 2015).
Future price estimates for global cacao trade by quality segment remain problematic.
The most widely used figures (Figure 11) we encountered come from a presentation by
a representative from the Corporacion Andina de Fomento (CAF) based on an
48
interview with Xoco, a ‘fine and flavor’ promoter in Central America (Vignati, 2016).
The only cited reference for the calculations is Xoco. Prices reported for the cacao
segment seem overstated given the unit values we calculated and the interviews
conducted with specialty cacao traders and the Fine Cacao and Chocolate Institute in
the United States. Those interviewed reported lower estimates both in terms of
volumes and prices. Key traders such as Atlantic, which focuses on ‘fine and flavor’ and
certified cacao, reported much smaller demand, much lower premiums, and slow
11
See https://chocolateinstitute.org/blog/sizing-the-craft-chocolate-market/ for more information on the size
of the market for high quality cacao beans.
market growth than those being perpetuated by the industry (personal communications,
Richard Fallotico, ECOM).
Figure 11. GLOBAL CACAO MARKET SEGMENTS, FROM THE LATIN AMERICAN
INITIATIVE FOR CACAO
Source: From a presentation by the Latin American Development Bank (CAF) at the ICCO
World Cocoa Conference, based on an interview with Xoco, a fine and flavor cacao promoter
in Central America (Vignati, 2016).
Finally, the CAF presentation itself recommends against using these figures for
commercial operations. The data in the CAF presentation is not based on observations
of actual market transactions, as even the bulk cacao price is exaggerated, being above
the highest level the ICCO price has ever achieved. Despite these flaws, versions of this
figure have continued to proliferate across Latin America, leading to an explosion of
‘fine and flavor’ cacao initiatives driven by unsubstantiated assumptions rather than data-
driven demand trends. Even the most transparent of efforts recognize the market
limitations and the difficulty of passing any premiums that do exist back to individual
farmers. This is a function of working with farmer groups over individual farmers.
Groups may or may not pass through premiums but provide the necessary volume and
quality. Also, given the limited demand, typically not all of the potential volume
generated by these groups are sold through premium channels.
For example, in the case of the producer organizations that are lucky enough to access a
premium channel (one that receives a premium price), the increased price paid is usually
only received by a small number of producers for small volumes of cacao (See Cortepaz
and Cacao Hunter Unique Business Model Box). This is seen in particular for Taza
Chocolate, one of the largest companies with Bean to Bar chocolate in the USA that has
a direct marketing program. In their transparency report from 2016, they document
that the price premium is less than US$500 above the bulk cacao price for high quality
certified organic cacao and is paid to less than 2,000 producers for 233 MT of cacao
(Taza, 2016). This is the equivalent of each producer selling 114 kilos of cacao. This
demonstrates that only a very small proportion of the total producer’s production is
dedicated to this market, the rest is sold as bulk cacao on the local market. This is
clearly an important market for those producers who are able to participate, but it is
not necessarily relevant for a large number of small cacao producers.
50
Cortepaz and Cacao Hunter Unique Business Model

Although the specialty cocoa market is growing, it currently represents a small niche market in Colombia
and globally. Despite its incipient nature, this market has the potential to pay higher prices to producers and
may represent an opportunity to reduce poverty in post conflict areas as part of a broader economic
development strategy. (cont.)
Cont. Cortepaz and Cacao Hunter Unique Business Model
The aim of this case study was to describe the development of inclusive business models between an
organization of cocoa producers from Tumaco and a buyer from the Colombian specialty cocoa market.
We applied the LINK methodology, which utilizes a participatory approach to enable the parties involved to
understand how their business models currently connect, and to design innovations that empower producer
groups to engage more effectively and support buyers to act in ways more amenable to smallholder farmers.
The results of the study show that the producers face many challenges in terms of infrastructure, roads,
access to quality services, and access to capital. These challenges cause farmers to seek better financial
outcomes through illicit crop production despite having the potential to offer exceptional cocoa to the
market. CortePaz and its producers possess traditional varieties with valuable organoleptic traits, suitable
weather, the skills to manage cacao cultivation and the infrastructure to implement high quality fermentation
and drying protocols effectively. CortePaz has the ability to provide high quality cacao to the specialty
market, which would pay them better than traditional markets.
Cacao Hunters collaborated with CortePaz for four years to identify specific cocoa farmers and build
fermentation and drying protocols to achieve exceptional quality. This collaboration led to award-winning
chocolate recognized globally, a pricing structure that rewards farmers and covers the significant additional
costs incurred in fermentation and drying underpinned by a strong business relationship valued by both
parties. Despite these gains, CortePaz only processes and sells 8% of its total cocoa production to the
specialty market due to limited demand and willingness to pay the true costs of fermentation and drying. The
remaining cocoa is sold on the national market with no price premium.
This case study highlights the potential and limitations of specialty cocoa as a vehicle for post-conflict rural
development in Colombia. A small niche market exists for specialty cocoa. Colombian producers and
processors can, under the right conditions, meet exacting quality standards and produce exceptional cocoa
and chocolate. Despite this success, demand for cacao of this quality remains limited which stunts the overall
gains from a successful inclusive business model. Complementary interventions in productivity, reduced
transportation costs, access to finance, technical assistance and inputs among others could spread the gains
from cacao more widely and help more farmers while, at the same time, improving the enabling environment
for a more competitive and inclusive cocoa sector. If Colombia can achieve competitive cocoa sector with
higher productivity and stronger organization, the potential exists for additional success stories to emerge
over time as the specialty market matures. In the meantime, however, the majority of cocoa producers and
producer associations need to get the basics right to become profitable in the conventional market.
POST-HARVEST PRACTICES & PRICES
Post-harvest practices (drying and fermentation) are critical to the quality of cacao
beans sold. At present, price premiums for high quality cacao may not adequately
compensate farmers for extra costs that are incurred when high quality standards are
desired. Farmers are receiving only a slight price increase for the added labor of careful
fermenting and drying correctly. The system now in place provides farmers an extra
COP$200 per kilo for cacao that meets high quality standards (Table 7). Through
multiple interviews, producers suggested that the added labor cost should have a price
premium of an additional COP$1,000 per kilo instead of the current COP$200-300 per
kilo, this is added to the regular price. This is considered the break-even point for a
farmer, the additional labor would be covered by the increased cost. For an average
farm of 3 hectares with a yield of 400 kilos of cacao per hectare, this equates to
approximately COP$960,000 additional funds or approximately US$320 total for the
average farm. This is gross revenue based on an increased premium and is roughly half
what is being paid on a limited basis for ‘fine and flavor’ cacao. This is a way for all
farmers to increase income by meeting higher quality standards in terms of the industry
standard cut test. Presently, adequate price incentives (covering additional labor costs)
are not in place to encourage the production of higher quality cacao for the majority of
cacao farmers in the country.
In spite of the rhetoric about needing additional higher quality cacao throughout the
52
supply chain, the actual low premiums being paid for quality suggest that it is not a
scarce resource. Farmers typically bring well-fermented cacao to points of aggregation
as opposed to traders going out and purchasing cacao at the farm. The vast majority of
this cacao is fermented on farm as opposed to being sold wet or “en baba”. Currently,
due to a lack of demand for quality and the need for consistency, all qualities of beans
are typically mixed during the aggregation process. Most buyers reference “Norma
ICONTEC 1252”, which defines different classes of cacao and standards for
differentiating. Table 7 provides the minimum standards used for qualifying cacao and
was shown to us at all of the buying stations when we interviewed the buyers and
traders. The issue is whether the incentive or compensation for the added work is
enough for a farmer to do a good job.
Un análisis de la cadena productiva del cacao en Colombia
Table 7
CACAO BEAN QUALITY STANDARDS
Source: Norma Técnica Colombiana NTC 1252-Cacao Beans ICONTEC, 2003
Some advocates of selling on high quality markets question whether farmers can ferment
and dry properly, so they pursue business models where these activities are conducted
by producer organizations or chocolate manufacturers. Some international clients
seeking luxury cacao for craft bars demand highly controlled fermentation conditions to
produce specific flavor profiles. Meeting their requirements has led to the sale of cacao
en baba (cacao still in its mucilage) to a centralized fermentation and drying facility
managed by a producer organization or chocolate manufacturer as standard practice.
The share of these types of farmers in the national production is unknown, but likely
small.
Furthermore, improving infrastructure (fermentation stations and drying areas), whether
on farm or by a processor, will have a cost that will need to be covered by someone. A
business that chooses this route will need to build these costs into their business plan
and not expect foreign donor agencies to cover these costs, which will limit the
sustainability of both the business and the practice of purchasing wet cacao and
processing for the farmer. It is also important to take into consideration that this is a
value-added practice that accrues funds to the farmer if they do a good job at
maintaining quality. It is possible that by removing this additional income generating
activity from a farm, there will be less money flowing into the household income and
farmers will be further deincentivized from caring for their cacao and producing more
quantity and at a higher quality. If a farmer does choose to ferment and dry at home,
they will need access to credit, training, and a reasonable expectation that he or she will
be able succeed in producing and selling cacao so that these debts can be repaid.
Processors and farmers will need to evaluate several factors (such as time, distance,
financing, premiums or discounts due to quality) to determine which is the appropriate
path; selling/buying en baba or fermented and dry.
54
THE SUPPLY CHAIN OF CACAO IN

COLOMBIA
A depiction of the Colombian cacao supply chain, seen in Figure 12, describes the
functional aspects of the supply chain, illustrating the activities from production, to post-
harvest, aggregation and transport, processing, marketing, internal consumption and
export. This process takes place amid several layers of organizations and institutions
that collaborate formally or informally. The processes and services occur within larger
social, economic, political, environmental, and technological contexts. Several actors
take on multiple steps within the physical production from bean to distribution of the
final product, such as Casa Luker and Nutresa. Many institutions that play leadership
roles, provide services such as technical assistance, provide financing, and help
coordinate sector activities. Some actors such as Fedecacao and Red de Cacaoteros
offer more than one support service. The larger private actors such as Casa Luker,
Nutresa, and smaller ones (e.g. Cacao Hunters) also provide some support services
principally to producer organizations.
In Table 8, all of the actors found in the cacao supply chain in Colombia are outlined
along with their roles or services that they provide.
Farmers
Based on our interviews with four different types of farmers from various ethnic groups,
we decided to not divide the producers into large and small scale. Instead we looked at
their yield or land holdings and evaluated the role cacao plays in their regional farming
culture. Based on the diverse perspectives, geographies, economic and socio-cultural
aspects we identified four farm typologies for the Colombian cacao sector.
Figure 12. THE CACAO SUPPLY CHAIN Following the bean to finished product
56
Table 8
CACAO STAKEHOLDERS AND THEIR ROLES
* Nutresa and Casa Luker provide advance payment to producer organizations so that they have the
cash flow necessary to purchase cacao from their farmers. Source: The authors, 2017.
Marginal
This type of farm typically lacks adequate water and the plants lack nutrition. This
results in high tree mortality. These areas are either not suitable for growing cacao or
the plants fail due to bad agricultural practices. Farms typically have between 800 –
1,000 total cacao trees per hectare with annual production of below 300 kg / hectare.
There is some level of intercropping with other food and market crops but these often
face difficulties due to water scarcity. The cacao from these farms is not profitable as
costs exceed income. New cultivation or maintenance of cacao plants may create risk
for producers, especially if the area is not suitable for growing cacao. This type of farm
usually does not meet the minimum quality standards and therefore prices paid to these
producers are low.
Traditional
This type of farm is common throughout Colombia. While the ecological conditions,
principally rainfall patterns, exceed those found on marginal farms, cacao management
remains rudimentary. Plants receive occasional nutrition, pruning, and phytosanitary
management, but it is usually in response to the presence of pests and diseases. These
farms typically have between 800 to 1000 cacao trees per hectare and annual yields of
between 300-500 kg / hectare (i.e. yield per plant is between 0.2 - 0.5 kg). Often cacao
on these farms is not managed per se but rather forms part of a diverse agroforestry
system from which the farmer extracts different products during the year. In some cases
yields from these farms can increase due to a development project or program. Cacao
58
from these farms tends to be sold on the bulk cocoa market. Income from cacao
constitutes less than one minimum wage over a 10-year period12.
Technical
This approach prioritizes cacao as a cash crop. Technified producers have access to
capital and periodic technical assistance. These farms have access to water and apply
technological packages in accordance with the planted genetic material. Annual yields
fluctuate between 1200 - 1800 kg / hectare, but can be higher. This is the most common
12
We use a 10 year time horizon to assess profitability due to the long-term nature of cacao as a tree crop.
type of system promoted by development interventions, but the most difficult to find in
the field. A technified cacao farm requires an investment of COP$12 - 15 million
(US$3,980 – US$4,975) per hectare depending on the terrain and whether it requires
irrigation or not. Due to improved management practices and investments, these farms
require additional labor. A well-managed technified cacao farm can earn a minimum
wage income over a 10-year period.
These types of farms are rare but can be found in the departments of Arauca,
Santander, Huila and Tolima in areas with better road access, functioning land markets
and improved security. We did not visit any farms like this in our trips to Colombia but
we discussed this type of farm with numerous investment firms.
Diversified
This type of farm varies a lot in size, ranging from 0.5 - 15 hectares. The land has
multiple uses including commercial agriculture as well as household food security and
livelihood needs. These needs include trees for wood, aromatic plants for health and /
or condiments, and environmental stewardship. Diversified farms have between 600 and
700 cacao trees per hectare with annual yields that fluctuate from 300 to 600 kg /
hectare (i.e. yield of 0.5 to 1 kg / plant), although not all these farms are as productive.
This type of farm has improved cacao yields due to rural development projects and
programs that promote restoration with new material, as well as a combination of
traditional and new management practices. These programs often provide specialized
technical assistance, as well as seeds and inputs that expand the growing area and
increase yields. Diversified farms often struggle due to a lack of infrastructure and are
vulnerable to armed conflict due to their geographic location and the fact that the
ecological niche for cacao production aligns with that for major illicit crops such as coca.
Diversified farming systems such as these have been able to meet the basic needs of
producer families in times of crisis due to multiple uses, the sale of diverse crops during
the year and the important role given to basic food security needs by farmers in this
farming class. The on-farm diversity makes these farms more resilient than the other
farming classes identified.
These types of farms can be found in Nariño, Cauca, Chocó, Huila, Caqueta, Guaviare,
Magdalena, Santander and Cesar. The localization of these farms is explained by the
smallholder economies present in most of these areas as well as limited financial access
to invest in more intensive production practices.
Based on our interviews and secondary literature review, there was some consensus
that cacao bean quality and consistency could be assured by fermenting and drying at a
centralized aggregation center. There is interest by larger scale cacao producers
(Technical Farms above) to purchase cacao from neighboring smallholder farms (satellite
production system) in order to aggregate the product and ferment in bulk. These
purchases would allow for an increase in economies of scale and improved quality and
consistency of cacao beans sold to exporters. Key limitations to achieving more
centralized processing include generally weak producer organizations, individualism
among farmers and pricing mechanisms including quality differentials that do not provide
viable incentives for improved post-harvest management. For centralized processing to
make sense, the Colombian market would need to provide stronger quality based
premiums that recognize the additional costs inherent in careful fermentation and
drying. For further information, please see the previous section on post-harvest
practices and prices and the case study of Cacao Hunters and CORTEPAZ.
Within our study, we were able to characterize on a limited basis five different groups
of cacao farmers in diverse regions of the country:
● Afro-descendant communities in North Cauca. Asprofinca:
These producers are located in the municipalities of Guachené, Caloto, Corinto,
Miranda, Padilla, Puerto Tejada and Villarica in northern Cauca. This group is
made up of 800 families that use traditional farming practices. According to
60
leaders, this local concept favors efficient land use, where cacao is fundamental to
household income. Cacao is part of an integrated system of crops that generate
additional income and complement household nutrition. Among the associated
crops are banana, citrus, corn, yuca, other fruit trees and livestock such as
chickens, turkeys and some pigs. For these communities, the use of the land has
more value than the land itself.
● Arhuaco Community of the Sierra Nevada:
Indigenous communities have their own way of seeing the world and growing
cacao is no exception. Cacao is an ancestral, cultural asset that is being revived.
For that reason, they do not view cacao as a means to realize commercial gains,
rather as a way to access products that are important to the development of

their community. These products include fuel, transportation, health, education,
etc. Cacao is found in the Arhuacan territories along with other crops that
complement the basic nutrition of the community. Unfortunately during most
visits, there were indicators of childhood malnutrition, despite the appearance of
available but uneaten fruit, both on the ground and in trees in the territories.
During discussion with community leaders, there was mention of child
malnutrition and they were looking for ways to reduce it, but they have not yet
begun to address it. This was the only group for which the cost structure was not
calculated, since the value of cacao does not have a direct economic value. A
more detailed study with a multidisciplinary group of the community’s spiritual
leaders (Mamos), anthropologists, and economists is needed to identify an
equivalent value.
● Farmers of the Sierra Nevada:
These farmers live and farm mostly along the Santa Marta, Magdalena - Dibulla,
and Guajira highway routes, which could mean a distance of up to 2-3 hours away
from one of these main highways. Most of them migrated several decades ago,
often moving from the center of the country to seek new opportunities.
Producers have described that dry periods have increased each year, significantly
decreasing productivity. In several locations, cacao trees have died due to lack of
water. An unusual case is the banana growing zone of Aracataca, where there is a
very small group of cacao farms with access to gravity-fed irrigation. They do not
have any type of fertilization but have yields between 700 and 900 kilos per
hectare, which is almost double the production of the areas along the Dibulla
highway. According to Fedecacao and other experts, however, these yields do
not reach the optimal production amount of equal to or greater than 1500 kilos /
hectare.
● Santander Farmers (technical and traditional):
This area has the most technical assistance, development and implementation in
the country. Two types of producers were found. The vast majority of producers
have a traditional system, with some integration of agroforestry techniques. They
use few inputs and have low yields. Usually this type of system is of one of
standard collection but with an area greater than in other regions of the country.
We found only one example of a “technical” farm in San Vicente de Chucurí. The
farm was approximately10 hectares and incorporated inputs as well as periodic
pruning. For these two systems, lack of water was the main component
preventing yields per hectare to increase.
● Caquetá and Guaviare Farmers:
These areas are very remote and have very little institutional presence. Over the
last 30 years, violent armed groups have forced displacement, and have pressured
communities to grow illicit crops. These communities have had to make a choice
between higher earnings from illicit crops of COP$60,000 to COP$90,000 / day,
and lower earnings from legal crops of COP$20,000 to COP$30,000 / day. These
farms are located in different municipalities of both departments with an average
size of 5 to 15 hectares. In addition to cacao, they also grow sugarcane, beef and
milk cows, bananas, citrus, wood, yuca, pigs, etc.
PRODUCER ORGANIZATIONS
Through our interviews and secondary literature review, we found that producer
organizations in the cacao sector have a mixed track record in Colombia. For the most
part, cacao producer organizations were formed with the support of development
programs such as MIDAS and ADAM, with the intention of serving as a conduit to
receive inputs (planting materials and fertilizers principally) for establishing new
plantations. In theory, these organizations can help farmers access resources that might
otherwise be unavailable, such as access to credit, technical assistance, the purchase and
marketing of cacao beans, supplying production inputs, or support for quality control.
62
Based on our interviews with CELI (USAID project) and Fedecacao, the establishment of
economically sustainable group credit funds has been a failure. These schemes provide
farmers credit through a producer organization with repayment based on marketing
their cacao through the organization. If a farmer chooses to sell his/her cacao to a
different buyer, then the credit is not paid back to the producer organization. This
problem of side-selling is common in smallholder systems globally. Principal causes
include better prices offered by traders and a lack of cash flow in the producer
organization, which means farmers deliver their cacao but must wait for payment or a
market diversification strategy employed by farmers to reduce risk and dependency on
one buyer. Consistent access to credit remains a problem13 and many producer
associations offered few services other than a means to access planting materials to
support acreage expansion.
We did find some well-functioning producer organizations (associations and
cooperatives). Strong producer organizations are those able to profitably provide
multiple services to their members and other actors in the value chain. They played
important roles in the supply chain by aggregating product, finding buyers for the cacao
beans, providing technical assistance, and ensuring quality standards in their beans.
These associations are run as a business and they are often linked with private industry,
selling the beans that have been aggregated into domestic chocolate processors or
export agencies. Some also offer fermentation and drying services, secondary
transformation or chocolate manufacturing, access to credit, production inputs, and
export capabilities. Please see the text box above on CORTEPAZ as an example of a
producer organization that functions as a viable rural business.
Unfortunately, no centralized records exist regarding producer organizations in the
Colombian cacao sector. The Red de Cacaoteros represents more than 50 such
organizations and the Productive Alliances program (PAAP) of the Ministry of
Agriculture and Rural Development (MADR) supported more than 140 between 2002
and 2014 but beyond those anecdotal figures no actual organization census exists. Based
on our interviews with Red de Cacaoteros and a review of PAAP dataset, it appears
that the majority of cacao farmers do not belong to well established/well-functioning
producer organizations.
PRIVATE COMPANIES
Large producers of chocolate
Nutresa and Casa Luker comprise a significant industry presence in the cacao supply chain.
Estimations of the total national production that these two firms acquire range from 80-90%
13
According to the recent Agricultural Census (DANE, 2014), only 11% of all farmers in Colombia report reliable access
to credit. Clearly this issue extends beyond cacao farmers but, nonetheless, remains critical for a dynamic and profitable
sector.
(Corporacion Andina de Fomento, 2015; TechnoServe, 2015). In 2013, Nutresa and Luker
captured an estimated 85%. Colombina S.A. utilized 4% of national production, Chocolate
Andino 3%, Chocolate Girones 2%, Comestibles Italo 1%, and all other processors shared
the remaining 5% (TechnoServe, 2015).
Both Nutresa and Casa Luker supply the domestic market and export cacao beans,
intermediary cacao products such as powder, paste, semi-elaborated products such
couverture and semi-sweet chocolate, and finished consumer products. The majority of the
production of both companies is for the domestic market, mainly for chocolate de mesa or
bars for hot chocolate. Nutresa imports some beans, mainly from Ecuador and Peru because
of the similarity in bean profile and quality. Casa Luker indicated that it does not import.
Both firms commented in interviews that access to additional cacao beans is their biggest
limitation to expansion, not bean quality14, factory capacity, or access to markets. Lack of
technical assistance, plant diseases, and weak producer associations were cited as main
reasons for low productivity. Both offer technical assistance to farmers, field days and
demonstrations farms.
Nutresa and Casa Luker have networks of buying centers with warehouses for storing dried
fermented cacao beans across the country. Both have centers in Bucaramanga, Medellin,
Bogota, and Neiva. Casa Luker has an additional center in Manizales, while Nutresa is also
found in Barranquilla, Cali, Ibague, and Valledupar.
Nutresa has played an active role in increasing cacao production for over 50 years.
Currently as part of their “social commitment,” Nutresa has a Productive Projects-Inclusive
Business program. Through the Productive Alliance Support Project (PAAP), Nutresa forms
64
alliances with farmers to assure the purchase of their product directly and will help provide
technical, social and corporate support. Nutresa has two demonstration farms, a larger one
in Magdalena Medio and a small farm near Medellin. In total these farms provide training to
several hundred cacao producers and technicians on an annual basis.
14
Both Nutresa and Casa Luker operate modern processing facilities designed to manage the quality variations
found in Colombian bulk cacao. This includes additional efforts to remove foreign objects in incoming
shipments as well as techniques and recipes designed to manage variable levels of bean fermentation. Their
processing systems have been optimized for Colombian cacao over many decades of experience.
Casa Luker is a Colombian family-owned company that was established in 1906 in Manizales.
Casa Luker promotes and capitalizes heavily on Colombia’s reputation as a source of cacao
‘fine and flavor’ types, and diversifies its product line by origin (Santander, Arauca, Huila, and
Tumaco) and sensory profiles. Casa Luker also sells cacao derivatives such as liquor,
powder, butter, and beans. Luker also has a model plot arrangement with some farmers.
Farmers receive subsidies from Luker in the form of free training, plant materials, various
farm tools, and supplies to improve their crop. In return, farmers agree to convert their
farms into models to be used to train other producers as well as sell their cacao to Luker.
Luker demonstrates cacao production in three-crop cultivation agroforestry systems (wood,
fruit trees or plantain, and cacao) which takes into account the temporal aspects of the
system, timing production so that the farmer has one “main crop” and two others that
support the system.
The two large processors in Colombia export a percentage of final product to regional and
international markets. The bulk of this export consists of mass consumer products with a
low unit value and relatively low cacao content often in the form of confectionary. In
addition to these exports, Nutresa and Luker manage semi-finished products which promote
specific origins within Colombia. With declining global cacao prices, however, it is possible
that these firms will pay more attention to developing higher value products from specific
origins. In regions such as Tumaco where Luker developed a specific line of semi-finished
products, prices paid for quality cacao increased. Examples of origin specific final chocolate
products also exist but interviews with both Nutresa and Luker suggest that these markets
remain small.
NATIONAL ORGANIZATIONS
Fedecacao
The Cacao Producers’ Guild, Federacion de Cacaoteros (Fedecacao), was founded in 1960
and represents 38,000 cacao farmers (approximately 70% of all producers) with 165,000
planted hectares of cacao located in 22 departments. It is primarily dedicated to research,
technology transfer, and commercialization support. It also administers the National Fund for
cacao, a parafiscal fund collected through the Cacao Development Fee. According to Law 67
of 1983, the fee is three percent (3%) on the selling price of each kilogram of dry cacao beans
grown in Colombia. In 2015, this fund was approximately $3.92 million USD. Its efforts
are dictated by where cacao is sold, since that is the main traceability source for returning the
fee to farmers. For example, if a producer has his or her farm in Bolivar but sells in Santander,
the cacao is counted as being from the department of Santander, not Bolivar. Funds are thus
allocated to the Santander Department instead of Bolivar, from where the cacao originated.
This organization serves a number of roles in the supply chain including the purchase of cacao
and assurance of the quality that is being purchased15. They are the primary providers of
technical assistance, mainly based in high productions areas of the country. They operate ten
demonstration farms located across the country, with areas for farmers to spend the night
while receiving training. The majority of workshops are hosted in the Villa Monica
demonstration farm in San Vicente de Chucuri, Santander, due to the prevalence of and
history with cacao in the region. They also provide supplies, such as chainsaws, sealant, and
fungicide for plantation renewals. Fedecacao is a founding member of the Consejo Nacional
de Cacao (see below), where they are helping to build institutional support among the many
actors along the supply chain. They purchase a small quantity of beans that have been well
fermented, dried, and selected and sell at a premium, allowing them to act somewhat like a
private business.
Associación Nacional Cacaotera de Colombia Red Cacaotera

The Red de Cacaoteros (Network of Cacao Producers) is an apex organization of 54
producer organizations from the six main areas of cacao production in Colombia. Their goals
include working with producer organizations to export cacao either by the producer
66
organizations or under the Red de Cacaoteros umbrella. In addition, they implement

development projects funded by international development agencies with a focus on
strengthening producer organizations in their network. Their main roles in the supply chain
are to purchase and export cacao beans for a small number of cacao producers.
They also work heavily with partner producer organizations to build institutional support to
help them access international markets and guarantee the quality of beans being exported,
including finding international donor funds to support building fermentation and drying centers.
15
Fedecacao has a mixed track record as a cacao purchasing and marketing agent with several failed attempts
to establish a dedicated export channel. While Fedecaco is legally entitled to support commercialization, it is
not necessarily directly commercializing cacao.
Within the overall supply chain, the Red de Cacaoteros represents producer organizations as
opposed to Fedecacao which represents individual farmers.
PUBLIC PRIVATE PARTNERSHIPS AND

COORDINATING ORGANIZATIONS
National Cacao Council
The National Cacao Council (Consejo Nacional del Cacao) is a sector-wide body
comprised of producers, associations, private industry, governmental organizations, and
Fedecacao16. The Council was one of the first multi-actor working groups to be
formalized by the Colombian Ministry of Agriculture and Rural Development (MADR)
under its Supply Chain (Cadenas Productivas) division. The Council was formally
established in October 2001 to represent the cacao sector. To achieve formal
government recognition as the cacao sector representative, the Council first negotiated
and agreed on a specific strategy to develop the sector, known in Spanish as an Acuerdo
de Competividad. This agreement served as the basis for the development of a public
policy framework for supply chain development. The common strategy seeks to
improve productivity and competitiveness, reduce transaction costs, develop strategic
alliances, improve information flows, include small scale producers and businesses,
promote sustainable natural resource management, strengthen human capital and a plan
for research and technology development. Law requires that the national government
provide direct support to the competitive agreements by incorporating them into
government policies and budgets and provide priority access to these resources to
members of legally constituted chain organizations. The goals of these policies were to
establish bodies that could represent the needs of supply chain members, coordinate
development strategies, interact with MADR and provide guidance on public initiatives
relevant to the sector. The Council in coordination with the five regional councils,
16
Actual members of the Consejo include the Ministry of Agriculture and Rural Development, the Ministry of
Commerce, Industry and Tourism, Fedecacao, ECOCACAO, APROCASUR, Nutresa, Casa Luker, Colombina,
Chocolates Gironés, Corpoica and ANDI.
which represent the needs of key production areas, has played this role since its
inception in 2001.
The five regional councils are found in Santander, Antioquia, Tumaco, Arauca and Huila.
The goal of these councils is to mirror the coordination functions of the National Cacao
Council but also adapt national cacao strategies to regional needs. These constitute an
important space to include recommendations for different cacao production systems
based on producer innovations, adapt extension materials to local needs (i.e. which
varieties, which densities, what management practices), flag regional research demands
and dialogue with sub-national governments to identify investment needs and
opportunities. An additional advantage of regional councils is that they provide a more
accessible space for a wide range of actors to participate, especially small farmers and
producer organizations, who are unable to travel to Bogota and participate in a regular
basis in the National Council.
The current Acuerdo de Competitividad negotiated between the members of the
National Council runs from 2009 to 2022 and focuses on four key areas of
collaboration:
(i) production and technology transfer;
(ii) investigation and innovation;
(iii) market development; and,
(iv) institutional arrangements.
The role of the Council is to provide coordination around these topics, improve access
68
to information, represent the interests of the sector with the national government and
permit the implementation of sector-wide development strategies that benefit the
Colombian cacao sector. The Council evaluates the implementation of the strategy on a
periodic basis with notable advances reported in production and technology transfer
and lesser gains in the other areas of collaboration.
ProColombia
ProColombia is a government agency of the Executive Branch of the Government of
Colombia in charge of promoting Colombian non-traditional exports, international
tourism and foreign investment to Colombia by providing domestic companies with
support and integral advisory services for their international trade activities, facilitating
the design and execution of their internationalization strategies, and by providing foreign
companies with trade, legal, and educational information about Colombia’s market,
products, services and companies. ProColombia has been highly active in promoting
foreign investment in the cacao sector, searching for new international markets for
cacao, creating concise and visually appealing information resources, and hosting
product expos and networking events. For activities related to cacao, ProColombia
coordinates directly with the Council mentioned above.
EPSAGRO
This is a program managed by MADR that pays individual consultants to give technical
assistance in cacao production systems to farmers. We were never able to find definitive
information on how this program works, but an individual or organization that is
qualified (has degrees or experience in the area of expertise) and has been certified by
the MADR as a quality provider of technical assistance in certain crops, can then take on
contracts at the departmental level. We are unaware as to how well this program has
worked or how prevalent it is across the country, since we saw no signs of actual
impact from the program during our field work.
PUBLIC ORGANIZATIONS
Corpoica
Corpoica, is the agricultural research division of MADR. They play an important role in
the supply chain since they set the research agenda for the cacao sector (National
Agenda for Cacao Research) in consultation with other members of the National Cacao
Council, conduct cacao research, maintain cacao clonal gardens and germplasm, provide
demonstration farms, and provide technical assistance to trainers through a “train the
trainer” model. Most of the research being conducted by Corpoica falls in the area of
genetic improvement, best management practices, disease management, and
organoleptic qualities of different varieties.
Universities
Similar to Corpoica, Universidad Industrial de Santander, and Universidad Nacional in
Bogotá are conducting research within sections of the supply chain. It seems that most of
the research that is currently occurring is in the area of cacao varieties, cadmium, sensory
characteristics, disease resistance, and management practices (agroforestry, pruning,
fertilization). There is little being done in the area of social and demographic issues,
economics, or supply chain analysis. The university research agendas should align with the
national cacao research agenda led by Corpoica and negotiated with other members of
the National Cacao Council. The glue that holds this together are funding calls from the
Colombian National Science Federation (Colciencias) which need to align with the
national research agenda. In practice, however, universities raise additional sources of
funding and are not fully beholden to only follow the topics in the national research
agenda.
MADR
The Ministry of Agriculture and Rural Development (MADR) develops, drives,
coordinates, and evaluates policies through its Vice Ministry on Production Chains
(Dirección de Cadenas Productivas) which provides oversight for the National Cacao
Council. The ministry also develops actions to promote alliances between national and
department institutions such as Corpoica, SENA, ICA, Finagro, local governments, and
others, which leads to the implementation of plans, programs, and projects.
Finagro
70
Finagro, Financing Fund for Agriculture, through the use of financial instruments and
incentives for investment, supports the development of the rural sector in Colombia.
Finagro provides funds to retail financial institutions (such as Banco Agrario) who in turn
lend to farmers. It is charged with implementing different credit policy instruments for
rural development (agricultural risk management, rural investment promotion,
productive and social strengthening) and financial services (credit lines, access to
financing, and regularization of overdue agricultural portfolios and partial or total relief
of debts). The economic objectives for the rural sector are outlined in the National
Development Plan.
SENA
The National Training Service (SENA – Servicio Nacional de Aprendizaje) is a public
institution attached to the Ministry of Labor. It offers free training in technical,
technological and complementary programs that focus on the economic, technological
and social development of the country, to increase the productive activities of
companies and industry. SENA establishes mechanisms of direct and permanent
interaction with unions, companies, governmental and non-governmental institutions,
and educational institutions of the country, to update and adjust curriculum designs of
existing training programs.
SENA offers face-to-face and virtual training programs in different areas, including some
related to agriculture. They coordinate with the MADR and are responsible for the
agricultural training programs which include: the management of agricultural companies,
agricultural production, agrobiotechnology, agricultural mechanization, among others.
They have courses on cacao production and post-harvest management17, provide
technical assistance, and have a production factory in Bucaramanga where they produce
truffles and bonbons and provide training for other small-scale chocolate processors.
They certify professional training programs that have been based on relevant criteria,
quality, convenience, and flexibility to all Colombians and certified foreign residents
interested in studying.
SENA also offers training for those who give technical assistance. The objective is
to provide conceptual elements and practical tools for the planning and operation of
technical assistance initiatives. With Corpoica, they designed a “technological
specialization” on the management of technical agricultural assistance. It seems that it is
focused on training people working in EPSAGROs. SENA, with Fundación Manuel Mejía,
offers a Rural Extension Training Program as part of the program Rural Development
with Equity (Desarrollo Rural con Equidad) of the Ministry of Agriculture. SENA
has Centers for Agriculture and Livestock (Centros Agropecuarios) in many
Departments, with crops, greenhouses, livestock, laboratories, processing plants (fruits,
bread, dairy, and others), where they train, advise, research and offer technological
17
For more information please see: http://oferta.senasofiaplus.edu.co/sofia-oferta/buscar-oferta-educativa.html
services to companies, guilds, organizations and people linked to the sector. They also
have the program “SENA Emprende Rural” (SER) that seeks to promote income
generation through the development of capacities and skills of the rural population
through the accompaniment and strengthening of productive initiatives.
Since 2015, SENA and the program, 100,000 Strong in the Americas, have been working
in collaboration to support the Innovation Fund grant competition, a program which
supports dynamic exchanges and training opportunities for students in agriculture,
aquaculture, biotechnology, environment, engineering, information and communications
technology (ICT), tourism, and gastronomy. In May 2017, SENA announced eight new
partnerships between U.S. community colleges and U.S. land-grant colleges and
universities, bringing the total to 13 partnerships to date. The second Innovation Fund
partnership awards will support approximately 122 more students in study abroad
programs between the U.S. and Colombia.
UMATA
As part of the decentralization process initiated with the Colombian Constitution of
1991, municipal governments established technical assistance units called Unidades
Municipales de Asistencia Técnica Agropecuarias (UMATA). The UMATA form part of
the municipal government structure and their mandate focuses on providing technical
assistance to all agricultural and livestock activities within their jurisdiction. Under the
agricultural sector policies established in the aftermath of the 1991 constitutions, the
UMATA should depend on the local Municipal Council for Rural Development (Consejo
72
Municipal de Desarrollo Rural, CMDR), chaired by the mayor and comprised of

representatives of other public-sector actors and producer organizations. The CMDR
holds ultimate responsibility for the formulation of municipal level rural development
strategies. At the departmental level, the UMATA connect to the Secretary of
Agriculture which, in turn, relates to the Ministry of Agriculture and Rural Development
at the national scale. In practice, the capacity and effectiveness of any given UMATA
depends greatly on the funding provided by the municipal government and the
importance given to rural development by the mayor. Many initial concerns that
surfaced at the inception of the UMATA model, that UMATAs play a more political than
technical role, persist today, as discussed by some of our interviewees, but there is a
broad spectrum of efficacy which varies by municipality.18
Instituto Colombiano Agropecuario (ICA)

The Colombian Agriculture Institute (Instituto Colombiano Agropecuario – ICA),
advises farmers and value chain actors in the formulation, preparation, and
implementation of policies, plans, programs, projects, measures, and procedures to
protect plant health, to protect the rights of breeders of new plant varieties, to verify
production quality, commercialization and the safe use of seeds and agricultural inputs.
Their objective is to improve the phytosanitary status of plant production, by developing
plans for the control and eradication of pests.
International Donor Agencies

Colombia has had a number of international cooperation agencies and non-
governmental organizations (NGO’s) support activities in cacao with a focus on planting
new areas, developing producer organizations and establishing additional processing
capacity both at the farm and collective level. They have also been involved in technical
assistance to cacao producers. Some key countries active in this space include the U.S.,
Canada, the European Union and Switzerland. International donor agencies working on
Productive Alliances as well as international cooperation agencies implementing donor
supported projects. Examples of international donor agencies active in cacao include
Socya, Swisscontact, ACDI-VOCA, Chemonics, Lutheran Relief Services, USAID, and
others. (See Foreign Aid to Colombian Cocoa Production Box)
18
Gottret, MV. 2007. Rural innovation and smallholders’ livelihoods: modes of intervention in hillside communities in Latin
America.https://www.researchgate.net/publication/37790524_Rural_innovation_and_smallholders'_livelihoods_modes_of_interv
ention_in_hillside_communities_of_Latin_America. Molina, JM. 2010. Territorial perspective of agricultural extension policies in
Colombia. Agronomía Colombiana 28(3): 456-463.
Foreign Aid to Colombian Cacao Production
USAID and other international donors have been supporting cacao production as an alternative to illicit
crops since at least 2000 in Latin America. A big push in Colombia came when two alternative development
projects were launched: More Investment in Sustainable Alternative Development (MIDAS) in 2006 and
Areas for Municipal-Level Alternative Development (ADAM) in 2005. These complex, multifaceted projects
addressed improving “conditions for rural citizens through productive projects, community participation,
public policy development and strengthening municipal governments.” Agricultural production was only a
part of these efforts, which emphasized institution building in post-conflict areas. Funding amounted to $369
million through 2011 and post implementation evaluations claim to have benefited over 330,000 families and
to have supported agricultural production on 272,000 hectares.
Cacao was/is a small but important part of USAID’s alternative development strategy, and was not the only
crop encouraged as an alternative to illicit crops. Cacao initiatives included providing farmers free trees for
planting, technical assistance to get farmers better prepared to grow new crops in areas where they were
uncommon, research and institutional support to identify areas where cacao production is appropriate,
planting materials likely to offer higher yields and better-quality beans, and training on production methods
and post-harvest practices. In order to insert farmers into the supply chain, these projects also addressed
marketing channels and provided support for the creation and improvement of producer organizations.
USAID funding was complemented by support from other donors who shared objectives and supported
similar or complementary initiatives. One goal was to provide alternative livelihoods for rural citizens that
incorporated cacao production. Another was to improve institutions of the cacao sector to benefit farmers,
especially in new areas where the potential for cacao production existed. Marketing efforts have emphasized
exporting “fine flavor” cacao, an issue addressed elsewhere in this report. To these ends they have recently
74
funded Red de Cacaoteras to organize and support producer organizations and high-end chocolate
manufacturers like Cocoa Hunters to support specialty cacao exports. More recent and less massive efforts,
prior to the Cacao for Peace initiative that began in 2016, (such as CELI/N) have emphasized helping rural
minorities and strengthening the cacao value chain.
In some respects, the cacao initiatives of these projects were quite successful. ADAM and MIDAS report
planting over 50,000 new hectares of cacao trees with a focus on high-yielding bulk varieties. This outcome is
seen in recent aggregate data (Fedecacao, FAO) as an increase in area harvest of cacao in 2014-15 of 70,000
hectares, above a total harvest area of only 95,000 hectares in 2010 (and 70,000 hectares in 2004). The only
other explanation beyond the various donor and government supported initiatives to expand cacao
production is the high prices, which are too recent and too small to elicit such a strong supply response in
such a short time. (cont.)
(cont.) Foreign Aid to Colombian Cacao Production
This has resulted in an increase of 40% in cacao production, from about 39,000 metric tons in both 2004 and
2010 to 54,700 metric tons in 2015. In addition, these development initiatives supported the establishment
of new producer organizations and the strengthening of existing organizations to both deliver planting
materials and technical assistance and to assist in post-harvest and marketing activities.
The successes in increased area and production needs to be tempered by the yield trend that has
accompanied those increases. National average Colombian cacao yield was a low 520 kilograms per hectare
in 2004, and fell to 410 kilograms in 2010 and an even lower 330 kilograms per hectare in 2015. The drops
in yield are evident from 2103 onward, and are not a one year phenomenon. This is substantially lower than
the 1.5 to 3 metric tons per hectare that is technically feasible, and was at times used in cost-benefit
evaluations promoting cacao initiatives. Low yields also mean low incomes to farmers, who typically plant
less than 3 hectares to cacao. Many development projects focused on planting cacao trees but neglected
other critical aspects such as fertilization, grafting, pruning and general crop management.
The record on producer organization effectiveness is also mixed. While we encountered some exceptionally
well-run producer organizations who offered technical assistance, marketing help and institutional support to
their farmers, most served only as conduits to funnel development funds to their farmers. Our interns asked
organizations what services were now being provided to members, and more often than not were told that
was not their function. Evidence also shows that farmers quit or participate only sporadically producer
organizations despite the fact that may have provided them free trees or initially offered technical assistance.
Post-implementation evaluations by those who implemented ADAM and MIDAS present several of the
problems that account for the weak performance. The evaluation notes difficulties in establishing the
production of crops which were uncommon to an area, and this was frequently the case with cacao as it was
introduced into post-conflict areas. Efforts to strengthen producer organizations and training farmers in a
difficult crop were problematic when cacao production had not been significant in a region. In some cases,
regions identified for expanded production were inappropriate for cacao, especially due to lack of sufficient
water. The evaluation notes that over a third of trees planted had died by 2014. Contributing to this may
have been the discontinuation of technical assistance when projects terminated. Moreover, the evaluation
observes that priority was placed on tree planting over provision of technical assistance, since quantitative
targets affecting implementer payment were based on the number of trees planted and not on the extent of
support services offered. Given the difficulties in offering services to farmers in new areas, and the lack of
incentives to bolster those services, it is not surprising that evidence supports the notion that these new
farmers are not adopting best production practices. (cont.)
(cont.) Foreign Aid to Colombian Cacao Production
Another possible explanation of the poor yield performance is that many rural citizens who received free
trees do not view cacao as important to their livelihood. These “dilatant” farmers simply harvest a few beans
for supplementary cash, but do not put in the hard work, nor hire the labor necessary to prune trees, weed
plantations, manage diseases like Monilia, nor effectively carry out post-harvest practices (fermentation and
drying) necessary to achieve high yields of good quality cacao.
Projects elsewhere (e.g. in the Cocoa Alliance in Peru) seem to have been more successful in establishing
good producer organizations, adopting best practices in production, and successfully marketing the harvest.
Those projects specialized in enhancing cocoa production. Another limitation to ADAM and MIDAS’ success
in cocoa may have been the lack of focus on this crop. Other project objectives achieved consistent
successes.
The outcomes from aid supported cacao initiatives in Colombia highlight both the difficulties in training new
farmers and establishing supporting institutions in regions where cacao production is not common, and the
need especially for long term technical assistance and institution building if alternative development strategies
are to feature cacao as an alternative to illicit crops.
76
CACAO PRODUCTION - THE BASICS

A contextual understanding of what is found in a Colombian cacao farm, planted
predominantly as a mixed agroforestry plantation such as found in the marginal,
traditional, and diversified farms outlined previously, can be helpful for delineating how
cacao plays a role in the household income. Cacao trees can be planted at a density
between 100-1000 trees per hectare. In our interviews with farmers we saw wide
variations in cacao production systems. In Colombia, cacao producers normally establish
and manage their cacao plantations under shade using various configurations depending
upon climate, soils, household food needs and potential for generating income. These
arrangements tend to include banana plants, fruit trees, and taller shade trees.
While some farms were managed extremely well (with yields upwards of 1,500 kilos/ha),
others were struggling to produce 400 kilos / ha. When cacao production was well-
managed, it was clearly the primary business of the owner. Regular fertilization and
disease control were carried out by family labor, and hiring labor was usually a necessity
for harvesting, pruning, and weed control. Among the farmers with lower yields, cacao
might be one of many income-generating activities and little or no time was spent
fertilizing, pruning, or controlling diseases.
Good agricultural practices should include fertilization (up to four times a year),
pruning to maintain a shorter stature and more open canopy for flower production and
fruit setting, weeding, and disease control. In especially dry regions, such as parts of the
Sierra Nevada, successful farmers also had access to passive irrigation systems. The
MADR national plan (MADR & Consejo Nacional Cacaotero, 2008) and Grand Alliance
(Gran Alianza)19 mention these same practices as a means for increasing production.
However, improved management practices come at a cost. Agricultural costs have
19
The mission of the Grand Alliance (Gran Alianza) is to “increase exports of fine cocoa of Colombia flavor and aroma in
a sustainable manner over time.” The full working group is divided into three branches of action, 1) Investigation
(Minagricultura, CORPOICA, Fedecacao, USAID), 2) Production (Minagricultura, Fedecacao, Procolombia), and
Commercialization and Production (Procolombia, Mincomercio – PTP, Minagricultura, Swisscontact, Casa Luker, USAID).
The goal is to increase cacao production to 100,000 tons per year.
increased in the last decade. According to a report compiled by TechnoServe and ANDI
(2015), over the last decade, labor costs have gone up 97% and the price of urea has
increased by 49%.20
Location matters in Colombia, since prices vary (local input costs, transportation costs,
etc.) and environmental factors can impact production levels, disease incidence, and
varietal differences. For farmers new to cacao farming, high substantial upfront costs
must be incurred (see Appendix H for costs associated with establishing cacao
plantations in one geographical region in Colombia) and income from cacao does not
accrue until several years later. The first harvests for cacao plantations are dependent
upon the variety and management of the trees. Some trees produce pods 2-3 years after
planting but larger harvests are usually seen 4-6 years after planting. Early on farmers
grow other crops (varying by geographical region), such as plantains and citrus in order
to ensure a more stable income. As the cacao matures, farmers may (or may not)
specialize in cacao and spend more time and energy on this crop and less on other
crops.
Given the long lead time needed for cacao to produce, income from fruit (soursop,
guava, citrus, and other tropical fruit) trees, timber species, and banana plants can be
important to a farmer’s livelihood. Banana plants produce for the first 4-5 years, until
the cacao trees begin to produce. By the time the cacao is ready to be replaced (20-30
years), the shade trees, which tend to have good timber quality, are ready to be cut
down and sold. A producer’s ability to harvest trees are limited because of
governmental policies.
78
20
The main increase has been in fertilizer costs (which is common globally but acute in Colombia). Labor
costs have increased in some regions as competition increases from both legal and illicit activities. For
example, in Cauca the day rate for agriculture is around COP$30,000 while illegal gold mining pays
COP$80,000. Coca processing is in line with the gold mining. For areas with better rural urban connectivity,
farmers may opt to diversify their activities out of agriculture. Day labor does the same thing with people
moving into selling labor for construction or into service provision in activities like informal transport
(mototaxis), small-scale commerce and maid service, among others.
Cacao Varieties and Planting Materials

One of the objectives of the Cacao for Peace program is to investigate the cacao varieties
found in Colombia. Numerous entities (Fedecacao, Corpoica, Nutresa, Luker, CIAT) have
developed and assessed cacao varieties that improve yield, resist diseases, and may be
adapted to local Colombian environments. These varieties appear to be capable of much
higher yields, but there are numerous reasons why they are not having an impact on yield
increases in the country. For instance, many producers do not have access to these new
varieties. Seedlings from the new varieties have not been mass produced and made available
to all regions of the country. Many of the new varieties have not been vetted to ensure that
they are suitable for the different regions and microclimates. Another limiting factor is
possibly due to improper management practices, including insufficient amounts of applied
fertilizer and incorrect pruning practices. We observed a mixture of cacao varieties in the
plantations, where they are all harvested, fermented, and intermingled together. In specific
cases where plantations utilize good management practices (fertilizer use, appropriate
pruning techniques, etc.), a yield boost can occur. Because there are numerous entities
competing to find the next high yielding variety, there is little collaboration and trust.
Experimental stations realize high yields with the available varieties, however in their
competition with each other, these entities do not enhance the reputation of Colombian
cacao science. The collaboration that has occasionally occurred seems prone to break down.
Mistakes may have been made in the past to rush new varieties to market. Available varieties
seem to offer tradeoffs between yield and disease resistance on the one hand and flavor
profile on the other.
Post-Harvest Management
Post-harvest management includes fermenting cacao beans, drying them, and storage.
Investment in wooden fermentation boxes for properly fermenting cacao are the
industry norm and considered best practices, but in our conversations with producers
many commented that cacao is also fermented in sacks. The use of burlap sacks for
fermenting causes low consistency and/or incomplete fermentation, which negatively
impacts final quality.
In the Santander region, the most productive farms had invested heavily in post-harvest
infrastructure, such as casas elbas, which provide removable rooftops for effectively
drying cacao and protecting it from rain (Figure 13). Nationwide, consistency in drying is
lacking, because the quality of on-farm drying locations and practices differs among
farmers. Sometimes beans are also being purchased wet, en baba, and a producer
organization would maintain a centralized area where post-harvest practices are
performed on aggregated cacao. The lack of capital to invest in improved post-harvest
infrastructure (fermentation boxes and elbas or drying areas) was mentioned as a reason
for not incorporating new infrastructure on the farms in numerous cases by producers.
While there is a general understanding that everyone would like to have improved
infrastructure to maintain high quality cacao, we also received anecdotal evidence
suggesting centralized processing facilities were underutilized.
Figure 13. ELBA, ROOFTOP DRYING SYSTEM

80
Photo Credits: Colleen Kelly, 2016

Extension and Technical Assistance Services along the

Supply Chain
Extension services “are the Achilles heel of the Colombian agricultural innovation
system (OECD, 2015, p 272). “The current technical assistance system is unstable,
relatively costly, disconnected from R&D, and education…,” and “technical assistants
lack the required skills and would need re-training” (p 275). Our analysis of the
decentralized system that provides extension services to cacao producers aligns with
this critical assessment, however we also found instances of providers with
programming that can increase yields substantially. We found that the access and quality
of extension services is highly variable between locations. International development
agencies and NGOs play a large role in providing technical assistance to cacao growers,
especially in areas with nascent supply chains. Producers in these may be left without
support when projects and funding end.
Technical assistance services are rarely coordinated, validated, or made consistent to
ensure a clear message is delivered in a format that is best for the farmer and in a timely
fashion. Competition among technical advice providers has at times generated mixed
messages to farmers, and with so many different people giving out information it is
challenging to make sure the content is correct. There is no mechanism in place to
coordinate and verify that accurate and consistent information is being provided to
farmers. Also, the technical assistance model currently being used and largely based on
one-on-one interactions with farmers, is a resource-intensive and expensive approach.
Hence, the reach is limited by budget constraints. And, there are only a few examples of
online approaches (Table 9).
Table 9
EXAMPLES OF EXTENSION (TECHNICAL ASSISTANCE PROGRAMS)
RECENTLY/CURRENTLY SUPPORTED IN COLOMBIA
Current/ Cacao
Entity Recent Date Description21 Specific? Web page
Program
Ministry of Colombia 2015- ‘Program objectives include No, but cacao http://bit.ly/2AvJ
Agriculture Sowing 2018 increasing the area, yields, is one of the e7C
and Rural production and promotion of crops
(Colombia
Development agricultural and agroindustrial supported for
Siembra)
exports, promote the the Incentive
development of agricultural to Rural
businesses to improve the Capitalization
income of producers,
strengthen technological
development and services in
the agricultural sector.’
There is an Incentive to Rural

Capitalization that can be used
for machinery and equipment,
planting, soil improvement,
and agricultural infrastructure.
This incentive is managed by
Finagro.
Rural 2011- ‘This program established Not http://bit.ly/2G1

Development 2014 incentives to promote specifically, Ml4m
82
with Equity productivity, including : but cacao is

an eligible
(Desarrollo  The Incentive for Rural crop.
Rural con Direct Technical
Equidad, DRE) Assistance, a subsidy
which co-financed up to
(Preceded by 80% of the costs of
Agro, Ingreso execution of the General
seguro, AIS from Plans of Direct Rural
Technical Assistance
2007-2010)
prepared by the
municipalities or
Provincial Agribusiness
Management Centers. It
provided technical
21
This description is about the aspects related to Extension (technical assistance), some programs may have
other components.
assistance to small and

medium producers
through the hiring of
EPSAGROs;
 The Incentive for Technical
Guild Assistance, an
economic support of
50% of the costs of
providing technical
assistance services to
and the training/updating
of technical assistants for
the agricultural sector
guilds;
 The Incentive for Special
Technical Assistance:
Provision of technical
assistance to small
agricultural producers in
conditions of
vulnerability in
prioritized regions.’
Support for Phase ‘This program links small rural No, but cacao http://bit.ly/2wq
Productive III: producers to markets through has been one dkXT
Alliances 2016- an agribusiness scheme with a of the crops
Program 2018; formal commercial ally. that benefited
the most.
(Apoyo a Phase The program promotes
Alianzas II: initiatives in which small
Productivas) 2008- producers participate to
2015; increase their income and
sustainable development by
connecting them to value-
added markets, and promoting
competitive production.
Phase I: The program supports

2002- sustainability and subsequent
2007 growth of agribusiness through
the creation of a revolving
fund owned by the producer
organization. Managed by
Corporación Colombia
Internacional.
In phases I and II (2002-2015):

147 alliances (20%) were for
cacao. There were 81 alliances
with Compañía Nacional de
Chocolates, 5.538 families, in
the case of Casa Luker, there
were 71 alliances benefiting
4.955 families.22
Proyecto de 2012- ‘Program targets groups of No http://bit.ly/2KP1

Construcción de 2017 rural people, instead of 6er
Capacidades individuals, and focuses on
Empresariales capacity building for groups
Rurales: through a combined approach
Confianza y of technical assistance,
Oportunidad workshops and training
sessions and study trips. It is
comprised of three
components: (a) Formation of
Associative Social Capital and
Business Development, (b)
Development and
Strengthening of Rural
Financial Assets, (c)
84
Knowledge Management,
Capacities and
Communications.’
This program is related to the

former ‘Development Program
for Investment Opportunities
and Capitalization of the
Assets of Rural
Microenterprises - Rural
Opportunities (Programa
Desarrollo de las
Oportunidades de Inversión y
Capitalización de los Activos
22
http://documents.worldbank.org/curated/en/433011496956067376/pdf/P161247-06-08-2017-
1496956063582.pdf
de las Microempresas Rurales

– Oportunidades Rurales)
which ran from 2007 - 2014
Implementation 2015 Sustainable Productive No http://bit.ly/2ru3

of Income Projects focus on gby
Generation and entrepreneurship and
Development of Comprehensive Projects for
Productive Strengthening Productive
Capacities Capacities is a focused
intervention aimed at
(Implementación
associations.
Generación De
Ingresos y Both programs are aimed at
Desarrollo de increasing the capacity of rural
Capacidades producers for productivity,
Productivas) competitiveness and direct
market integration.
Agency of Comprehensive 2015 ‘Program includes technical No http://bit.ly/2v

Rural Agricultural and assistance for agricultural WHBub
Development Rural producers on: agricultural site
selection based on soil type;
Development
planning for marketing and
Projects with a
exporting; application and use
Territorial
of productivity enhancing
Approach technologies and resources;
access to investment financing,
(Proyectos
promotion of producer
Integrales de organizations; management of
Desarrollo marketing and process
Agropecuario y technologies; infrastructure
Rural con development and market
Enfoque information systems.’
Territorial)
Ministry of Productive 2009- ‘The program offers technical Yes, "Cocoa http://bit.ly/2B9
Commerce, Transformation assistance and support to and its h6HC
Industry and Program businesses promote the derivatives" is
Tourism adoption of advanced methods the first of
(Programa de for productivity twelve sectors
Transformación improvements. The program that this
Productiva)
uses specialized training in program
alliance with companies and covers
educational institutions along
with financing to obtain
certifications as a requisite for
entry to international markets,
etc.. .
Swisscontact Colombia + 2017- The objective is to strengthen Yes, “special http://bit.ly/2M4

Competitiva 2020 the value chain, focusing in the cacaos and pgGm
international market. Swiss chocolate” is
(Formerly 2012- Expert Network is also one of the
“Promoción de 2016
available to support capacity four value
la Producción y development, competitiveness, chain
Exportación de
access to financing, supported
Cacao Fino y internationalization, and
de Aroma en
standards and certifications.
Colombia” –
COEXCA" from
2012-2016)
Companies 2000 - They are public, private and There are http://bit.ly/2G2
providing Present mixed companies registered EPSAGROS QO7e
agricultural under the Ministry of specialized in
technical Agriculture or the cacao.
assistance Departmental Secretaries of
services - Agriculture, for the provision
EPSAGROS of technical assistance
services. As for 2017, there
were 559 EPSAGROs
registered.
86
With the potential to increase yield, unmet domestic demand, and the support from
donors and the government, many actors have gotten into the technical assistance
business (Table 10). Best practice messages are not always consistent and with so many
different people giving out information it is challenging to make sure the content is
correct. We found that Fedecacao, Luker, SENA, Nutresa, EcoCacao (and other farmer
associations), Corpoica, and international development agencies all provide some type
of technical assistance services and yet they are rarely coordinated, validated, or made
consistent to ensure a clear message is delivered in a format that is best for the farmer
and in a timely fashion. Competition among technical advice providers has at times
generated mixed messages to farmers. When numerous organizations are providing
technical assistance, there is a need for coordination to ensure accurate and consistent
information is being provided to farmers.
Table 10
EXAMPLES OF ONLINE EXTENSION RESOURCES FOR CACAO IN COLOMBIA
Entity Title Description Website
Ministry of Information and Online courses, statistics, weather http://bit.ly/2I1Q4Fg

Agriculture Communication information, and a digital library with
and Rural Network of the articles, books, booklets and magazines.
Development Agricultural This information is aggregated by Agronet
Sector (Red de to assist producers with decision making.
Información y
Comunicación del
Sector
Agropecuario) –
AGRONET
CELUAGRONET Subscription by cellphone, free of charge, http://bit.ly/2K9BY19

covering these topics:
 Market information system for main

wholesale centers.
 Weather information by region.
 Technical production guides for specific
crops.
 Official information reported directly
from the Ministry of Agriculture and
Rural Development.
Fedecacao Documentos Information about good agricultural http://bit.ly/2I1MmeE

técnicos practices and techniques for cacao.
Revista Colombia Information about cacao, news, events, and http://bit.ly/2M1NIrG

Cacaotera Fedecacao
Swisscontact Promotion of the From their project COEXCA, created http://bit.ly/2KEoUQW
Production and online resources including: Quality control
Exportation of for cocoa beans; Good Agricultural
Fine Cocoa and Practices for harvest, fermentation, and
Aroma in drying of special cocoa; Basic Guidelines for
Colombia Sustainable Cocoa.
Corpoica Cacao Videos Educational videos about cacao techniques. http://bit.ly/2wrwsVH
PNUD Guide for the Practical guide for the maintenance of http://bit.ly/2IbQkNC
Colombia cultivation of cocoa cultivation in which peasant families
cocoa from Oriente Antioqueño work
ICA Phytosanitary ‘This booklet offers general information on http://bit.ly/2G0vr6i

management of the cultivation of cocoa and a practical
cocoa crops: guide for the management and control of
Measures for the these diseases.’
winter season
The national agricultural policies which have decentralized and privatized extension
services have materialized as highly fragmented support for cacao farmers. By design,
there are many actors providing extension services.
In Colombia, a cacao farmer may receive extension services from:
 Fedecacao
 Casa Luker / Nutresa or other private chocolate manufacturers
88
 A producer organization such as Ecocacao

 One of the contracted Companies Providing Agricultural Technical Assistance
Services (EPSAGROS) (which could be a private enterprise, a producer
organization, an NGO, etc.)
 An NGO such as Fundación Socya
 Agricultural universities’ students completing compulsory internships in their final
semester
 A program supported by an international development agency such as USAID
 An UMATA
A co-financed MADR program that may have a technical assistance component

such as: Equitable Rural Development (Desarrollo Rural con Equidad) DRE,
Producer Alliances (Alianzas Productivas) and Rural Opportunities (Oportunidades
Rurales)
Of these options, the two primary extension models funded with public resources are:
Technical assistance provided by EPSAGROS and UMATAs under The Direct Rural
Technical Assistance (ATDR) plan
Technical assistance provided by Fedecacao with resources from the National Fund
for Cacao, the parafiscal fund supplied by the 3% Cacao Development fee.
The manner in which technical assistance services are funded results in a non-integrated,
patchy implementation. Colombian law states that state and local governments are
responsible for providing technical assistance to small and medium sized farms 23. The
diversified, traditional, and marginal farms fit within this definition. Municipalities develop
programs to receive federal funding and hire a provider such as EPSAGRO to implement
the desired program. Technical assistance programming timeframes follow funding cycles
and trends in the most recent issues impacting farmers. The resultant technical
assistance takes the form of short-duration projects rather than stable programming
with an impact assessment. We were told, by multiple stakeholders including
governmental organizations, cacao producers, chocolate manufacturers, farmer
organizations, that this lack of sustained extension programming is especially
problematic when combating systemic, persistent problems such as Moniliophthora roreri.
Funding structures for technical assistance services also greatly impact program delivery
and coverage. We found that the farmers in Santander largely had access to high-quality
technical assistance and that farmers had a favorable opinion of Fedecacao. In other
areas, Fedecacao was viewed as absent or spread too thin and unevenly. Colombian law
directs Fedecacao to allocate the 3% Cacao Development Fee back to the areas from
which they were obtained. Fedecacao’s programs and projects, therefore, must
prioritize attention to regions already producing large amounts of cacao rather than
23
Colombia uses a system called ‘unidad agrícola familiar’ (UAF). A UAF is defined as the minimum land holding needed
for a family to make three times the minimum wage. The size of the UAF varies depending on where it is located. For
example, in the coffee region a UAF is 4 hectares while in the Llanos (Eastern Plains) it varies from 13 hectares (along the
river Meta) to 1,840 hectares in hilly terrain.
emerging areas. For there to be large scale sectoral growth, there needs to be
resources allocated such that all growing areas receive some attention. If it cannot be
done by a sole entity, then all the more reason for fostering effective collaboration. The
infrastructure of how cacao enters the market chain exacerbates this issue further.
While fees should be assessed at every transaction, in reality, fees are collected only at
central buying centers. When cacao from distant areas is brought in for sale by a trader,
it invariably crosses jurisdictional lines. The fees are linked to the point of aggregation
rather than production as are any funds that are reinvested in the region.
There is also a mismatch between the financial support structure for cacao technical
assistance services and the reality of the diverse farming system of small-holder farms.
Cacao is often grown with multiple crops but services are offered from providers
primarily interested in increasing cacao yields and quality. Offering extensive advice for
integrated systems is especially critical when expanding cacao to new areas in order to
support income and household food security during the multiyear gap between planting
new trees and harvesting the first pods.
Fedecacao, with 35 agronomists and 148 technicians among its 21 technical units, has
the most expansive and integrated technical assistance network across the country,
however it was reported to us, by multiple stakeholders found within the supply chain,
that Fedecacao presence and on-the ground impact in areas new to cacao was sparse or
non-existent. Between 2010-2015, Fedecacao made: 89,444 individual visits; held 192
field days benefitting 15,192 participants; conducted a total of 3,752 days of “Cacao
Producer School” for 5,440 producers; held 63 farm tours; and conducted 164 capacity
90
training courses for 4130 beneficiaries at demonstration farms. In 2014, Fedecacao

expanded their technology transfer event portfolio to offer methodological
demonstrations, farmer field schools, workshops, and 36 national training courses.
Fedecacao also employs mass communication methods, such as a Fedecacao newspaper,
online videos, radio programs and publishes booklets and technical guides. Despite these
efforts, the fact that Fedecacao does not reach all cacao producers directly is a source
of discontent for those they do not reach given the obligatory nature of the 3% fee for
the Cacao Fund.
Fedecacao does manage a beginning farmer program at all of their offices when feasible,
both from a personnel and financial perspective. One farmer in the jurisdiction of the
Rionegro Fedecacao office, who was just starting, implied that when someone starts
out Fedecacao visits them at least around four times during the first year. It seems that
information on new farmers tends to reach Fedecacao either through word of mouth
(“Juan’s neighbor is planting cacao this year”) or when the new farmer contacts them, so
it is doubtful that the programs are found in areas where cacao is not an important
cropping system. It is much easier under current technical assistance models to work
with farmers who already have experience with cacao, and in regions where cacao is
prevalent so that neighbors can reinforce messages. If new “post-conflict areas”, where
cacao is not now prevalent, are to realize expanded production and high yields, even
more resource intensive support services will be required. It is not sufficient to just
subsidize the cost of planting trees and hope that new farmers succeed. Oftentimes
these farmers are in areas where the infrastructure is not in place to earn a higher price
for their cacao. Traders infrequently stop by to pick up cacao purchases because there
is not enough supply for their trip to be worthwhile. Input costs can be higher in areas
where infrastructure has not been established or the inputs might not even be available.
Fedecacao’s presence is often lacking in areas that do not have high populations of cacao
farmers. New organizations have sprung up in these areas to support cacao farmers but
their programs are usually tied to donor dollars and when the money is no longer
available these organizations leave the area. Even though there is a national policy for
research and development specifically for cacao, in reality there is no practical evidence
that consistency and defined roles are part of national institutions to follow these
policies.
The current technical assistance system in Colombia is costly, unstable, inconsistent,
unevenly distributed, and disconnected from research, innovation, and education. Few
stakeholders in extension, policy, or research view cacao as part of an integrated
system. Programs involving youth are almost entirely absent, an unfortunate exclusion
given the utility of youth programming in diffusing innovation to older family members
and training the next generation of producers.
Targeting domestic versus export markets

There is a high potential to meet demand in domestic and bulk export markets, so if
more cacao is produced, it is likely to be sold. Meeting that demand can raise incomes
of small producers and increase employment in rural areas.
We observed several distinct approaches to tapping export markets for luxury cacao
and paying price premiums. Some models are more realistic than others in light of the
demand for cacao in Colombia and on international markets. The luxury cacao market
is a competitive business and we found initiatives to produce and export fine flavor,
single origin, or bean-to-bar cacao in a number of other Latin American countries. Based
on these initiatives, Colombia should not expect to quickly become a large supplier to
higher end cacao markets of sufficient size to employ a large number of farmers.
There have been efforts to tap these markets ongoing in Colombia for a number of
years (>5). To date these efforts have exported only a very small volume of cacao, and
so benefited only a few farmers. Moreover, some started by offering high premiums
over the international price, but those premiums have shrunk as time passes – since the
captured value is not from farmers’ activities but by the exporters’ activities. The
“socialist business models,” where farmers are paid more than the value they generate,
are not sustainable. When processors are under financial stress, they will reduce the
prices paid to farmers. The relative scarcity of models such as Taza and Cacao Hunters,
who have paid farmers premiums for higher quality cacao, seems to indicate limited
market appetite for these products as well as other income opportunities for farmers
that may be more profitable. The demand for this chocolate is quite small, so the true
impact for poverty reduction on a large scale using this business or development model
is questionable.
Emphasis on expanding cacao to sell in ultra-premium markets is a mistake because:
1) expected premiums are exaggerated and have not been realized in sales for
Colombia,
2) the market niche for ultra-premium cacao may be growing, but it is still very
92
small and highly competitive,

3) the value generating activities to attract these premiums are marketing and post-
harvest processing, thus any premiums will accrue to businesses conducting these
activities and not necessarily farmers,
4) beans to supply this ultra-premium market are readily available, even in surplus –
hence low premiums should be expected (as is the case for certified sustainable
cacao),
5) processing can overcome issues with low-quality beans and sort them out of the
supply,
6) past longstanding efforts to penetrate this market in Colombia have generated
only very small exports.
In order to reach some of Cacao for Peace’s goals, we must be able to scale up activities
that reach the maximum number of people. Foreign or domestic aid should improve the
livelihoods for farmers and provide employment opportunities, not just benefit a few
businesses. The goal should be to provide the appropriate technical support to increase
production, develop consistent post-harvest processing and get it marketed. Extension
will play a key role if the available land (and labor) can be found with the expansion into
new areas.
Financing
The Colombian government has a history of subsidizing credit for agricultural activities.
Credit subsidies exist, and can be quite large. While many government agencies appear
to offer subsidized credit for agricultural projects, this has not been taken advantage of
as much as it could be. Farmers cite difficulties in filling out paperwork and the long
timeframe as barriers to accessing credit, despite assistance offered by some extension
services and producer associations. Several experienced cacao technical experts
expressed their difficulty in accessing credit from the private sector specifically for
purchasing land, as many banks do not see cacao as a profitable crop. Other producer
organizations have attempted to take advantage of government programs and only
certain members have succeeded.
More proactive assistance from government financial institutions may be needed to
connect farmers to the financial resources they need. One function of technical
assistance programs should be to help farmers gain access to credit, whether through
these subsidized programs or through commercial loans. Repayment plans also need to
be sensitive to the long-term requirements of growing cacao, which often takes several
years to become profitable. As such, cacao is not a good option for micro-credit. Since
cacao often takes several years to become profitable, repayment plans also need to be
sensitive to long-term requirements. For cacao, loans generally have a three-year grace
period without payment or interest while cacao matures. Interest is very low, around
1.1% or 1.2%. The interest rate is calculated according to the land size of the farm and
depends on whether you are a large, medium or smallholder farmer. There are also
programs that will cover large percentages of the loan, i.e. 40%. Some years, programs
from the federal government loan out most of the money available for projects early,
meaning there is a scarcity of money by the middle of the year. When someone takes a
loan from the bank for a project, Fedecacao will provide technical assistance free of
charge (funded by the 3% tax).
The well-run cacao farms we encountered had substantial capital investment – trees,
drying rooftops, fermentation boxes, and other good agricultural practices. For those
farmers with access to credit, there are good options available for cacao farmers for
inputs, renewal of trees, etc. if a farmer can figure out the paperwork. Not all farmers
have access to this credit because they do not live in an area where it is available.
However, financing to purchase land to get into cacao is not as available.
Youth and Labor Constraints

In order to ensure growth and long-term viability of the cacao sector, the attractiveness
of cacao farming to younger generations as an appealing profession and income
opportunity must be greatly enhanced. The cacao sector faces an aging rural population,
youth migration to urban areas, and an array of land access issues, such as high prices
for land, land tenure issues, and farmland close to alternative income sources. For the
traditional and diversified cacao farms, full time year-round labor is not required but
they also do not provide stable incomes. The older generation is remaining on their
farms and providing the primary labor and decision-making until they reach old age; we
commonly saw farmers in their 60’s and above. The younger generation (18-30 years
old) we talked with, who were involved in cacao (for example those employed by
Fedecacao), often return home on weekends and holidays to assist their parents but
their help isn’t necessary full time.
94
Because cacao farmers are working until their 60s+, when they retire their children will
be 30-40+ years old (if a parent works until 80 years old their child could easily be 60).
Youth have no hope to inherit the land during their peak years, so they leave the farm in
order to make a living, meaning that the farming lifestyle is skipping a generation. The
younger generation we interviewed expressed frustration with respect to purchasing
their own land as not a viable option in most of the departments that produce cacao in
the country. By the time parents are ready to hand off the farms, the appropriate
generation to take the land would be the grandchildren who have now grown up in a
different lifestyle. The only successful multi-generational family farm we saw functioned
because the grandfather had enough land to give each of his sons a few hectares to farm
independently, but on a family compound, to support their nuclear families. However,
this pattern may not hold for children who find temporary careers outside the farm, or
in cases where children are unable to find jobs that pay highly enough to make living
apart from their parents practical.
Post-Conflict Environment
The post-conflict environment in Colombia constitutes a challenge to rural development
in general, with specific implications for the cacao sector. Key issues include rural
outmigration, land tenure, poor transportation infrastructure and competition with off
farm activities and illicit crops. The competition for labor is principally with illicit
activities and off-farm income. Illicit activities include coca and poppy production,
harvesting and processing as well as illegal mining and contraband. All of these activities
pay a higher day rate for unskilled labor than anything in the licit agricultural economy.
In addition, off farm income activities including construction, transportation and the
service sector offer an increasing number of opportunities even in rural territories
and/or small to mid-size cities. These activities normally have higher social status and
may pay better than agriculture.
In terms of land issues, in addition to the continual division of land among children
(which leads to commercially non-viable farms) many farmers lack legal ownership
and/or tenure. This is especially problematic in areas of post-conflict where land titles
either don’t exist or are managed in a collective fashion, such as is the case with Afro-
Colombian and indigenous communities. The lack of a clear title effectively disqualifies a
farmer from formal credit and may limit their access to other public support like
training, extension and/or input provision. Context matters, the situation in Tumaco –
Afro-Colombian communities with collective land titles – varies significantly from what
one finds in Huila, Antioquia or Arauca. As such it can be challenging coming up with a
general answer for all of Colombia.
The 50-year old Colombian conflict displaced 6,360,000 people. Most relocated to
urban areas, particularly the larger cities such as Bogotá, Cartagena, Barranquilla,
Medellin, Cali, Bucaramanga, Villavicencio, and Pasto. Most fled conflict zones that were
well-suited to cacao production, or zones where cacao was already in production.
These migrations contributed to the lack of labor in cacao producing areas, a significant
level of abandonment of cacao plantations as well as the continued aging of the producer
population. In areas that are more remote, with poor road access and a lack of utilities
such as electricity and potable water, land is less expensive. However, these areas are
less likely to receive technical assistance while also carrying a security risk. As such, land
conflict in many major cacao producing areas is an obstacle to the development of the
sector.
STATUS OF RURAL EDUCATION AND AGRICULTURAL EDUCATION

Favorable winds for revitalizing rural education
On September 26, 2016, President Juan Manuel Santos and leftist rebel leader
Timochenko signed a peace deal between government and FARC rebels using very
special pens - re-purposed 50-gauge bullet casings had been fashioned into the barrel of
the stylists. Nicknamed “balígrafos” (bala for bullet and bolígrafo for pen), the pens bear
the inscription, “Bullets wrote our past. Education, our future." In 2015, for the first
time in the nation’s history, funding towards education exceeded that going towards
national defense. Fiscal policy appears to be backing up Santos’s promise to make
Colombia the most educated country in the region by 2025.
The CfP initiative similarly places education at the center of its strategy by identifying
cooperative research, technical assistance, graduate student scholarships, and extension
education as the tools through which public and private agricultural institutions
supporting the cacao sector will be strengthened. They also align with the objectives
found in the National Planning Department’s proposal “Mission to Transform Rural
Colombia” (Misión para la Transformación del Campo Colombiano) and the most
recent draft of the peace accords, "Final Agreement for the Ending of Conflict and the
Construction of a Stable and Durable Peace.” Both call for the development and
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expansion of a more integrated technical assistance and deep changes to rural

education.
Agricultural education for youth and young adults
The peace agreement articulates a Comprehensive Rural Reform and the creation of
“Special Rural Education Plan.” Seventy-two members of the IV Congress for Rural
Education formed a National Roundtable to draft a roadmap for rural education
initiatives to meet the conditions stipulated in the peace accords as well as Ministry of
Education guidelines. Policymakers are careful to word recommendations regarding
rural education to navigate the delicate balance between recommending agricultural and
vocational education strategies and not creating a classist system which channels rural
youth into low-earning occupations. The key to negotiating this balance lies in combining
student-centered, experiential learning approaches and agricultural to teach STEAM

(Science, Technology, Engineering, Agriculture and Mathematics) material, leadership,
civic engagement, and entrepreneurial skills. This approach not only provides students
with a suit of transferrable life skills, it prepares students entering the rural workforce
and those desirous of continuing their education at either technological schools or
universities.
The following Table 11 lists the 13 criteria to be met by this plan as well as potential
areas of alignment with CfP objectives and examples of interventions. While CfP cannot
re-cast these complex systems itself, the initiative can be directed to support an
integrated education approach and rural education as it relates to the cacao sector.
Unique opportunities exist for CfP to support school-based agricultural programming
models with proven track-records for success, extension programming dedicated to
positive youth development, education programs which strengthen links between higher
education institutions and businesses within the cacao sector, and training resources
within tertiary institutions which train future researchers and extension professionals.
Table 11
CRITERIA OF THE SPECIAL RURAL EDUCATION PLAN AND EXAMPLES OF
HOW CFP ACTIVITIES COULD ALIGN WITH THESE CRITERIA
Table 11 Continued (Continued)
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RECOMMENDATIONS
The Colombian cacao sector presents opportunities specifically in the context of post-
conflict development. Cacao has the potential to be grown in areas emerging from
conflict if managed using diverse farming systems (similar to the diversified cacao
plantation section mentioned earlier in the document) by smallholder farmers. Unlike
other producing countries, Colombia possesses a strong domestic market for cacao and
chocolate and is home to two large confectionary companies that demand high volumes
of, and add value to, Colombian cacao. This strong private sector provides a wide range
of services (including research and education) and opportunities for public-private
partnerships. On the public side, Colombia invests significant resources in the sector for
technical assistance and training (through the levy of an internal tax) as well as through
investments in cacao research. Fedecacao, a public institution, is in place to support
farmers and through institutional building and technical assistance, but the breadth and
depth of their reach is constrained by available resources. The public policy environment
has an established entity, Consejo Nacional de Cacao, which has the potential to
support collaboration and can convene the key actors in the cacao sector or a new
institution could be introduced that benefits from the lessons learned from the Consejo.
Given the regional diversity of the sector (population, demographics, topography, among
other factors), similar attention should be given to the Consejo’s that are in place at the
departmental level. All these factors seem to constitute good conditions for a
competitive, profitable, sustainable and socially inclusive cacao sector in Colombia.
Recent efforts to promote the Colombia cacao sector have focused on expanding cacao
production and to a lesser degree post-harvest management, the establishment of
producer organizations and the exploration of niche markets. Despite these
interventions, the sector still underperforms its potential.
Rather than focus only on cacao production, we propose a different strategy that starts
by clarifying roles and responsibilities in the sector to avoid duplication and enhance
coordination and collaboration amongst national and regional actors, identify
investments that strengthen producer organizations to become viable rural businesses
and provide clear market signals and incentives for improved practices. This could be
achieved by a National Strategic Plan for the cacao sector. As we have stated
throughout the document, the major challenge facing the Colombian cacao sector
remains low productivity, varying quality and low or negative profitability for farmers.
To date most support focused on a technology push strategy whereby public funds
(donor and Colombian government) promoted production technology packages to
farmers. Results of this strategy – as shown by our analysis of annual yield per hectare –
remains modest at best. Given the limited return on a supply push strategy, we propose
to examine the institutional arrangements in the cacao sector to see if better alignment,
coordination and the provision of key incentives can help create demand pull that leads
to more effective adoption of technologies and contributes to improved investment and
yields. This approach postulates that many of the issues holding back cacao production
are not technical in nature and that continued investment in production will not move
the needle significantly. Rather, care should be paid to how actors in the sector work
more efficiently together to ensure access to technology, finance to implement, and
clearer purchasing relationships to incentivize quantity and quality of cacao. This means
doubling down on organizations like the National Cacao Council and the Regional
Cacao Councils and using funding to achieve alignment among research, extension and
finance. Additionally, conversations with buyers around business models and pricing
schemes that effectively incentivize volume and quality are needed. For large buyers like
Nutresa and Casa Luker, greater price differentiation between high-quality and low-
quality cacao would help. For specialty buyers, additional incentives for quality that take
into account the higher post-harvest costs associated with consistent fermentation and
drying processes are needed. Finally, all of this is constrained by the global market for
cacao which remains principally a commodity crop. Incentives, coordination and
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alignment need to improve but they need to do so within the constraints that operate in
the global cacao market. After considering all of the stakeholder input (Appendix E),
interviews conducted in Ecuador (Appendix F) and available data (Appendix A), we feel
that these interventions in combination with specific actions to improve the
competitiveness and productivity of cacao production can help the cacao sector live up
to its potential.
Recommendations to increase productivity, sustainability,

and competitiveness of cacao production
Improve Coordination and Consistency in Extension/Technical Assistance
Since agroecological zones vary considerably within Colombia, cacao production

systems must address climatic, and edaphic conditions specific to each region while
taking into account differences in the social, economic, and cultural circumstances that
influence productivity. In order to take into account the diversity of cacao producing
areas, there is a need to develop key training materials for cacao production, adapted to
regional specifications. Specific gaps in existing knowledge should be systematically
identified, prioritized and targeted for additional research for each cacao producing
region. Regionally-tailored training materials should be incorporated into extension
programs, with a feedback loop that allows lessons learned in cacao production to
define additional research to continuously improve best practices. Therefore, extension
and technical assistance approaches should be adjusted for specific regions, promoting
production systems and best practices that fit within the regional context.
Organizations providing technical assistance or extension services such as Fedecacao,
producer associations, and other groups should be identified and brought together in
order to clarify roles and avoid duplication. The oversight role might be placed with
the Consejo Nacional de Cacao or perhaps delegated to Fedecacao and/or Corpoica
to assure technical assistance quality and regional consistency. We suggest that the
training materials and learning processes be certified by the group that is providing the
oversight role (undergone rigorous peer review) so as to ensure that the various
organizations operating are delivering consistent technical assistance services that have
been confirmed to be the correct information for farmers.
Area expansion and rehabilitation for cacao production continues to increase demand
for extension and technical resources. Improved collaboration and sharing of resources
can help to meet the needs of more cacao farmers. Extension services and technology
transfer can also be enhanced by Peer to Peer learning, including demonstration farms
and farmer field schools. In order to ensure that producers become profitable, training
should also highlight business skills and record keeping. The limited resources for such
work is a binding constraint and building efficiencies into the system of development and
delivery of these services can contribute to a more equitable and accountable system.
Increase innovation in Extension/Technical Assistance by leveraging the peace process

and utilizing face-to-face and digital resources
When considering options for extension/technical assistance, it is important to

recognize that this sector is currently evolving based on structural reforms developed
during the peace process. For example, the recently adopted peace accord calls for an
overhaul in the delivery of technical assistance to make it more integrated with other
extension type programs and provides increased support for rural education in general.
The accord specifically calls for more school-based agricultural education24. The details
of the peace accord, which is still under negotiation, provide up to COP$8mm
(~$2,700) for every FARC member that has a “viable” entrepreneurial project. A
definition of what a “viable” entrepreneurial project has not been agreed upon but will
likely be determined by a technical committee of the National Reconciliation
Commission (made up of the usual FARC, government, experts mix). 25
An additional initiative by the National Planning Department and by former MADR
director, Jose Antonio Ocampo, called Mission for the Transformation of the
Colombian Rural Area (Misión para la Transformación del Campo Colombiano),
suggests the creation of a new entity – the Administrative Unit of Technical Assistance
and Integrated Support (Unidad Administrativa de Asistencia Técnica y
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Acompañamiento Integral) to resolve the systemic problems to the current Extension-

on demand system. According to Ocampo:
“The idea is to lead, in the company of the territorial entities, the
execution of the resources of the National Government destined to
24 See section 1.3.3. Stimulus to agricultural production and solidarity economy and cooperative. Technical
assistance. Subsidies. Credit. Income generation. Marketing. Labor formalization and Section 3.2.2.6 Identification of
the needs of the process of economic and social reincorporation may provide the basis for a suggested CfP
intervention
25
As outlined in section 3.2.2.6. of the peace accords, “(c) Development and implementation of sustainable
productive projects and programmes. Every member of FARC-EP in the process of reintegration will have the right
to one-time economic support to start an individual or collective productive project, in the amount of 8 million
pesos (Col$ 8 million). Programmes and projects with ECOMÚN A fund will be set up, on a once-only basis, for
the establishment of productive and service projects in the process of economic and social reintegration through
ECOMÚN, the viability of which will be verified in advance by the National Reintegration Council.”
provide technical assistance and accompaniment to integrate small

and medium producers. This unit should fulfill other functions such as
leading and coordinating the training program updating and
specialization of rural technical assistants and extensionists; Designing
and putting into operation the accreditation system of companies
providing this service at the territorial level; Advise and accompany
the Secretariats of Agriculture in the formulation of the general plans
of technical assistance; And to manage the national level of
information systems related to said service.”
This or any other institutional reform should be built on a comprehensive and multi-
sectoral institutional arrangement that incorporates clear policies alongside adequate
resources (human, financial, etc.) that provide for a wide and tangible presence that has
the capacity for implementation at the appropriate level (department and/or
municipalities). Partners involved in such arrangements should include all stakeholders,
including the private sector, in planning and decision-making. Ultimately, there needs to
be a balance struck between recognizing and deploying country-level expertise and
developing the capacity at the local level for the successful execution of programs and
projects, and the monitoring of results/impacts. CfP can serve as a conduit between all
actors in the cacao supply chain, including government entities and university-based
expertise in order to foster the appropriate system that will not only generate and
disseminate knowledge and skills to strengthen the Colombian cacao sector, but to also
to give rural people a leading role as managers and actors of their own development.
Because CfP is working with a diverse group of actors (farmers, producer organizations,
governmental organizations, NGOs), ithas the ability to create discussions and
collaborations between the multiple actors. This alignment, laterally across those that
are or should be engaged in the extension/technical assistance system with the
stakeholders of the Colombian cacao supply chain, upstream and downstream, will play
a key role in the success of future endeavors.
To operationalize such an alignment will require a combination of locally-based, ‘high
touch’ efforts, and ones that allow stakeholders the opportunity to learn and apply
skills through experiential techniques. Such face-to-face efforts require that high
quality extension professionals are available to meet the demand for technical
assistance and research-based education. In addition, a multiplier effect can be applied
if peer learning networks can be put into place via farmer field schools. In both cases,
however,
deploying an adequate number of extension professionals to meet the needs of
Colombian cacao farmers scattered across the country will require a significant amount
of resources and an intentional examination of how/where the myriad of
institutions/organizations are currently deploying their resources and looking for ways
to more effectively and efficiently serve the sector.
One way to complement ‘high touch’ extension efforts is by developing and deploying
‘low touch’ methods that rely on technology. There are several Information and
Communication Technology platforms that already exist. CfP may want to try to
develop apps specifically for establishing cacao plantations, cacao diseases, a registry of
cacao varieties that tell farmers if the variety is auto-compatible or not, how resistant to
Monilia sp. etc. Outlined below are a number of programs already in place in Colombia
that could be leveraged to link the ICT technologies and make them more accessible for
educators, extensionists, and farmers.
Agronet is the Information and Communication Network of the Agricultural Sector of
Colombia, led by the MARD (the Ministry of Agriculture and Rural Development) with
the support of the Food and Agriculture Organization of the United Nations. Agronet
attempts to centralize and disseminates sector information to support decision making
and to establish synergies with other national and regional sectoral information
management units to government entities, research centers, universities and field
projects being carried out by different national or international organizations.
In 2011, the Vive Digital (Live Digital) initiative, the Colombian Government’s
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technology program run by the Ministry of Information Technologies and

Communications (MinTic), expanded Agronet’s reach with Celuagronet, a text message
based service for agricultural producers. In 2013, Agronet began development of mobile
applications (Agronet, n.d.). In 2015, Celuagronet had 369 thousand registered users
with the platform sending 15 million text messages containing information on climate,
prices, calls and productivity (MARD, 2016).
Vive Digital kiosks (Kioscos Vive Digital) are community internet access points for
children, youth and adults in rural areas with more than 100 inhabitants. The kiosks
bundle a server computer, a wifi network with a 50-meter range, a printer, and
furniture. Technicians are on hand for free training and use. Even those located in the
most remote areas of Colombia are connected to the internet via high-speed internet
satellite. The kiosks are mainly installed in establishments and educational sites in which
during the teaching hours, teachers and students can access ICT to support their
pedagogical activities, and in extracurricular hours, the community in general can make
use of the services provided. Kiosks have also been installed in reserves and indigenous
communities, military bases, natural national parks, and consolidation zones. As of far,
6,885 kiosks have been installed.
Linkata (C(k)omunidad de Asistentes Tecnico Agropecuarios) is an online community
for agricultural technical assistants. The program requires registration to explore the
site. The cacao group has 204 members as of June 2017.
Corpoica manages the Siembra Network, (Sistema de Información, Emprendimiento,
Búsqueda, y Recolección Agroindustrial, Information System, Entrepreneurship, Search, and
Agroindustrial Collection) information on research activities in supply chains. The vision
of Siembra online portal is to “to support knowledge management through the
production and use of statistics and indicators that will guide and evaluate sectoral,
national, regional and international policy” and “to stimulate the action of various actors
of the National System of Science and Agro-industrial Technology (SNCTA), as well as
the flow of knowledge and information among those responsible for agricultural
research and development in Colombia” (Corpoica, (n.d.)).
The Siembra network facilitates information sharing as stakeholders in each chain
identify areas where innovation is needed, define objectives, research and technological
gaps, the needed disciplines to research the problem, and possible solutions to issues
facing the chain. Siembra network attempts to coordinate the sectors’ research request
with the work being done in private research centers to avoid duplicating effort once
the supply chains’ initial requests are defined and research priorities established on
regional and/or municipal levels by the CPGA as General Plans for Technical Assistance
(PGATs).
The portal offers many highly useful features, such as allowing users to consult with an
expert via chat or hosting virtual classrooms for technical assistance, a page dedicated to
regulations and useful documents, links to helpful software, and a searchable database of
actors for each supply chain. However, the portal appears to be a work in progress,
with some portions of the site populated with little information. While the “Agricultural
library” feature returns 125 technical publications, the cacao supply chain information
page only contains one document. The supply chain actor search engine only produces
results for one of the eight actor categories - “Universities, Research and Development
Centers.” “Parastatals and Associations” produces no results. There may be some
overlap in vision between the Siembra Network and Agronet. The potential usefulness
of the Siembra Network can be clearly illustrated by the Direct Rural Technical
Assistance (ATDR - Asistencia Técnica Directa Rural) database which can be found on
the portal.
Take into Account Total Factor Productivity
We recommend a systems approach where producers will manage their farms for
multiple benefits. This includes planting agroforestry systems (e.g. banana or plantains)
where incomes can be earned in the first years of cacao tree establishment. Total
income per hectare should be adopted as a metric so as to include cacao and other
relevant crops in the system. Lastly, given the differences across cacao varieties in terms
of management, productivity, disease resistance, etc, more effort needs to be made
towards aligning planting and grafting recommendations made by technical assistance
providers with prevailing and potential future agro-economic conditions.
Prepare Sector for Production Risks
The stakeholders in the cacao sector should prepare to anticipate, mitigate and manage
production risks. These risks include such factors as:
 Cadmium. Meeting the expectations of the European Union by January 1,

2019 and continuing/expanding research into cadmium-cacao issues and
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offering technical assistance to stakeholders on management

 Climate shifts. Recognizing the effects of climate shifts and anticipating
new/expanding cacao production zones
 Pest and disease pressures. Coordinating and deploying a national strategy
for cacao disease prevention and management
 Land transitions. Identify the constraints for marginal areas (i.e. lack of
precipitation, low labor pool, non-existent technical assistance and others) to
decide whether cacao is a viable crop
 Labor constraints. Recognize that cacao is a somewhat labor intensive
cropping system and without the human power for the necessary management
practices
 Post-conflict. Address social capital issues in post-conflict areas where

farmer organizations have not been introduced, faltered or require
strengthening
 Ongoing generational shift among farmers. Conduct an agricultural
census to better understand generational dynamics taking place on the farm
and offer technical assistance that build capacity for beginning farmers and
assist with generational farm transition (succession planning)
Provide Business Development Services
The workforce along the cacao supply chain needs to be developed to increase
production and value added. For example, rural entrepreneurs appropriately trained
and prepared could provide services for grafting, nurseries, inputs, transportation,
pruning, fermentation, drying, and other areas. This presents an opportunity to increase
overall rural employment and income related to the cacao sector.
Develop Livelihood Indicators and Set Up a Monitoring and Evaluation System to

Evaluate the Effectiveness of the Cacao Sector
The indicators should address the sustainability of the production units, competitiveness
of the producers and those that support the cacao production system, accurate
measurement of productivity, and consistent cacao production data. The management of
such a sector-wide information system should ideally reside with Fedecacao, with a clear
commitment to public accessibility.
Recommendations to transform associations into

competitive and sustainable rural businesses
Define Roles and Responsibilities of Associations
Associations need to be defined, identified, and legitimized. An accreditation process

needs to be set up and a directory formed of producer organizations that the
appropriate entity agrees are efficient and sustainable businesses. Institutions and
organizations that have experience in farmer association development and management
(e.g. Fedecacao) may be well placed to lead this initiative with input from commercial
actors. We suggest that an entity (e.g. Consejo Nacional de Cacao) should develop a
list of criteria for accrediting associations and maintain an up-to-date and readily
available directory for all stakeholders in the cacao sector. In addition, provision of
follow-on organizational strengthening services needs to be offered to associations.
Develop and Promote Good Business Models for Associations
We suggest that a review of good business models from other producer associations
(domestically and in nearby countries) be carried out. The business model structure
should drive fidelity and consistent quality and volume for the associations and increase
competitiveness in the cacao sector. The portfolio of services provided to the
associations and their members should be strengthened and broadened, ensuring the
inclusion of:
a) Business plan development
b) Savings
c) Inputs
d) Quality control
e) Post-harvest services
f) Market information
g) Market access
h) Credit
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i) Disease management
j) Pruning and other good agricultural practices
Associations need to function efficiently and add value both to producer members as
well as commercial partners. We suggest that the focus be placed on sustainable and
profitable producer organizations as a first priority, then these associations may be able
to perform peer to peer learning opportunities for others. We suggest that indicators
for livelihoods be developed and avoid focusing just on production, and taking into
consideration regional differentiation reflecting diverse production systems and cultures.
Lastly, fostering organizational transparency is paramount as delivering value to
stakeholders and ensuring that the necessary social capital is in place will play a
significant role in sustaining these associations in the long run.
Provide Extension and Technical Assistance to Associations
As with individual farmers in the above recommendation, peer to peer learning

opportunities between producer organizations could help fill the gaps in the ability of
extension and technical assistance providers to strengthen associations. These learning
opportunities could cover topics such as:
a) Business planning capacities
b) Business skills
c) Networking with cacao stakeholder organizations
d) Post-harvest
e) Quality control
f) Transparency
g) Negotiation with market actors
Build Credit Worthiness
Develop credit packages tailored to association needs taking into account regional
variability and other pertinent factors. Financial services should focus on associations
and ensure accountability to their members and likewise, hold members accountable to
the associations. Solid credit worthiness could assist to bring investors into the cacao
sector with a ripple effect both in the Colombian financial sector as well as in the
agricultural impact investing space with organizations such as Root Capital, Fair Trade
Access Fund, Incofin, etc. who are searching for additional clients for financial services.
Organize Business to Business Roundtables
Over the medium and long term, organizing business-to-business roundtables with the
participation of associations and other stakeholders could strengthen the success and
sustainability of cacao producers’ associations. As associations gain capacity, regional
business to business roundtables to develop production, post-harvest management,
service provision and market access strategies could prove especially useful especially if
orientated around clear market demands.
Recommendations to strengthen the sector to respond
to markets – consistent quality and volume
Fortify Extension/Technical Assistance Services Linking Producers to Market
Ensure that extension and technical assistance must take into consideration market
access for both producer associations and smallholders. Production strategies should
align with market demand over the short, medium and long-term. Appropriate post-
harvest management practices of producers should enhance access to markets and
prices and sufficient incentives should exist to drive adoption. To enhance adoption of
current quality standards, it may be necessary to review price differentials between
grades of cacao and how a premium is/might be transmitted and who captures them to
inform the identification of effective means of incentivizing improved post-harvest
practices at the farm and producer organization level.
Leverage the Safety Net (National Market)
The existence of a strong domestic market for cacao differentiates Colombia from most other
cacao producing countries. This demand constitutes an important safety net for the sale of cacao
regardless of inevitable global price fluctuations. Finding ways to produce efficiently and profitably
for the domestic market represents a first step towards potentially accessing higher value niche
110
markets in the future. These niche markets remain small and will remain so for the foreseeable
future. They do not currently constitute a broad solution for rural poverty, but can provide
incentives for improved post-harvest and organizational management for a small sub-set of
growers and producer organizations that get the basics right in domestic markets. Accessing
higher value markets without first producing efficiently and with consistent volumes and quality for
the domestic market remains highly problematic.
Search/Transaction Costs for Multiple Market Segments
Crowding in more buyers for Colombian cacao may take decades. We believe that
reducing search costs through up-to-date, publicly available information will significantly
help develop the cacao sector in Colombia over the long-term. This might be done by
identifying specific geographies as differentiated origins based on the unique interplay of
genetics, environment and management, organoleptic profiles and a consistent story and
share this information publicly. Industry leaders in Colombia, such as Casa Luker and
Nutresa as well as emerging specialty chocolate producers such as Cacao Hunters and
others, want good cacao and we should work with them on potential markets so they
are better positioned to find and open novel markets. We should leverage their
knowledge and financial muscle to position Colombian cacao on the global stage. In
addition, it should be noted that the transactions costs between the farmgate and
factory gate / port are real and represent opportunities for an examination into how
margins are distributed along the supply chain. Efficiency gains in this context represent
an opportunity to positively affect cacao producer income and ensure that all actors
along the supply chain operate in a strong, competitive market.
Build Analytical and Research Capacity
Stakeholders in the cacao sector need to better understand and leverage market trends.
Institutions such as the Consejo Nacional de Cacao, Fedecacao, Corpoica and local universities
should be monitoring and analyzing cacao markets domestically and abroad – and developing
recommendations to enhance Colombia’s competitiveness in domestic and international markets.
Answering the question “who trains the trainer?” to support the cacao sector highlights the need
for higher education institutions within Colombia to re-frame student preparation. Universities
may impart students with scientific competence in agronomic disciplines, however becoming an
effective extension professional requires specific disciplinary training in areas such as diffusion of
innovation, conducting participatory research, program planning, youth development, community
development, and impact analysis. The current incentive structure in universities almost exclusively
prioritizes theoretical research to the detriment of more applied research, training students in
these skill sets, and direct interaction with farmers (See Pilot Project with the Universidad de
Caldas Box).
Pilot Project with the Universidad de Caldas
University of Caldas professor Carlos Parra Salinas demonstrated how project-based learning can produce
significant outcomes for both learners and community stakeholders. Parra, aware of the growing trend in the
Eje Cafetero or Coffee Axis to grow cacao at lower latitudes and an increasing in the number of
municipalities advocating the crop, saw a need in learning more about the status of these producers and their
access to markets and services. The CfP Supply Chain Analysis (SCA) working group shared their semi-
structured interview questions with Parra who utilized the questions as a starting point for a two-semester
experiential learning project. Parra, two graduate students, and four undergraduate students developed and
tested an 84-item survey developed to characterize cacao producers in western / central Colombia.
Pedagogically, the project aimed to familiarize the students with cacao, provide research experience, and
offer insight in the role that extensions and researchers play in rural development. The team also hoped that
the survey results would help guide decision makers in supporting the cacao sector.
Random sampling was not possible due to the relative scarcity of cacao growers in the region and the
reliance upon associations, businesses, and municipal offices to direct the students to cacao growers to
interview. The surveys took around an hour to conduct, and despite often long and arduous treks to farms,
collectively the students conducted close to 250 interviews among nine municipalities across six departments
(Caldas, Risaralda, Quindío, Valle de Cauca, Huila, and Tolima) between November and December 2016 and
March 2017. At The students coded and analyzed 156 of the surveys.
Overall, the team determined that the region currently lacks a cacao culture. The majority producers
possess less than four years of experience working with the crop, and the many planting are less than four
years old, especially in Huila. Average prices received per kilogram ranged from $5434 pesos (Victoria,
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Caldas) to $7270 pesos (west-central Caldas). Buenaventura presented a special case with farmers selling
their cacao still in the pods for $1869 peso per kilogram. The municipality also contained significantly larger
farms – 19 ha on average compared to 1.9 ha in all other areas. In all the municipalities, the clear majority of
the cacao was sold via associations or cooperatives.
Many of the producers were unaware of the specific cacao genetics on their farm. For respondents who
aware of the cacao genetics, no single variety dominated farms in Tarqui, Huila or the Central of Caldas.
However, in Libano, Tolima, CCN51 was the most common variety; Victoria, Caldas CCN51 and ICS 95
were most often planted; Buenaventura (Valle de Cauca), contained CCN 51 and IMC 67. (cont.)
(cont.) Pilot Project with the Universidad de Caldas
In terms of technical assistance, access appeared less than ideal. Only producers in Tarqui reported receiving
assistance from Fedecacao (Producers in this area reported assistance from the cooperative Colcocoa as
well.). Buenaventura reported assistance from the association ASOSA. The west-central portion of Caldas
25% reported assistance from Casa Luker, while producers in the municipalities of Libano and Victoria claim
that they receive no technical assistance.
One member of the CfP SCA working group met with the students. The students had a high initial
motivation for the project due to the potential of their work to be useful for CfP; as they interacted with
farmers and associated homes and families with the productive chain, they became more emotionally
invested and motivated to help the producers. All gained knowledge and enthusiasm for working with cacao.
In a discipline that often prioritizes quantitative data over qualitative, students reported a gained
appreciation for the type of a data that couldn’t be checked by a box on the survey instrument, some
suggesting that they gained a richer sense of the farmers’ realities through their conversation and direct
observation. Students reported that the exercise underscored the importance of collecting baseline data and
leaving the confines of the lab and classroom to interact with producers on their farms, and the value of
extension and applied research.
Increase market demand for Colombian cacao
There is no formal market for fine and flavor cacao on the world market. Large
premiums to cacao only accrue when a willing buyer and seller agree that a seller’s lot
of cacao embodies special characteristics the seller can provide and the buyer desires.
There are two cases where this happens on global cacao markets. 1) Cacao can be
certified by an independent entity (ie. UTZ, Fairtrade, Rainforest Alliance) that it is
produced using ‘organic’ methods, or is produced based on environmental standards set
out by the certifier, or that producer organization practices meet certain “ethical”
requirements. 2) Alternatively, either a chocolate manufacturer or trader dealing in
specialty cacao prefers certain characteristics of the cacao purchased (e.g. organoleptic
properties).
Typically, certified cacao transactions involve a producer organization that has met
criteria of the independent evaluating entity, and a buyer who wants to market their
beans based on that certification. Currently, there are hundreds of thousands of metric
tons of certified cacao produced, but less than half of that production is actually sold as
certified cacao. The majority of the certified cacao is traded as bulk cacao because
supply greatly outstrips demand. When a characteristic is not scarce, it will not accrue
a significant premium. In addition, certification systems operate on the premise of
higher prices to farmers, but we found that often the additional cost that goes to
paying for certification services (ie. paperwork, inspections) or other transaction costs
for certification serve as an implicit tax on any premiums that may find their way back
to the farmer.
A limited number of small companies (less than 300 worldwide) purchase directly from
producer organizations, or from specialty traders, at higher prices and for extremely
small quantities of cacao. We estimate that less than 100 MT are demanded by the
majority of these companies, with only a handful (about 10 companies) purchasing over
250 MT, due in part to economic limitations of scaling up the capacity of their
processing and manufacturing equipment to process more than 100 MT in a year. The
result is a specialty market involving less than 20,000 MT of cacao traded annually. They
most often involve contractual relationships (e.g. between Taza and producer
organizations in the Dominican Republic) because one characteristic the specialty
manufacturers require is consistent quantity (albeit low) and quality (high) over time.
These transactions account for less than 1% of the market and the transaction costs to
find, establish, and maintain these markets remain high.
The high-end chocolate market is slowly expanding, but the cacao used for this niche
presently comes from more consistent quality and quantity sources such as Ghana.
114
Ghanaian sources are able to deodorize the cacao and fit into established recipes and
flavor profiles. ‘Fine and flavor’ advocates prefer to use the ICCO thumbnail guesses
associated with ‘fine and flavor’ market share from the designated origins to estimate
demand. Careful analysis of global trade data, along with interviews with leaders in the
specialty cacao field, have convinced us that this niche is much smaller than the
quantities promoted by advocates of establishing a fine and flavor niche (as much as 8%
of the existing cacao market).
Efforts to expand ‘fine and flavor’ exist all over Latin America, so the likelihood of the
supply of this niche exceeding demand is high, and the distinction is not sufficient by
itself to entice a specialty purchaser. A cursory review of development donor and NGO
websites shows large projects (with more than 10,000 farmers each) currently ongoing
in Peru, El Salvador and the Dominican Republic, not to mention public support in
Ecuador. As these come online it is likely that supply will grow to consistently outstrip
demand leading to a significant reduction or even disappearance of a price premium.

This already happened with certified cacao and we see no data to indicate that
something similar can be avoided in the case of ‘fine and flavor’. Our recommendation is
to move with caution when encouraging farmers to invest in varieties that meet the ‘fine
and flavor’ designation without markets in place to sell at higher prices.
Brand Colombian Cacao/Certification
Stakeholder institutions should develop incentives to increase the margin between

premium and non-premium cacao, reject bad quality beans or pay significantly less for
them, and incentivize good practices. We recommend reviewing current pricing models
based on quality and exploring ways to create clearer market signals that favor well
managed cacao as opposed to low quality beans.
The cacao sector stakeholders should evaluate the Juan Valdez model of a national
brand or, alternatively, regional model based on distinct flavor profiles with regional
brands. Fedecacao has initiated a campaign with Maria del Campo as the face of
Colombian cacao. We also believe that licensing the Colombian brand could generate
additional revenue. This process should include all commercial actors in the country
with a unified strategy that focuses on maximizing the value and reputation of
Colombian cacao on the international market. Given domestic demand, Colombia has
the potential to focus export promotion on highly differentiated cacao and chocolate
products. A clear focus on quality, consistency, unique value propositions and brand
recognition could play a key role in maximizing income from these sales and position
Colombia well. But this should not be the only strategy that is pursued since the market
is extremely small and very few farmers will be able to benefit.
Improve the institutional architecture of the cacao sector

– clear rules and specialization
Strengthen the Role and Credibility of National and Sub-National Institutions in the
Cacao Sector
The Consejo Nacional de Cacao has played a key role in sector governance and
planning. Now is the time for the public and private sector to consider the most
effective way to develop new or strengthen both the national and regional institutions
concerned with governance and planning in the cacao sector. Key steps include, first, an
increase in farmer and industry participation. Key organizations such as Red de
Cacaoteros and representatives from smaller chocolate makers should be included to
most adequately represent the diversity of the sector. Second, roles and responsibilities
need to be defined with the acceptance and support of all stakeholders in the cacao
sector. This includes clearly defining specific leadership roles among the institution’s
members for topics like research, extension, organizational strengthening, financial
inclusion and market intelligence. Such clarity will allow organizations to play to their
strengths and avoid duplication. Third, the institution should provide oversight and
review of all projects and extension programs active in the sector to identify synergies,
build common messages and provided consistent guidance and feedback to all actors.
This includes coordination with international donor programs and other organizations
that are offering extension and technical assistance programs operated by Luker,
Nutresa, Swisscontact, USAID and operators, Corpoica, SENA and others. Finally, we
recommend that the institution serve as an advocacy arm of the sector and provide
oversight of the cacao fund.
At the sub-national scale, the regional institutions should be strengthened to play a
similar role vis-à-vis departmental and municipal actors to ensure adequate
communication and coordination across initiatives. The regional institutions should
offer an important space for dialogue between national level strategies and regional
needs. To that end, we recommend a review of current participation in the regional
116
councils and the construction of regionally adapted strategies for sector development in
terms of research, extension, organizational strengthening, financial inclusion and market
intelligence. The diversity of cacao production in Colombia requires clear national
strategies that incorporate regional needs and adaptations to be effective. A well-
functioning network of national and regional institutions will play a critical role in
achieving this goal.
In order for the national and regional institutions to carry out their respective
coordination responsibilities, we suggest an initiative to build their institutional capacity
be undertaken. This would include the construction of coherent strategic plans (short,
medium and long-term), and structuring the institution so that there is a representation
of key actors (national / regional scales) within the organization, strengthening the
coordination capabilities of all representatives and a concerted effort to place the

institution at the center of the sector.
Define a Focused Role for Fedecacao
We believe that Fedecacao needs to focus on its core business. Fedecacao should have
a central role in bridging research and extension through applied research and
consistent extension materials – ensuring its quality and providing continuous oversight.
In addition, Fedecacao should support access to credit for farmers as part of extension
services through credit preparation and presentation. Given the resource constraints
faced by Fedcacao, and the need to prioritize efforts to increase effectiveness and
impacts on the sector as whole, Fedecaco should re-examine its business plan and
thoughtfully consider which investments bring the highest returns to the sector in
addition to securing Fedecacao’s long term sustainability. A review of funding is needed
to ensure that Fedecaco can access sufficient resources to provide national coverage in
these topics consistently. In addition to funding, Fedecacao should continue to build on
and leverage existing alliances with key Colombian public sector actors such as SENA
and universities to expand access to training, planting materials and good post-harvest
processing.
Improve and Leverage the Fondo Nacional de Cacao – Fomento
We suggest that a review be conducted to determine if the funds currently raised

through the Fondo Nacional de Cacao are sufficient and are being efficiently used. This
review should assess the following issues. First, is the levy currently applied to cacao
bean sales sufficient to meet the development needs of the sector? Could additional
funds be raised connected to value addition in terms of chocolate production? Second,
are the current rules governing use of the fund for extension activities adequate and
fairly applied? How can the fund better account for cacao produced in one department
but sold in another? Third, how efficient is the use of the funds in terms of achieving
sector targets around improved volumes and quality of cacao? What strategies exist or
can be developed to improve the efficiency of these investments? These questions need
careful thought and consideration and for answers to be given in order to move
forward to better leverage the use of these funds.
Improve the Effectiveness of Finagro in the Cacao Sector and Other Financial Service
Providers
Finagro should develop regionalized credit products in line with different production
systems. Credit should not just be for cacao production but for improving farming
systems that are linked to livelihood indicators. This would ultimately enhance the agility
in the finance sector. We also recommend that better information be provided to
Finagro on production systems, profitability and time horizons for cacao production in
order for credit risk to be appropriately assessed, and thereby improve risk assessment
of both cacao farmers and producer organizations. This requires increased coordination
between the Consejo, Fedecacao, and Finagro.
In addition to producer level credit access through Finagro, we recommend exploring
opportunities for financial services to producer organizations. Globally the field of
agricultural impact investing shows strong growth with a focus on providing credit to
producer organizations alongside training in financial literacy and good administrative
practices. Strategic support to professionalize Colombian cacao producer organizations
and make them credit-worthy could potentially open opportunities for additional
funding beyond that offered by Finagro at the farm level. This connects to
recommendations above on producer organizations.
Improve Coordination among Public Sector Programs and International Donor Programs
118
Cacao can play an important role in Colombia’s transition to peace given its potential in
most key post-conflict areas of the country. For this to happen, however, requires
improved coordination among national public policies and investments relevant for the
sector. These include diverse topics ranging from funding for research, to the support
of programs such as Productive Alliances managed by the Ministry of Agriculture and
Rural Development, to training by SENA and key investments in infrastructure to
reduce transport costs for producers in more distant areas. In order for cacao to
provide a solid peace dividend, these diverse initiatives require coordination to achieve
synergies that benefit the sector.
In addition to Colombian public-sector investments, the cacao sector is poised to
receive significant investments under international donor programs in support of post-
conflict development. Previous experiences managed principally by international
implementing agencies show both successes and failures. For these programs to
effectively support the Colombian cacao sector, they should be aligned and coordinated
both among themselves and, most importantly, with the key supply chain actors. Stand-
alone programs that do not contribute to lasting capacity and institutional development
will not serve the best interests of post-conflict economic development in Colombia.
As part of the institutional strengthening process delineated above, we believe that an
expanded, more representative and reinvigorated national institution should take charge
of coordinating national public sector and international donor support to the cacao
sector. This would rightfully place the direction of international assistance in the hands
of the Colombian cacao actors.
CONCLUSIONS
As part of the research that was conducted over the past year, our working group
thoroughly analyzed various market options for cacao producers in Colombia. During
our assessment, we interviewed a variety of cacao purchasing entities, including both
traditional traders and new enterprises that are pursuing niche, specialty markets (e.g.
Cacao Hunters and Red de Cacaoteros in Colombia and Republica de Cacao and Pacari
in Ecuador). At the time the international development community was considering the
“fine and flavor” cacao market as an integral development strategy for boosting the
income of cacao producers in the country. Our findings led us to conclude that focusing
on the limited specialty market for cacao, and especially the attempt to differentiate into
a non-existent “fine and flavor market”, faces significant limitations for reducing poverty
or impacting large numbers of cacao producers in Colombia.
Cacao has the potential to contribute meaningfully to development in Colombia when
market infrastructure is in place and technical assistance is available. There is
demand on both the domestic market and bulk international market to absorb
significant increases in Colombian cacao production. Marginal areas (e.g. where
irrigation will be necessary) need to be evaluated carefully to determine whether the
return on investment is worthwhile, however. Assessment of the potential for cacao
production expansion also needs to utilize more realistic price expectations than is now
120
the case, and should not be based on exaggerated premiums that are not found in large
volumes on global markets. The extent to which any premiums might be passed back to
the farmgate must also be taken into consideration, as transactions costs to get cacao to
the port or to domestic processors must be considered.
Institutional strengthening is vital in order for the Consejo Nacional de Cacao and
Fedecacao to be able to coordinate research, development, and extension activities
across the country. Business planning skills need to be put in place for producer
associations and training needs to occur to ensure that they have a sustainable plan for
how to market their members’ cacao to markets available to them. Producers across
the country need to have access to technical assistance that covers production
strategies, post-harvest capacities, and marketing capabilities.
In our opinion, far too much time and energy is being focused on justifying the current
development community fascination with specialty cacao and far too little on a sober
analysis of current and forecasted market conditions, not only at the port, but more
importantly, at the farmgate. A poverty reduction strategy based on pursuing niche
premiums (which may or may not develop over time, and which are likely to involve a
relatively small quantity of cacao) where benefits accrue primarily to downstream actors
and where price gains for producers are eroded by significant transactions costs is not a
viable or scalable solution. Focusing on fundamental supply chain competitiveness such
as production, post-harvest, consistent quality, farmer group capacity building,
infrastructure, market information, diversification, etc. will deliver results for the
majority of cacao producers in Colombia. This strategy would address all stakeholders
engaged in the various links along the supply chain, ultimately raising overall sector
revenue and smallholder household income.
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APPENDICES
Appendix A. List of Documents and Resources Utilized

for the Development of the Colombian Cacao Supply
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Appendix B. List of Organizations and Individuals

Interviewed for the Colombia Cacao Supply Chain Study
Interview subject Category Location Date
1 Red de Cacaoteros 3 National Producer Bogota 6/3/2016

Organization
2 Cacao de Colombia 7 Chocolate manufacturers Bogota 6/14/2016
3 USAID 1 Government Bogota 6/16/2016

Organizations
4 ACDI VOCA 2 Non-Governmental Bogota 6/16/2016

Organizations
5 Swiss Contact 2 Non-Governmental Bogota 6/21/2016

Organizations
6 (Ex) Nacional 6 Independent buyers Bogota 6/21/2016
7 UNODC 2 Non-Governmental Bogota 6/23/2016

Organizations
8 Mariana Cocoa Export 7 Chocolate manufacturers Santander 6/27/2016
9 Chocolate Girones 7 Chocolate manufacturers Santander 6/27/2016
10 COOPERCACAO 4 Independent Producer Santander 6/28/2016

Organizations
11 Fedecacao 3 National Producer Santander 6/28/2016

Organization
12 FUINMUCAR 4 Independent Producer Santander 6/28/2016

Organizations
13 Cortipaz 4 Independent Producer Santander 6/28/2016
Organizations
14 Large farm 5 Cacao Producers Santander 6/28/2016
15 San Vicente Department of 1 Government Santander 6/29/2016

Agriculture Organizations
16 Chocolate de Chucuri 7 Chocolate manufacturers Santander 6/29/2016

Organization
18 San Vicente Intermediaries 6 Independent buyers Santander 6/29/2016

Organization

Organization
146
24 Group of farmers 5 Cacao Producers Santander 7/1/2016
25 UIS 8 Universities/Research Santander 7/1/2016

Centers
26 SENA 8 Universities/Research Santander 7/1/2016

Centers
27 CORTEPAZ 4 Independent Producer Bogota 7/7/2016

Organizations
28 Cacao de Colombia (follow-up) 7 Chocolate manufacturers Bogota 7/7/2016

29 USAID (Ex, currently 1 Government Bogota 7/8/2016

AmCham) Organizations
30 National Parks 1 Government Sierra Nevada 7/11/2016

Organizations
31 Secretary of Economic 1 Government Sierra Nevada 7/11/2016

Development Organizations
32 Guardabosques 4 Independent Producer Sierra Nevada 7/12/2016

Organizations
33 Small farmer 5 Cacao Producers Sierra Nevada 7/12/2016
34 Intermediary, SN 6 Independent buyers Sierra Nevada 7/12/2016
35 Large farm 5 Cacao Producers Sierra Nevada 7/13/2016
36 Arhuaco farm 5 Cacao Producers Sierra Nevada 7/14/2016
37 APOMD 4 Independent Producer Sierra Nevada 7/14/2016

Organizations
38 UMATA 1 Government Sierra Nevada 7/15/2016

Organizations
39 AGROCOOP 6 Independent buyers Sierra Nevada 7/15/2016
40 Mid size farm 5 Cacao Producers Sierra Nevada 7/15/2016
41 Large farm 5 Cacao Producers Sierra Nevada 7/15/2016
42 Cacao de Colombia 7 Chocolate manufacturers Sierra Nevada 7/15/2016
43 Fondo Accion 2 Non-Governmental Bogota 7/18/2016

Organizations
44 Technoserve 2 Non-Governmental Bogota 7/19/2016

Organizations
45 Pacific Agricapital 5 Cacao Producers Bogota 7/25/2016

46 Manifesto Cacao 7 Chocolate manufacturers Bogota 7/26/2016
47 Universidad Nacional 8 Universities/Research Bogota 7/28/2016

Centers
48 Casa Luker 7 Chocolate manufacturers Bogota 7/28/2016
49 Nacional 7 Chocolate manufacturers Bogota 7/29/2016
50 Nacional buying center 7 Chocolate manufacturers Valle de 8/1/2016

Cauca
51 SAG 1 Government Valle de 8/2/2016

Organizations Cauca
52 Asprofinca 4 Independent Producer Valle de 8/3/2016

Organizations Cauca
53 Small farmer 5 Cacao Producers Valle de 8/3/2016

Cauca
54 Cacao de Colombia 7 Chocolate manufacturers Valle de 8/4/2016

Cauca
55 Secretary of Agriculture and 1 Government Valle de 8/4/2016

Rural Development Organizations Cauca
148
56 Experts, Agribusiness venture 8 Universities/Research Bogota 8/8/2016

Centers
5 Cacao Producers
57 Pacific Agricapital / Fenicia 6 Independent buyers Bogota 8/8/2016

Trading
58 Fedecacao 3 National Producer Bogota 8/8/2016

Organization
59 Casa Luker 7 Chocolate manufacturers Bogota 8/8/2016
60 Cacao de Colombia 7 Chocolate manufacturers Bogota 8/8/2016

61 Swiss Contact 2 Non-Governmental Bogota 8/9/2016

Organizations
62 Corpoica 8 Universities/Research Bogota 8/9/2016

Centers
63 Chamber of Commerce 1 Government Bogota 8/9/2016

Cartagena Organizations
64 Red de Cacaoteros 3 National Producer Bogota 8/9/2016

Organization
65 Consejo de Cacao 3 National Producer Bogota 8/9/2016

Organization
66 Nacional 7 Chocolate manufacturers Bogota 8/9/2016
67 Nacional buying center 7 Chocolate manufacturers Santander 8/10/2016
68 Agrotropical 5 Cacao Producers Santander 8/10/2016
69 APRIMUJER 4 Independent Producer Santander 8/11/2016

Organizations
70 Mayor of San Vicente de 1 Government Santander 8/11/2016

Chucuri Organizations
71 Fedecacao offices and lab 3 National Producer Santander 8/12/2016

Organization
73 Villa Monica (Fedecacao 3 National Producer Santander 8/12/2016

demonstration farm) Organization
74 Ecocacao 4 Independent Producer Santander 8/13/2016

Organizations
75 Organic farm 5 Cacao Producers Santander 8/13/2016

76 ASOCAVIZ 4 Independent Producer Santander 8/14/2016
Organizations
77 SENA 8 Universities/Research Santander 8/14/2016

Centers
78 Farm and chocolate producer 5 Cacao Producers Santander 8/15/2016
79 Farm 5 Cacao Producers Santander 8/15/2016
80 Corpoica La Suiza 8 Universities/Research Santander 8/16/2016

Centers
81 Retired CORPOICA 8 Universities/Research Bucaramanga 8/16/2016

researcher Centers
82 Grupo NovoAgro 5 Cacao Producers Medellin 8/17/2016
83 EAFIT 8 Universities/Research Medellin 8/17/2016

Centers
84 UNAL 8 Universities/Research Bogota 8/18/2016

Centers
85 Socya NGO Bogota 8/19/2016
86 Grupo Nutresa /CNCH 7 Chocolate manufacturers Bogota 8/19/2016

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Appendix C. Interview Tools Used to Gather Information

for the Colombian Cacao Supply Chain Analysis Study
Survey 1 – Government Organizations
1. Can you explain the role that your organization plays in supporting the cacao
industry during the production stages (cacao farms, cacao purchasing, chocolate
production)?
2. Can you explain the role that your organization plays in supporting the cacao
industry during the marketing stages (domestic, export)?
3. Do you have information that is collected or aggregated for the quantity and
price of cacao/chocolate produced or sold? If so, what do you have and would we
be able to access it? How?
4. What are the sources of the information – collected directly or obtained from
another entity?
5. Has your organization conducted a census for cacao producers, cacao
traders/buyers, chocolate processors, chocolate sellers/exporters? Anyone along
the value chain? What questions were asked? Do you have a unfilled census form?
Can this information be accessed publicly or are we able to gain access to it?
6. Does your institution or other institutions collect information on cacao imports?
If so, is that information available – or do you know where we can get it?
7. Does your organization provide any extension services to cacao producers,
buyers, chocolate manufacturers? If so, what services has your organization
provided? In what parts of the country? How is it provided?
8. Do you have regional, departmental or municipal level offices in cacao producing
areas?
9. Who else do you recommend that we talk to?
10. Please tell us who your institution collaborates with on activities related to
cocoa.
11. Does your organization provide any credit to farmers or financial support for
improvements in their cacao plantations or to chocolate manufacturers in their
small/medium or large businesses?
Survey 2 – Non-Governmental Organizations
1. Can you explain the role you are playing along the cacao value chain in Colombia
(linking farmers with traders, buying, trading, processing, marketing, exporting)?
2. What areas are you working in Colombia?
3. Does your organization provide any extension services to cacao producers,
buyers, chocolate manufacturers?
4. If so, what services has your organization provided? How is it provided?
5. Do the extension agents have a viable “message” to convey to farmers? Does it
involve tree planting, production method, post-harvest practice, marketing
practices, other “business practices?
6. Will adoption of the recommended practices raise yield? Increase farm income?
Fit into the farming system without bumping into constraints? How long before
benefits form following recommendations are realized?
7. Are the farmers adopting extension recommendations? If not, why?
8. Are there some models of extension services that work, while other do not?
(Compare Fedecacao, Ministry of Agriculture, Red de cacao, Swiss contact, etc. –
each seems to offer some extension services?
9. Do you offer any marketing opportunities or services to cacao producers? If so,
which ones?
improvements in their cacao plantations or chocolate manufacturers in their
11. What are your perceptions of opportunities and challenges for scaling up cacao
production, chocolate processing, marketing opportunities or exporting options
(Colombia specific best practices)?
152

13. Please tell us who your institution collaborates with on activities related to
cacao?
Survey 3 – National Producer Organizations
1. Can you explain to us your organizational structure?

2. Can you explain the role you are playing along the cacao value chain in Colombia
(linking farmers with traders, buying, trading, processing, marketing, exporting)?
3. What areas are you working in Colombia?
4. Does your organization provide any extension services or technical assistance to
cacao producers, buyers, chocolate manufacturers?
6. Do the extension agents have a viable “message” to convey to farmers? Does it

involve tree planting, production method, post-harvest practice, marketing
benefits form following recommendations are realized?
9. Are there some models of extension services that work, while other do not?
(Compare Fedecacao, Ministry of Agriculture, Red de Cacaoteros, Swiss Contact,
etc. – each seems to offer some extension services?)
10. Does your organization participate in the sale or purchase of cacao? If so, please
explain how you participate.
11. Does your organization offer contracts to cacao farmers either informal or
formal? What are the conditions of those contracts?
12. What price was the farmer paid for his cacao? More specifically, how many times
did he sell beans, to whom, and at what prices?
13. What was the nature of the buyer? (small trader, wholesaler, buying agent,
producer organization,..) Where did the transaction take place?
14. Did the farmer receive premiums or discounts related to quality?
15. Were the beans well-fermented, dry, with few spoiled beans? If not, were any
sales refused – did the quality affect the price the farmer received?
16. Did the farmer have other options to sell the cacao? Of similar or different types
of buyers? If the farmer used other buyers, would different quality restrictions
apply?
17. Would sale to other buyers require incurring additional transport costs (how
much)?
which ones?
19. Do you collect domestic or international marketing information? If so, where do
you get your information?
20. Do you maintain any databases on cacao production, farmers, organizations,
marketing? Would you be willing to allow us access to those?
21. Do you work directly with cacao farmer organizations? Which ones?
22. What are some of the challenges or limitations of working with farmer
organizations?
23. Can you tell us some of the opportunities or where working with farmer
organizations has been beneficial to your organization?
improvements in their cacao plantations or chocolate manufacturers in their
27. Please tell us who your institution collaborates with on activities related to cacao.
Does your organization have any partnerships with manufacturers, exporters,
NGOs (Swiss Contact Chemonics) or other private public partnerships (PPP)?
Survey 4 – Independent Producer Organizations
1. Can you explain to us the organizational structure of your association (number of

members, paid employees)?
2. Can you explain how your organization serves the members in your association
(post-harvest processes such as fermentation, drying or roasting, linking farmers
with traders, buying, trading, processing, marketing, providing inputs at a lower
cost, participation in governmental or non-governmental programs)?
3. Does your organization provide any extension services or technical assistance to
cacao producers, buyers, chocolate manufacturers?
5. Do the extension educators have a viable “message” to convey to farmers? Does
it involve tree planting, production method, post-harvest practice, marketing
benefits from following recommendations are realized?
154

8. Are there some models of extension services that work, while other do not? If
so, which ones seem to be better models for teaching concepts?
9. Does your organization participate in the sale or purchase of cacao? If so, please
explain how you participate.
11. What price was the farmer paid for their cacao? More specifically, how many
times did he/she sell beans, to whom, and at what prices?
12. What was the nature of the buyer? (small trader, wholesaler, buying agent,
producer organization,..) Where did the transaction take place?
13. Did the farmer receive premiums or discounts related to quality?
apply?
much)?
which ones?
20. Do you work directly with Fedecacao or other national organizations? Which
ones?
21. What are some of the challenges or limitations of working with these
organizations?
22. Can you tell us some of the opportunities or where working with these
organizations has been beneficial to your association?
23. Does your association provide any credit to farmers or financial support for
improvements in their cacao plantations or chocolate manufacturers?
NGOs (Swiss Contact Chemonics) or other private public partnerships (PPP)?
Survey 5 – Cacao Producers

1. Where do you produce cacao?
2. How long have you been producing cacao?
3. How many hectares of cacao do you produce on?
4. What is your yield for this area?
5. Are you a member of a local cacao association? Which one?
6. What are some benefits from being in the association?
8. Do you participate in any extension programs for producing cacao, processing
cacao or marketing/selling your cacao? If so, which ones?
9. What types of programs have your participated in?
10. Did your local cacao producer organization provide these services? Are there
other organizations that have provided these activities?
11. Do you feel the extension programs have a viable “message”? Does it involve
tree planting, production method, post-harvest practice, marketing practices,
other business practices?
benefits from following recommendations are realized?
13. Are you adopting the extension recommendations? If not, why?
14. Are there some models of extension services that work, while other do not? If
so, which ones seem to be better models for learning?
15. Do you receive technical information or support on cacao
production/processing/selling/marketing from a governmental or non-
governmental organization? If so, which ones?
16. What types of technical information support or information have you received in
the past?
17. What price do you receive for the cacao you produce?
18. How many times did you sell your beans during the year?
19. How do you sell your beans? Wet, fermented, dried?
20. Who buys your beans? (small trader, wholesaler, buying agent, producer
organization,..) Where did the transaction take place?
21. Did you receive premiums or discounts related to quality?
22. Do you have other options to sell your cacao? To similar or different types of
buyers? If you would sell to other buyers, would different quality restrictions
apply?
156
23. Would sale to other buyers require incurring additional costs such as
transportation (how much)?
24. What are your costs of producing cacao? (labor, inputs, equipment, etc)
25. How do you ferment your beans?
26. Do you have access to fermenting boxes at a cooperative or association? Does
this have a cost?
27. How do you dry your cacao seeds? Do you have access to other drying facilities?
28. Are you associated with Fedecacao, Red de Cacaoteros or any other national
organizations? Which ones?
organizations?
organizations has been beneficial to you as a producer?
33. Please tell us who your local association collaborates with on activities related to
cacao. Does your organization have any partnerships with manufacturers,
exporters, NGOs (Swiss Contact Chemonics) or other private public
partnerships (PPP)?
Survey 6 – Independent Buyers

1. Do you purchase cacao? If so, please explain the process.
2. What price was the farmer paid for their cacao? More specifically, how many
times did he/she sell beans, how was it sold, and at what prices?
3. Where did the transaction take place?
4. Did the farmer receive premiums or discounts related to quality? Explain if this
occurred.
6. Once the beans are purchased, what happens to the beans? Do you aggregate the
beans in a warehouse with other purchases? At what point (volume, age,
purchase agreement for your aggregated beans) do you procure transportation
to move the beans to somewhere else?
7. Where do you sell the beans? To whom do you sell the aggregated beans?
8. Do you have contracts with chocolate manufacturers? How are these contracts
set up? On a yearly basis? For a certain amount of volume?
9. Are there price premiums involved for high quality beans when you sell to the
next purchaser? Do you receive a premium for volume?
10. Do you know the outcome of the beans that you sell? Do they go for export or
for domestic production of chocolate?
apply?
much)?
14. Do you purchase any other commodity crops (coffee)?
which ones?
ones?
organizations?
NGOs (Swiss Contact, Chemonics) or other private public partnerships (PPP)?
Survey 7 – Chocolate Manufacturers

1. Do you purchase cacao? If so, please explain the process.
2. Who do you purchase cacao beans from? What percentage of your purchases
comes from producers/traders/etc.? Are purchases cash transactions?
3. When are cacao beans sold to you? What volumes do you purchase by month
over the course of the season?
4. What price did you pay for the cacao beans? How is price determined, and does
it vary by season?
158
5. Do you sort the beans based on quality (fin de aroma/bulk cacao seeds)?
7. Did the cacao bean seller receive premiums or discounts related to quality or
volume? How much? What quality characteristics are considered?
8. Do you have a traceability system in place? If so, please explain how you maintain
your records to keep track of where high quality beans may be coming from in
your value. What aspects are traced (farm, or farmer group, production method
(organic), etc.)?
9. Do you maintain any certifications for your cacao (organic, Fair Trade, Rainforest
Alliance, UTZ)?
10. Do you have contracts, either informal or formal, with cacao
farmers/buyers/aggregators/producer organizations? How are these contracts set
up? (Forward contract? On a yearly basis? For a certain amount of volume?) Do
the contracts set the price or are they based ion an index like the ICCO price?
11. Are buyers self-financed or bankrolled by your organization?

12. Once the beans are purchased, what do you do with the beans? Wash? More
drying? Sorting?
13. Where do you store purchased cacao? How do you transport lots, or do the
downstream buyers come to you?
14. Do you import beans to increase your capacity to produce chocolate products? If
so, where from? Is the value steady? What is the proportion of the imported
beans in comparison to the domestic beans that you purchase in your
manufacturing?
15. What is your grinding capacity in your operation? How many tons of beans can
you process in a month? Do you have excess capacity that could be utilized to
handle increased production? What limits the size of your operation
16. What products do you manufacture? Chocolate liquor? Cocoa butter? Cocoa
powder? Consumer goods (bars)? What are the proportions of each product in
your operation?
17. What proportion of the products goes for domestic consumption and what goes
to export?
18. What is your potential to increase in the future? In what time frame? What are
your limitations to increase production of the chocolate products you
manufacture?
19. Do you offer any marketing opportunities or services to cacao producers? To
producer groups? If so, which ones?
ones? What services do they provide to you?
organizations?
25. Do you provide any credit to farmers and/or farmer organizations or financial
support for improvements in their cacao plantations or chocolate manufacturers?
How is it repaid? What is the interest rate?
(Colombia best practices)?
27. What is the current role of the government and what role should they play
moving forward if the sector is going to grow and prosper?
NGOs (Swiss Contact, Chemonics) or other private public partnerships (PPP)?
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Appendix D. Agenda and Methodology of the Facilitated

Discussion Workshop and List of Participants Attending
Agenda: Creating the best cocoa for Colombia
Wednesday, October 26, 2016

8:00 to 9:00 am Arrival of the participants
9:00-9:15 Welcome and presentation
9:15 to 10:15 Purpose of the project
Logistics of the plan of work
Explanation of the methodology
The role of the facilitators and participants
Rules for the operation of the Group
10:15 to 10:30 Recess
10:30 to 12:00 What is the role of the cocoa in the creation of prosperous
communities?
12:00-1:30
Lunch
1:30 to 2:45
Imagine and share your ideas to express as it would be the ideal of
the cocoa sector in Colombia.
2:45 to 3:30
By Tamara Benjamin community capital
3:30-3:45
Recess
3:45 to 5:00
That is working well in the sector cocoa today?
What are the qualities positive of the sector cocoa?
5:00 to 5:30
Closing of the session
Thursday, October 27, 2016
Report on the cocoa sector in Colombia by Tamara Benjamin and
8:00 to 9:30 Mark Lundy
Reactions on the contents of the report
9:45 to 11:00 Strategies and recommendations
11:00 to 12:00 Formulation of a Plan of action
1:30 to 2:00 pm Formulation of a Plan of action

2:00 to 3:00 Feedback and reports in English and Spanish
Methodology
As part of a larger research project funded by USAID and USDA, Purdue University and
the International Center for Tropical Agriculture (CIAT) partnered to propose an
innovative alternative for addressing some of the challenges in the emerging Colombian
cacao sector in achieving its development goals. Bringing stakeholders from across the
value chain together in a facilitated workshop for two days, the partners sought to
engage the sector in building trust, collecting and sharing information broadly, creating a
shared vision for the sector in reducing poverty and promoting peace, and identifying
162
key strategies and actions to begin to achieve the vision.

Background Information
The “Cacao for Peace” (Cacao para la Paz) project funded through USAID and managed
by USDA in Colombia has a mission of building peace in rural regions through the
growth of the cacao sector. Prior funding had supported various research projects as
well as efforts to boost production or improve processing, distribution, and marketing.
Purdue and CIAT were invited to complete a supply chain analysis with
recommendations for future funding. The facilitated workshop was a part of this larger
research effort.
Program Design & Description
The facilitated workshop of the Cacao for Peace project took place over two full days in
October, 2016. The preparation was critical, primarily in ensuring that different voices
and interests were represented in the process. Many in-country and international
partners gave input into the invitation list. The 37 participants included small and large
producers and marketers, niche and conventional producers and marketers, processors,
association representatives, nongovernmental and governmental agencies, educational
partners, and more. Concerns about the influence of certain partners who benefit from
the status quo were taken into account in the planning and design.
Two experienced facilitators, who were not involved in other aspects of the project, led
the group through many kinds of activities and discussions over the two days utilizing
facilitation techniques and tools that are not uncommon in Extension but were less
familiar to some of the Colombian participants. Some of the tools included ground rules,
small group discussions, creating a visual representations of a vision, asset mapping,
establishing a criterion grid, sticky dot prioritization, rotating flip charts and more. The
facilitation was done entirely in Spanish, the participant’s native language. The main
questions advanced from one to the next:
How can the cacao sector build peace and prosperity in Colombia?
What does an ideal cacao sector look like?
What assets are available?
What is working well in the sector? What needs improvement?
What does the data say?
What strategies should the sector pursue?
Conclusions/Implications & Recommendations for practice
Facilitation can help create buy-in when there is dis-alignment within a loosely-affiliated
group that shares some common economic and, or, socio-political goals. Much of the
planning and design conversations centered around ways to structure the gathering to
prevent potential power plays, ensure inclusive participation, and manage conflict in a
productive way. Certain techniques proved effective at accomplishing all of these.
While our planning team had an ambitious vision for what the group could accomplish in
two days, the reality of the participants’ relationships to each other, their depth of
understanding of some of the issues affecting the sector, and our commitment to a
facilitated process, led us to adapt and pull back on some of what we were able to
accomplish together. The value of facilitation is that it tracks the pace of the group and
adjusts as the process in conversation with the group. In complex situations, this can
help the group to take ownership of the process as well as the outcomes of it.
Participants in Attendance
Participants Organization
1 Aaron Beydoun Fenicia Trading
2 Isaac Lopez Cordés EcoCacao
3 Andres Felipe Zabala Corpoica
4 Bernardo Saenz ex-Consejo
5 Carlos Parra Universidad de Caldas
6 Carlos Vasquez Secretary of Ag- Antioquia
7 Cecilia Rivera Swiss Contact
Corina Buendia
8 Grigoriu Corpoica
9 Diana Ballesteros Chocolate Girones
10 Eliecer Torres Arhuacos
11 Emilio Huertas Lutheran World Relief
12 Esperanza Torres Universidad Nacional
13 Estanich Grant Pinilla Manifesto Cacao
14 Fernando Gomez USAID
15 Gilberto Gomez Saenz Fedecacao San Vicente
16 Gustavo Mindinieros Cortepaz
17 Jaider Nieves Guardabosques
18 Jesse Last Taza
Jorge Enrique Ángel
19 Poveda Socya
20 Juan Carlos Arroyave Casa Luker
164
21 Juan Carlos Botero Finagro

Juan Fernando
22 Valenzuela Nutresa
23 Julia Ines Ocampo Colcocoa
24 Juan Carlos Agudelo Colcocoa
25 Sebastian Escobar Corpoica
26 Liliana Arias Red Alma Femenina
27 Luis Alejandro Perea FAO
28 Rocio Ramirez Arias Ascoviz
Luz Mery Gutierrez
29 Solano Cortipaz
30 Dra. Nubia Martinez Fedecacao
Maria del Pilar Gómez
31 López Mariana Cocoa Export
32 Mariángela Ramirez Pacific Agricapital

33 Martha Acevedo EcoCacao
Miguel Angel Vargas
34 Caro Aprocasur
35 Nelson Ardila Nutresa
36 Sebastian Alvarado USAID / LRDP
37 Vivana Hernandez ECOM, Colombia
Appendix E. Facilitated Discussion Notes
October 25-26, 2016
Bogotá, Colombia
¿Como puede el sector cacaotero colombiano contribuir a la creación de

comunidades prosperas y pacificas?
 Reconversión social
 Rentabilidad con sentido de pertenencia
 Reconstrucción del tejido social
 Promover la asociatividad
 Integración de cadena
 Promover y fortalecer la asociatividad productiva, buscando ser más competitivos
 Fomento a la asociatividad con modelo de negocio
 Generar capacidades integrales que permitan enfrentar los retos del sector en
todos los niveles (cultivo, medio ambiente, comercial)
 Fortalecer el trabajo familiar y el relevo generacional
 Desarrollar el liderazgo de la mujer en la actividad de cacao
 Promover la puesta en valor del producto cacao entres las comunidades
cacaoteras, que genere apropiación y autoestima y asegure el relevo generacional.
Ello con un concepto de prosperidad más allá de la económico.
 Políticas claras y planificadas desde las necesidades del territorio
 Proporcionar un instrumento de ordenamiento territorial que le permita a los
166
productores establecer cultivos en zonas apropiadas

 Fortalecer tradiciones y costumbres
 Fortalecer el equilibrio entre medio ambiente y desarrollo social
 Hacer del cacao en las regiones centros eco productivos turísticos
 Mejorar la productividad y la calidad en el cultivo para garantizar una buena
rentabilidad para promover la sustitución de los cultivos ilícitos
 Fortalecer la participación de los productores en la cadena de valor (capacitación,
certificaciones, tecnología)
 Reconversión productiva
 Aumentos en competitividad en temas productivos en la cadena en general
 Mejor unidad y articulación del gremio
 Proporcionar los medios para que las comunidades sean mas productivas –
competitivas (infraestructura, recursos, capacitación, transferencia, valor
agregado)
 Vincular las particularidades regionales en la búsqueda de modelos de negocios

sostenibles
Capitales Comunitarios
1. Capital Construido
a. Elbas y otros sistemas de secado
b. Cajones de fermentación
c. Centrales de beneficio
d. Vias para movilidad
e. Laboratorios de análisis de cadmio
f. Bodegas de clasificación
g. Bodegas de comercializadores en los municipios
h. Fabricas de chocolate/transformacion
i. Diseño de imagen de asociaciones
j. Entidades de investigación
k. Oficinas
l. Granjas de Fedecacao
m. Centros de acopio
n. Puertos
o. Riego
p. Cultivos establecidos
q. Agroindustria (Casa Luker, Nacional de Chocolates)
2. Capital Cultural
a. Fiestas cacaoteras locales (reinados, concursos, ferias, festivales, grupos de
baile, encuentros deportivos, concurso de desgranadores de mazorcas)
b. Sentido pertenencia por el hecho de ser una región cacaotera y unida
c. Grupos artísticos
d. Mujer cacao cultora
e. Premios internacionales
f. Concurso Cacao de Oro
g. Casa de Chocolate
h. Rutas turísticas
i. Cultura campesina
j. Diferenciación cultural en las regiones
k. Consumo interno de tomar chocolate caliente
l. Inclusión culinaria
3. Capital Político
a. Consejo Nacional Cacaotero
b. Fedecacao
c. Política publica para siembras (SIEMBRA)
d. UMATAs
e. Alcaldías
f. Ministerio de Agricultura
g. Ministerio de Comercio
h. Cámaras comerciales
i. Cooperación Internacional
j. Programas y proyectos de entidades del gobierno
k. Inversión de las instituciones del gobierno
l. Bancos: BANCOLDEX, Banco Agrario, BANCOLOMBIA
m. FINAGRO
n. Inversionistas
o. Acuerdos de competitividad
p. Consejos regionales de cacao
q. Secretaria Agricultura de los departamentos
r. Red Cacaotero
4. Capital Financiero
a. FINAGRO
b. Fondo parafiscal de cacao (Fondo Nacional del Cacao)
c. Política de precios
d. Demanda asegurada
e. Incentivos para siembra
f. Findeter
g. Banco Agrario
h. Bancos internacionales
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i. Tecnologías de información
j. Líneas de crédito
k. Industria – empresas compradoras
l. Fondos de comercialización
m. Financiera Comuctrasan
n. Cooperativas - Coopcentral
o. Cooperación Internacional
5. Capital Social
a. Núcleos familiares
b. Participación en asociaciones de productores (Ecocaco, Aprocafrum,
Ascoviz, Misión Chocolate, mujeres)
c. Comunicación entre industria y productor
d. Red Nacional de Cacaoteros
e. Fedecacao
f. Universidades
g. Agencias de cooperación
h. Juntas de acción comunal
i. Comunidades productoras
6. Capital Humano
a. Centros de Investigación (Corpoica, CIAT)
b. Equipo técnico de Nacional de Chocolates
c. SENA
d. Universidades – (Universidad de la Paz – Magdaleña,
e. Productores (mano de obra, mingas)
f. Inversionistas
g. Líderes de asociaciones
h. Expertos en el cultivo del cacao
i. Conocimiento técnico/Extensión
j. Experiencia del agricultor
k. Consejo Nacional de Cacao
l. Fedecacao
m. Asociaciones
n. Directivos, personal técnico y administrativo
o. Chocolateros
7. Capital Natural
a. Agro ecosistema – cultivos establecidos combinados con frutales,
forestales, ambientalmente amigable
b. Condiciones ambientales – clima, fuentes hídricas/precipitación
c. Tierra y suelos fértiles y apropiados para el cultivo
d. Recursos genéticos – viveros y jardines clonales de cacao
e. Ecoturismo
f. Certificaciones ambientales
g. Biodiversidad y paisaje
h. Geo posición del país (ubicación geográfica)
i. Fertilización orgánico
j. Bonos de carbono
k. Granja Yarigure (Nacional de Chocolates)
Financiero y Entidades de Apoyo y Proveedores de Servicio

Funcionando Bien
a. Promoción reciente del sector cacaotero – gobierno
b. Buena interacción/comunicación de la Red Cacaotero
c. Mejoramiento de la coordinación del sector liderado por entidades de
apoyo
Mejoramiento
a. Mayor apoyo para promoción del cacao colombiano en eventos locales y
extranjeros (gobierno/ProColombia)
b. Fomento de cultura alrededor de caco por parte de los gremios
c. Enfoque de inversiones de cooperación
d. Fuentes de financiamiento deben ser más diversas
e. Mayores líneas de financiamiento para transformadores
Productores y Proveedores de Insumos

Funcionando Bien
a. Confianza en el cultivo del cacao
b. Deseo de asociarse
c. Negocio familiar
d. Tenencia de la tierra
e. Conocimiento de las practicas agronómicas
f. Armonía con el medio ambiente, conservación del territorio y las practicas
productivas y culturales
g. Amplia oferta
Mejoramiento
a. Aplica los conocimientos de las practicas agronómicas
b. Modernización de los cultivos
c. Tecnificación en las practicas pos cosecha
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d. Conocimiento y aprovechamiento del recurso genético

e. Soberanía alimentaria
f. Acceso a financiación
g. Asistencia técnica y transferencia de conocimiento y tecnología
h. Altos costos
Canales de Comercialización, Consumidores y Comercialización

Funcionando Bien
a. Global – crece más la demanda que la oferta
b. Hay hábito de consumo
c. Inicio al consumo de cacao fino local
d. Mercado internacional, hay demanda cacao fino y de aroma
e. Hay diversidad en canales de comercialización
f. Gran oferta de comercializadores nacional e internacional
Mejoramiento
a. Se necesita incrementar consumo local
b. Mejorar condiciones de conocimiento del cacao (atributos) como aroma,
salud
c. Crear canales para cacao social
d. Muy alto el nivel de intermediación
e. Fortalecer encadenamiento
f. Incrementar coberturas
g. Disminuir riesgos de precio, mala calidad
Transporte
Funcionando Bien
a. Protección al transporte vereda comunitario
b. Confianza de productores y transportadores
c. Seguros de transporte
d. Consolidación de envíos
Mejoramiento
a. Transporte animal del cultivo al centro de beneficio
b. Cable vías
c. Mejorar las vías de acceso
d. Costos elevados
e. Transporte fluvial y marítimo para el cacao e insumos
f. Abuso por transporte informal
g. Recipientes para transporte de cacao en baba
h. Condiciones de vehículos de transporte
i. Trazabilidad
Industria
Funcionando Bien
a. Cobertura de compra del Cacao Nacional (consumo del 87% aproximado)
b. Buena difusión de precios de mercado
c. Mecanismos de financiación para la compra de caca a las asociaciones
d. Apertura de líneas de financiación enfocada al escalamiento de la industria
de la transformación
e. Posicionamiento en el exterior
f. Alianzas con asociaciones y productores
Mejoramiento
a. Incentivas económicos por calidad del grano y segmentación de mercad
b. No hay suficiente reinversión en la base de proveeduría
c. Valor compartido
d. Mas competidores en el mercado (industriales y exportadores)
Educación/Universidades/Investigación/Asistencia Técnica
Funcionando Bien
a. Hay oferta educativa para sector rural mas técnica y tecnológica presencial
y virtual
b. Hay capital humano en investigadores
c. Hay buenos trabajos en genética y selección de materiales genéticos
(colecciones y entidades)
d. Buena oferta en investigación en diseños de siembra y sistemas
agroforestales
e. Hay avances en la calidad del cacao, sistemas de fermentación y calificación
calidad
f. Trabajos en transformación de productos, por industrias y entidades del
sector de apoyo (SENA)
g. Hay oferta de transferencia en el país por varias entidades (Fedecacao,
Industria, SENA, UMATAs)
Mejoramiento
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a. Mejorar la calidad de la educación

b. Vinculación Academia – Sector Productivo
c. Investigación a largo plazo
d. Mejorar al acceso a la educación
e. Direccionamiento de la educación empleado a empresario
f. Mejoramiento enfoque asistencia técnica
g. Diferencia entre extensión y asistencia técnica
h. Pertinencia de educación e investigación
i. Aplicación de la investigación (transferencia)
j. Metodologías de transferencia (adopción)
Metas para el Sector Cacaotero en Colombia:

1. Mejorar la Institucionalización del Sector de Cacao
a. Ampliar representatividad de productores en el consejo nacional
cacaotero
b. Convocar al gobierno nacional para definir una hoja de ruta de
reforzamiento de la institucionalidad cacaotera y de la construcción de la
política publica
c. Comparar a Colombia con la institucionalidad regional (de México hasta
Perú) y su posible adaptación
d. Desarrollar líneas de crédito para incentivar el fomento de la industria de
transformación del cacao colombiano
e. Incentivos a la exportación por el gobierno a asociaciones
f. Fortalecer a la red cacaotera para mejorar representatividad de las
organizaciones de productores
g. Promover que el MADR cuente con 1 responsable del sector (no junto
con otros)
h. Apoyo a secretarias técnicas de la cadena de cacao por regiones
i. Las universidades como se podrían vincular al sector cacao
Prioridades:
 Divulgación y fácil acceso al crédito
 Generar una articulación de los sectores y de los recursos en pos del
aumento y la productividad
 Mejoramiento de infraestructura
 Política clara de legalización y acceso de tierras
 Modelo diferenciado (pertinente) de educación rural (capital humano en el
campo, relevo generacional, pertinencia productiva)
 Articulación y unificación de los actores (marco estratégico)
2. Aumento de la Producción y la Productividad, Sostenibilidad y Competitividad

a. Promover la investigación participativa (universidad – productor)
b. Contratar expertos que propongan metas razonables y posibles para
aumentar la productividad por regionales (presupuesto razonable)
c. Convocar a las universidades para definir modelos tecnológicos con
enfoque regional y énfasis en producción agroecológica y agroforestal,
posteriormente incluirlos en los currículos de ciencias agrarias
d. Asistencia continua
e. Capacitación de líderes locales en extensión y asistencia técnica
f. Fortalecer el intercambio entre productores
g. Censo cacaotero
h. Investigar y desarrolla modelos productivos que se adapten a los
territorios
i. Preparar profesionales, tecnólogos y técnicos con énfasis en el sector
cacaotero
j. Hacer ejercicios de retroalimentación con países donde funcione mejor la
cadena para adaptar lo que sirve Colombia
k. Fortalecer las escuelas productivas
l. Formación en manejos culturales del cacao a los productores cacaoteros
m. Promover capacitaciones sobre liderazgo y comunidad
n. Trabajar en focos de innovación en todos los eslabones de la cadena
o. Crear centros de acopio colectivos
p. Transferencia de tecnología para los transformadores
q. Participación activa del productor en los programas
r. Concretar y definir lo referente a la extensión con un “servicio de
extensión” moderno, con personal técnico preparado en el cultivo, el
mercado, la calidad y apoyo, pero con preparación y capacitación en
“métodos y medios” de extensión para la adopción. Servicio de extensión
del gremio y las asociaciones, financiado por el estado como un bien
público y como un servicio del gremio y de las asociaciones para los
productores de cacao.
Prioridades:
 Prioridad esquemas agroforestales y producción agroecológica con
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enfoque regional
 Política nacional de investigación y transferencia de tecnológica regional
 Enfocar esfuerzos en mejorar la productividad (de acuerdo a realidades
regionales y culturales), no en extensión de área para pequeños y
medianos productores cacaocultores.
 Crear o estructurar un adecuado programa de extensión y asistencia
técnica y crédito tecnología
 Fincas espejo
 Investigación y extensión rural fortalecida y diversificada de acuerdo a las
necesidades regionales, que garanticen la productividad y calidad del
cultivo con sostenibilidad social y ambiental
 Servicios de extensión y asistencia técnica para mejorar productividad a la
medida de cada región
 Invertir en investigación, desarrollo e innovación participativa para generar

modelos de sistemas productivos de cacao competitivos y sostenibles
dadas las condiciones ecológicas y culturales de cada eco región
 Disponibilidad y acceso a recursos necesarios que permitan garantizar la
adopción de tecnología
3. Fortalecer al sector para responder a los mercados

a. Iniciativas para reducir # de productores que venden a intermediarias
informales
b. Sobre la base de estudios de mercados existentes llamar a una macro
rueda de negocios “exploratoria” de volúmenes de compra durante el
próximo decenio
c. Facilitar el acceso a recursos para escalamiento y preparación adecuada
para acceder a mercados para transformadores
d. Continuar la promoción de Colombia en el mercado internacional
e. Fomentar al consumo de productos a base de cacao en los jóvenes
f. Compara a Colombia en la competitividad mundial de costos por kilo
g. Desarrollar el turismo de conservación y producción con cacao
h. Consolidar el concurso “Cacao de Oro” como medio para crear cultura
de calidad
i. Educación a consumidores
j. Desarrollar capacidades para proceso de pos cosecha (generar CFA)
k. Continuar impulsando vinculación comercial entre organizaciones/regiones
y compradores internacionales
l. Crear opciones de fortalecimiento y preparación cualitativa para el eslabón
de transformación
m. Creación de oportunidades para acceder a capital semilla para fortalecer
emprendimientos en la cadena
n. Promover el consumo de cacao especial y orgánico
o. El papel de los exportadores de grano debe ir mas allá de compra grano
p. Desarrollar un perfil del cacao colombiano para ofrecerlo en dos vías, uno
“estándar” y otro especializado, con el ánimo de alimentar mercados
diferenciados
Prioridades:
 Fortalecer la industria del cacao en Colombia
 Promoción y reconocimiento del cacao colombiano en el mundo
 Desarrollar una oferta que permita posicionar a Colombia como un país
que ofrece CFA (Cacao Fino y de Aroma) de orígenes regionales con
mayor valor para el productor
 Impulso a generar valor agregado hasta la trasformación final en Colombia
“énfasis en vincular a familias productoras”
 Recuperar y fortalecer mercado nacional e internacional
 Generar procesos enfocados a la mejora de la cadena de cacao
convencional para generar oportunidades para todos
 Crear un perfil de cacao colombiano
 Desarrollo y ejecución de posicionamiento del origen regional en el
segmento de caca fino y de aroma
 Evolución del proceso de compra “justicia en las ganancias”
4. Fortalecer la asociatividad hacia la competitividad y sostenibilidad

a. Fortalecer iniciativas de transformación que están luchando por escalar en
chocolatería
b. Hacer un diagnóstico de la situación de las mujeres en la cadena del cacao
en Colombia
c. Enfocarse en competitividad en calidad, cantidad, costo eficiencia,
transformación y agregación valor
d. Desarrollar programas gerenciales con enfoque social para los directivos
de las asociaciones con énfasis en prácticas éticas en manejo de recursos,
desarrollo de planes de negocio
e. Incrementar capacitación y fortalecimiento en la asociatividad productiva a
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la base social de las organizaciones productivas

f. Fortalecer el intercambio de experiencias y productos entre el campo y la
ciudad – mercado
g. Como retener la mano de obra en el sector rural
h. Crear proyectos para fomentar la participación de las mujeres en la
asociatividad
Prioridades:
 Fortalecimiento de la asociatividad (reducción de costos, poder de
negociación, calidad, acceso a mercados)
 Enfoque de género, ampliación de la participación y visibilidad de las
mujeres en las asociaciones
 Fortalecer las asociaciones de productores para crear negocios rentables y
sostenibles
Próximos Pasos
1. Concretar una ruta junta con el gobierno
2. Actualizar y precisar las metas de crecimiento del sector
3. Identificar el potencial del mercado
4. Crear un equipo de seguimiento a este proceso
5. Crear una plataforma por estrategia (son 4) para continuar el trabajo
6. Convocar a las universidades que están haciendo trabajo con el cacao
Appendix F. Action Steps and Priorities Defined by the
Key Stakeholders at the Facilitated Participatory
Discussion
1. Improving the Institutionality of the cacao sector
a. Augment the representation of producers in the Consejo Nacional de
Cacao
b. Ask the national government to define the route to strengthen the
institutionalization of cacao and the construction of the public policies
c. Compare Colombia’s institutional support to the region (from Mexico to
Peru) and any possible adaptations or adoptions
d. Develop lines of credit to incentivize the strengthening of the
transformation industry of Colombian cacao
e. Incentives to export for the government to associations
f. Strengthen the Red de Cacaoteros to improve representation of producer
organizations
g. Promote the Ministry of Agriculture has at least one person from the
sector, not joined with another sector
h. Support the technical secretaries of the cacao supply chain in each region
i. Link universities to the cacao sector
Priorities:
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 Disclosure and easy access to credit

 Generate a linkage between sectors and resources in a post-conflict era to
increase productivity
 Improve infrastructure
 Clear policies on the legalization and access to land
 Differentiated model for rural education (human capital in the field,
generational differences, productive pertinence)
 Linkages and unification between actors (strategic plan)
2. Increasing the production and productivity, sustainability, and competitiveness of the

sector
a. Promote participatory research (university – producer)
b. Contract experts that propose reasonable goals and possible increases in
productivity in the regions (reasonable budgets)
c. Call on universities to define technological models with a regional focus
that emphasize agroecological and agroforestry production, and later
include these in the curriculum for agricultural sciences
d. Continued assistance
e. Training of local leaders in extension and technical assistance
f. Strengthen exchanges between producers
g. Cacao census
h. Research and develop productive models that are adapted to the different
territories
i. Prepare professionals, technologists, and technicians with an emphasis in
the cacao sector
j. Study countries where the cacao supply chain is functioning better and
that can be adapted for Colombia
k. Strengthen farmer field schools
l. Provide opportunities for cacao producer to learn about cultural
management of cacao
m. Promote training in leadership and community development
n. Work on innovation foci in all parts of the supply chain
o. Create collective centers of storage
p. Transfer technology to transformers in the industry
q. Active participation of producers in programs
r. Define extension as a modern Extension Service with technical personnel
prepared to work in the crop production systems, market, quality, and
support but with preparation and training in the methods and means of
extension for adoption. The service should be provided by the cacao guild
and associations and financed by the state as a public good and as a service
for the guild and associations of the cacao producers.
Priorities:
 Agroforestry and Agroecological production schemes with a regional focus

 National policy for research and technological transfer on a regional basis
 Focus work on improving productivity (in agreement with the regional and
cultural realities), no in the extension of area for small and medium cacao
producers
 Create or structure an adequate extension program with technical
assistance and technological credit
 Demonstration farms
 Research and rural extension strengthened and diversified in agreement
with the regional necessities, that guarantee the productivity and quality of
the crop with social and environmental sustainability
 Extension and technical assistance services to improve production in each
region
 Invest in participatory research, development, and innovation to generate
models of productive systems of competitive and sustainable cacao given
the ecological and cultural conditions of each eco region.
 Availability and access to the necessary resources that allow for the
guarantee of technology adoption
3. Strengthening the sector to respond to markets

a. Initiatives to reduce the number of producers that sell to informal
middlemen
b. Based on existing market studies determine the possible volumes for
exploratory business that they will purchase in the next ten years
c. Facilitate the access to resources through scaling up and adequate
preparation for accessing markets for transformers
d. Continue the promotion of Colombia in the international market
e. Strengthen the consumption of cacao products with youth
f. Compare the global competitiveness of Colombia for costs per kilo
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g. Develop conservation and production tourism with cacao

h. Consolidate the “Cacao de Oro” competition as a means to create a
quality culture
i. Education of consumers
j. Develop capacities for post-harvest process
k. Continue to promote the commercial linkages between
organizations/regions and international buyers
l. Creation of opportunities to access seed capital to strengthen new
activities along the supply chain.
m. Create options to strengthen and quality preparations within
transformation links
n. Promote the consumption of special and organic cacao
o. The role of the exporters of beans should be more than just purchase
beans
p. Develop a profile of Colombian cacao to offer two different ways, one

standard and another specialized, with the hope that different markets will
be served
Priorities:
 Strengthen the cacao industry in Colombia

 Promote and recognize Colombian cacao in the world
 Develop a supply that allows Colombia to position itself as a country that
offers fine and flavor cacao from regional origins with high value for the
producer
 Promote the generation of value added through final transformation of
cacao in Colombia, emphasizing the linkages for family farms
 Recover and strengthen the national and international markets
 Generate processes focused on the improvement of the conventional
cacao supply chain to create opportunities for everyone
 Create a Colombian cacao profile
 Develop and execute the positioning of regional origin cacao in the
segment of fine and flavor
 Evolution of the process of purchasing “justice in profits”
4. Strengthen the associations to be more competitive and sustainable

a. Strengthen transformation initiatives that are being conducted to scale up
chocolate making
b. Make a diagnostic of the situation of women in the cacao supply chain in
Colombia
c. Focus on the competitiveness in the quality, quantity, cost efficiency,
transformation, and value added
d. Develop management programs with a social focus for the directors of the
associations with an emphasis on ethics and management of resources,
development of business plans
e. Increase training and strengthen the productive association of the social
base of the productive organizations
f. Strengthen the exchange of experiences and products between the rural
and urban areas in the country
g. How to retain labor in the rural sector
h. Create projects that strengthen the participation of women in the
association
Priorities:
 Strengthen the associations (reduction of costs, negotiation power, quality,

Access to markets)
 Focus on gender, increasing participation and visibility of women in the
associations
 Strengthen the producer associations to create more profitable and
sustainable businesses.
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Appendix G. Ecuador Trip Report

Trip Overview and Objectives
After nearly twenty years of historic growth (GDP rose from $18.3B to $100.1B in real
terms between 2000 and 2015 according to the World Bank), agriculture continues to
be important to Ecuador, and is considered its largest employer (US Embassy). Ecuador
has been exporting cacao for more than a century and it continues to be a key
agricultural sector accounting for approximately 8% of GDP or US$814 million (Ministry
of Agriculture). Nearly all the production is exported due to little chocolate
consumption by Ecuadorians, resulting in relatively low domestic demand (3% goes to
local consumption, the rest to exports). Ecuador is now a global leader exporting cacao
(5th largest in the world, behind Ivory Coast, Ghana, Indonesia and Cameroon)i.
Ecuador’s long history of producing cacao, and its current position as the largest cacao
exporting nation in Latin America, provides an excellent backdrop for examining the
current opportunities and challenges facing the cacao sector in Latin America and the
best practices that have led to Ecuador’s ascendance in the global marketplace.
During our week-long visit, we interviewed government officials, university faculty,
researchers, producers, producer associations, exporters, traders, and NGO personnel
among others (See Appendix for itinerary for trip). The original objectives for our trip
were the following:
1. Understand the governmental support system that created a successful cacao
supply chain
2. Determine how extension has played a role in the increase in cacao yield and
acreage
3. Study the farmer producer organization structures that helped to create a
favorable supply chain for cacao producers
4. Gain an appreciation for the financial mechanisms that have been put in place for
the scaling up of the cacao sector in the country
5. Understand the role of cacao in poverty reduction strategies
Similar to Colombia, there are indigenous varieties (Nacional or arriba), which have been
cultivated in a number of specific regions of the country (Esmeraldas, Amazonas, Manabí,
and others). Although these varieties are highly prized because of their genotype and
phenotype (genetic diversity, flavor profiles, potential disease resistance characteristics,
etc.) by producers, government, research institutions, and others, they are often not as
productive as the variety CCN51. So, while we collected information that pertains to
each of these objectives, the prevailing discussions revolved around the viewpoints of
factions that support the notion that Nacional varieties of cacao are the foundation for
moving forward and those that see Ecuador’s future in the CCN51 cacao variety
developed in Ecuador in the 1960’s. In this report, we provide an overview of our
findings and discuss, at length, several pressing issues that we uncovered during our trip.
Overview of Cacao in Ecuador
Since 2000, Ecuador has seen huge increases in cacao exports, as total production went
from 51,000 MT in 2000 to 265,000 MT in 2016, a 5-fold increase in a little over 15
years. There are a number of reasons for this increase, including governmental and non-
governmental investments in programs focused on the cacao sector (for example, the
Government of Ecuador, USAID, CRS and many others committed significant resources
during this time) and private sector contributions that included upstream supply chain
innovations and the evolution of large scale plantations. In addition, Ecuador
experienced an increase in plantings of CCN51, a prolific variety (yielding up to 2500
kilos per hectare) that has been tested for more than 50 years, is considered somewhat
disease resistant, and can be produced with little to no shade. Along with the
introduction of high yielding varieties, many new hectares of area were converted to
cacao as production extended into multiple areas of the country, some of which had
previously been in banana or cattle production. According to FAOSTAT, over 100,000
ha. of land where cacao is being harvested was added between 1999 and 2013, rising
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from 301,160 to 402,434 hectares harvested. Currently, the Ecuadorian sector can be
best described as being in transition. In one respect, it is heavily vested in the past,
relying on the flavor profiles and historic bond to traditional Nacional (arriba) cacao
varieties that are being used to develop new niche products that are differentiated by
origin at the regional level. On the other hand, farmers are realizing higher yields and
benefiting from the resulting production gains through the adoption of CCN51 and
introduction of international exporters interested in the marketing of bulk cacao on the
global market. Based on our observations, a tension pervades the Ecuadorian cacao
sector and the line is definitively drawn between Nacional and CCN51.
Nacional versus CCN51

For the ease of comparison, important variables for the Ecuadorian cacao industry are
listed under separate CCN51 and Nacional columns in Table A. The remainder of the
report will follow the order of the variables listed in the table. Market outcomes are
referred to throughout as many of the variables examined potentially have some effect
on prices received.
Table A. Comparison between the cacao varieties CCN51 and Nacional (arriba)
Item CCN51 Nacional
Planting Material Private sector Public and private sector

Grouped for certification
and/or vertically
Farmer Groups Few, if any
integrated with exporter
or manufacturer
Smallholder and large-

Plantation Smallholder
scale
Yield High Low
Production Increasing Stable to Decreasing
Fermentation On farm On farm / Collective
Acreage Increasing Stable to Decreasing
Flavor Evolving Fine and Flavor
Overall Quality Increasing Regionalization
Research, Marketing,
Government Support None
Plantation Management
International Farmer group

None
Community Support strengthening
Fermentation techniques,
Private Sector Support planting material, tech Supply chain development
transfer
Cacao Processing and

Chocolate Local / International Local / International
Manufacturing
Cacao Exports Local / International Local / International
Farmgate Price SAME
Planting Material
CCN51 – We visited Hacienda Cañas in Naranjal, Guayaquil. There we learned that
CCN51 cuttings are grown for grafting and prepared for shipment across Ecuador and
beyond. CCN51 plant material is only available through private sources such as
Hacienda Cañas. While the source material is limited in origin, the quantities produced
continue to face high demand (Figure A).
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Figure A. Preparing the grafting material for CCN51 plantation at Hacienda Cañas.
Nacional – Planting material for these varieties are available through commercial and
public outlets. The Government of Ecuador, through the research conducted by INIAP
(El Instituto Nacional de Investigaciones Agropecuarias / National Institute for
Agricultural Research), maintain clone variety trials on Nacional varieties. During our
visit to INIAP at their Tropical Experiment Station in Pichilingue, we were introduced to
the latest clones EETP-800 and EETP-801 (Figure B). These high yielding clones are
actually crosses between Nacional and CCN51. The difference is that these clones have
a flavor profile that resembles Nacional and yields, during trials, that rival CNN51. It
remains to be seen if these clones are widely adopted. There are multiple constraints
facing adoption, such as continued trials across Ecuador’s diverse cacao growing regions
to see how they respond to disease and differing management practices, as well as the
resources at the government level available to commercialize these new clones.
Figure B. New Nacional clones at INIAP experimental station in Pichilingue.
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Farmer Groups
CNN51 – There are few, if any, farmer groups that focus their collective energies on
CNN51. We were told that a more common scenario is that farmers have both
Nacional and CCN51 on their farms. The variety, CCN51, is sold individually and, if part
of a farmer group, the Nacional production is destined for market transactions mediated
by the farmer group.
Nacional – We were told that no more than 10% of all Ecuadorian farmers maintain a
membership in a producer group. Those that are members have access to markets
directly mediated by Ecuadorian and international exporters and collective fermentation
(necessitating the purchase of cacao en baba, seen Figure C – cacao freshly removed
from the cacao pod and still encased in mucilage - instead of individually fermented and
dried), which is used as a quality control measure by downstream actors (Figure D).
This post-harvest practice is to ensure consistency, limit risk, and increase certification
assurance as much of the output purchased through farmer groups carries some type of
certification. Ecuadorian cacao processors, such as Cofina, work with farmer groups to
ensure supply of a variety of certified cacao (organic, Fair Trade, Kosher, UTZ,
Rainforest Alliance, etc.). Chocolate manufacturers, such as the Ecuadorian firms Pacari
and Republica de Cacao, work with farmer groups in different regions to ensure that
they have access to high quality cacao that carries the desired flavor profile. It was
mentioned by several entities that work with farmer groups, that members often
receive extension-like technical assistance that is conducted by the entity directly and/or
its partners.
Figure C. Collection of wet cacao (en baba) at a community collection point to

increase consistency and uniformity for quality control to meet certification
requirements.
Figure D. Communal fermentation boxes to increase the unifority and consistency in
the fermentation of Nacional cacao varieties to improve quality control.
While approximately 10% of Ecuadorian cacao producers are organized, one must keep
in mind that they do not sell all of their output through the farmer organization. We
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were told that of the total amount of beans a producer might sell to an association,
about 50% are sold through the association’s channels, while the other 50% is sold
individually by the producer.
Plantation
CNN51 – This cacao variety is grown on both smallholder plots (typically less than 10
ha. and oftentimes less than 5 ha.) and much larger haciendas that cover hundreds of
hectares. CNN51 is usually grown as a monocrop with little shade and planted at
relatively high densities (Figure E). As Ecuador has become a major player in the global
cacao trade, there has been an increase in the number of large scale plantations. No one
in our group had ever seen the size and intensity of cacao plantations anywhere else in
the world. The elimination of shade trees, density of tree plantings, and the extensive
areas that have been planted were overwhelming. The planting of trees on an industrial
basis has definitely had an impact on the overall production of the cacao sector in the
country as well as the productivity on a per hectare basis.
Figure E. Cacao Variety CCN51 planted at Hacienda Cañas in Naranjal, Guayaquil

Nacional – The Nacional varieties are almost exclusively grown on smallholder farms
that employ agroforestry systems which afford needed shade and a variety of economic
opportunities for the farm household. Given the relatively low planting densities and
small acreage, the diverse portfolio of output found in these systems offers much
needed additional sources of income.
Yield
CCN51 – CCN51 yields were quoted as anywhere between 800-2500 kg/ha. Producers
have tended to prefer CCN51 due to the resulting increased productivity (and the
market at the farmgate not transmitting any price differentials based solely on variety).
Nacional - The yields for Nacional that were quoted to us varied between 200-500 kilos
per hectare. As mentioned earlier, there were instances reported where these yields
were reportedly higher than the national average (~450kg/ha, though this figure is highly
contested by both sides).
As with most crops, planting density, along with variety, input use, farm management,
prevailing weather conditions, etc. all play a role in determining yield.
Production
CNN51 - Undeniably, there has been a marked increase in CCN51 production all over
the country, with estimates running anywhere from 30-60% of total cacao production in
the country. It is challenging to find the exact number since there isn’t necessarily a
market channel for only this variety. However, export data suggests that at least one
third of all Ecuadorian cacao exports are CCN51. Given its use internally, the overall
proportion of production is likely higher than the export data suggests. Based on our
discussions with stakeholders, CNN51 production is expected to continue to expand as
farmers either convert away from Nacional or additional acreages are brought into
production.
Nacional – Despite efforts aimed as staving off the decline of Nacional plantings and
holdings, in addition to those focused on increasing demand for chocolate that requires
use of Nacional varieties, Nacional production continues to decline. Partly a function of
yields, Nacional doesn’t appear to be sustainable at the farm level for a large number of
farms, regardless of any existing price premiums. This is primarily due to the relatively
low production of these varieties, which cannot be compensated for in any economically
feasible way at the farmgate. The only farms that seem to be benefitting from a price
premium are those that have a direct market to a “bean to bar” company or are
connected to a producer organization that has invested in certifications. We were able
to find with our research that very few producers benefit in a meaningful way from
certifications, mainly because of the lack of a robust market in other countries for these
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products. As can be seen in Figure F, this farmer association was paying an increased
price for organic certification but only for a few days because there wasn’t enough
demand to purchase everything from the farmers.
Figure F. Sign at the producer associations community post-harvest facilities, which

states that they will stop purchasing cacao during the week of February 20-28, a peak
period for farmers to sell cacao.
Fermentation
CCN51 - A considerable amount of time was spent during our trip discussing the poor
quality of CCN51. The government sees CCN51 as a “disease” and is at risk of
jeopardizing the local treasure, the arriba varieties. Part of this is due to the perceived
flavor profile of CNN51. As with all cacao, the fermentation process has a significant
effect on the final flavor profile of the resulting fermented and dried cacao.
Compared to Nacional, CCN51 has an increased amount of mucilage, which can easily
convert to a vinegar tasting chocolate when it is fermented the traditional way in
wooden boxes. INIAP, industry, and some producers have worked collaboratively to
modify the fermentation process for CCN51. The new process helps to reduce the
moisture from the beans in the first stages to eliminate the buildup of acetic acid and the
astringent flavor profile that ensues (Figure G). Properly fermented CCN51 results in a
flavor profile that is pleasant tasting and does not require blending of non-CCN51 beans
to make chocolate. Surprisingly (to us), we were treated to chocolate made purely with
CCN51 beans. Unlike our experience tasting unpalatable cacao liquor in Colombia,
using poorly fermented CNN51, the CCN51 dark chocolate we tasted in Ecuador was
proudly being served to the public.
Figure G. Burlap bags are used to ferment CCN51 cacao to increase the drainage of
194
excess liquid from the mucilage and to change the fermentation process so the cacao
does not taste like vinegar.
Whether they are employing the new fermentation technique or not, smallholder
farmers typically sell CNN51 already fermented and dried. This is partly because
CCN51 is currently destined for international ‘bulk’ markets and sold by individual
farmers rather than farmer groups (who are more likely to be involved in collective
fermentation arrangements). Large-scale plantations also sell fermented and dried beans,
albeit in much larger and more frequent transactions. This output is fermented on much
the same scale (or larger) as the collective fermentation units. The difference being that
the cacao is owned by the same entity and simply aggregated from across the farm
rather than individual farmers.
Nacional – As mentioned above, Nacional is either fermented collectively by the farmer

group or the entity contracting with the farmer group. Individual farmers that do not
belong to farmer groups ferment and dry their Nacional beans on their own.
Acreage
CNN51 – As discussed in the Production section, acreage of CCN51 is expected to
continue to increase in Ecuador. The new acreage will likely be a combination of
Nacional cacao farm conversion or conversion of non-cacao farms into CNN51 farms.
Several of our interviewees expressed that far fewer acres would be brought into
production through the conversion of forest.
Nacional – Acreage in Nacional is expected to stabilize or continue on its downward
trend. This will be determined by market demand for Nacional, perceived profitability
and the introduction of higher yielding Nacional varieties or Nacional production
systems.
Flavor
CCN51 – As discussed in the Fermentation section, the flavor of CCN51 is partially a
function of its genetics and partly due to the application of fermentation techniques that
are appropriate for Nacional, but not CCN51. With appropriate fermentation
techniques being refined and disseminated, oftentimes through CCN51 producer
(commodity) groups and trainings held at large haciendas and the growing demand from
international exporters, the quality of CCN51 from a flavor perspective should continue
to increase.
Nacional – The government, non-governmental organizations, and private firms have put
many resources into recognizing the organoleptic qualities of Nacional at the regional
level. This push is aimed at developing high value niche markets that focus on the
specific regional attributes of Ecuadorian Nacional (fruit, floral, etc.) cacao. While there
are examples of successfully marketing such a product, the market is extremely small
and the prices commanded at the retail level do not offer the opportunity for premiums
that can overcome the relatively low production currently experienced in the traditional
Nacional production system. At a more global scale, Nacional is the source of ‘fine and
flavor’ cacao from Ecuador. Based on our secondary data analysis, Ecuador is positioned
to be one of the leading purveyors of this differentiated cacao, but the production share
of Nacional continues to decline. At this moment in Ecuador, based on official export
data, the share of Nacional is roughly 27% of exports – a complete reversal from the
ICCO’s ‘fine and flavor’ benchmark of 75% ‘fine and flavor’ for Ecuador. Through the
efforts of several Ecuadorian firms, processors, and chocolate manufacturers, market
penetration for Nacional continues to occur as does investigation into find new and
securing known flavor profiles.
Overall Quality
The quality measurements that show up in official export data for Ecuador are assigned
much later in the supply chain, when the trader is planning on exporting. Traders will
sample and sort their lots of beans and then sell based on the quality standards being
met (see below). CCN51 beans are prized by processors for their relative size. Larger
beans have more cacao butter based on weight and Nacional beans are sought after for
their organoleptic qualities.
Export data that was shared with us (from MAGAP) suggests that at least 34% of all
exports are comprised of CCN51. This runs counter to the ICCO rule of thumb that
25% is not considered to be ‘fine and flavor’. Additionally, the data suggests that,
between January 2012 and September 2015, 72% of cacao exports were considered
‘conventional’ and the remainder met the A.S.S.S. or A.S.S. qualifications, quality
standards that are based on bean weights that correlate to % fermentation. The higher
the grade (A.S.S.S.), the higher percentage of beans that have been fermented (a cut test
to determine if there were 75% well fermented) and heavier weight (130-135 grams per
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100 beans). During this time, the overall difference between the unit value of
conventional and the A.S.S.S. or A.S.S. designated cacao was approximately $85.
Based on 100 beans, from highest quality to lowest quality for Nacional beans:
A.S.S.S 130 - 135 grams 75% fermentation

A.S.S 120-125 grams 65% fermentation
A.S.N 110-115 grams 54% fermentation
A.S.E 105 - 110 grams 53% fermentation
CCN51 135 - 140 grams 76% fermentation
The buyer (for example ECOM or a farmer cooperative or producer association)
sample the beans and "assume" the cost of sorting to achieve the desired grade. This is
one of the reasons why beans are being purchased en baba and the processing is done
by several middlemen or some cooperatives. The majority of farmers do not know
about the quality standards (based only on weight and fermentation percentages), unless
they receive a quality based payment. This practice is being reduced at most collection
centers because a large percentage of buyers are purchasing en baba or paying the same
price for all dried beans, regardless of whether they are well fermented or are CCN51
or a different variety.
There is little consistency and only physical quality measures are taken (to whether the
beans have been well fermented and dried based on physical characteristics) when
purchased. At this time, the market is not concerned about where the beans are coming
from or what variety. The only time that a differentiation is made between Nacional and
CCN51 is when the beans are sold through a producer association and few farmers are
members of a producer association or cooperative.
Government Support
CCN51 – Publicly funded research on CCN51 is essentially focused on using its genome
to introduce positive attributes to new Nacional clones. Additional government support
has been lent through research collaboration on fermentation methods.
Nacional – The Ecuadoran government has taken a particular interest in supporting the
cacao sector. A governmental program for improving productivity of the Nacional
variety, Minga de Cacao, was initiated to increase technical assistance for cacao
producers, predominantly pruning cacao trees to increase yields. There is hope that the
next governmental program will focus on post-harvest and quality as well as grinding
potential in the country, currently they are only able to grind 2% of the production. At
the experiment station level, research is being conducted on disease resistance and
treatment, sustainable production systems, developing new cultivars and quality control.
At the university level, some of the cutting-edge research on cadmium in cacao is being
conducted.
One issue that requires more attention is that collection and use of fees that were
previously used by the Asociacion Nacional de Exportadores de Cacao (ANECACAO)
are now a domain of MAGAP. The ‘best use’ of these resources should be examined
and priorities set based on potential and actual impacts on the sector.
International Community Support

CCN51 – The international community has not been particularly interested in CCN51,
despite its production potential. Though it was developed in Ecuador, CCN51 does not
appear to fit the non-governmental organization narrative as it is typically not grown in
extensive agroforestry systems but rather in intensive monoculture system that can be
scaled up well beyond the smallholder household (typically the focal point of
international efforts).
Nacional – Virtually all current efforts funded by the international community are
focused on positioning Nacional farmers to supply niche markets. This includes exercises
that effectively shorten the supply chain, in an effort to increase margins for cacao
farmers, and expand opportunities for farmers beyond simply selling their output to
potentially unscrupulous intermediaries. Farmer groups are a key institutional ingredient
for these efforts. As mentioned previously, the vast majority of Ecuadorian cacao
farmers are not organized into farmer groups, and those that are oftentimes need
additional capacity building. Lastly, most of the internationally funded efforts rely on
certification in order to further differentiate the product. To that end, sourcing Nacional
beans is a necessary but not sufficient condition.
Private Sector Support

CCN51 – Support for CCN51 is almost exclusively the domain of the private sector. We
met with CCN51 ‘advocates’ from the production, processing, and export sectors.
These entities are leading efforts to continue to refine the fermentation regime and
198
production systems, including the scaling up to commercial, large-scale systems. The

private sector is also actively working towards increasing market penetration for
CCN51 and advocating for CCN51 amongst downstream actors. With so much effort
being expended by governmental and non-governmental organizations focused on
promoting Nacional, the private sector is recognizing that CCN51 requires similar
efforts. Several of the interviewees discussed the income potential for smallholder
farmers that are converting, or should be converting to CCN51. They would like the
conversation amongst all of the actors to focus on the economic outcomes at the farm
household level given the prevailing agronomic conditions in Ecuador.
Nacional – Private sector support for Nacional appears to originate from the
downstream actors, especially processors and chocolate manufacturers. In contrast, the
export sector is less divided by cacao variety and more focused on the local versus
international exporter divide.
The Mars Company recently purchased a farm in Ecuador and is working to improve
efficiency, including determine better ways to shape trees to use an automatic picker,
and improving cacao farming systems to ensure a supply of cacao to their factories. This
could be thought of as a risk management strategy that combines large-scale production
with intensive research that can be disseminated to smallholders as well as large-scale
plantations.
Cacao Processing and Chocolate Manufacturing

The processing and chocolate manufacturing industries in Ecuador continue to evolve.
Firms like Cofina, process Ecuadorian cacao to meet demand for butter, powder and
paste in Ecuador and beyond its borders. Other firms, such as Universal Sweet
Industries (Chocolates la Universal), seek ‘bulk’ cacao to process for their needs. While
other firms intensively seek out specialized batches of cacao for specific products.
As mentioned previously, some private firms and the government of Ecuador have truly
taken on the idea of embracing regional diversity. Ecuadorian Bean to Bar companies
(Pacari, Republica de Cacao, etc.) have seen the need to identify, highlight, and market
the regional differences in cacao to satisfy a growing, albeit relatively small, consumer
demand. Where price differentials are paid for those varieties, producers are able to
continue to preserve these varieties, but the actual metric tons that are needed for
these markets is extremely small (impacting hundreds, not thousands of producers) and
it is highly unlikely this niche will grow sufficiently to become significant in the global
export market in the future.
Cacao Exports
The Ecuadorian export sector has been in significant flux over the past few years.
Traditionally, ANECACAO, the exporter association, was primarily made up of
members that were Ecuadorian. The introduction of ECOM and OLAM, along with the
bankruptcy of Transmar, has significantly impacted the export sector.
Both ECOM and OLAM are large trading houses that export cacao from all over the
globe. Both have a relatively large presence in Ecuador. Both are exporting certified and
bulk cacao. ECOM has reached into the cacao growing regions relatively further than
OLAM. Both rely primarily on intermediaries to secure cacao supplies.
While the two major international exporters have secured market share, there are still
many Ecuadorian exporters, many of which are extremely small. Based on data shared
with us upon our return, it appears that the top five exporters had roughly 40% of the
market, leaving 60% to be shared amongst nearly sixty other entities between 2012 and
September 2015. Based on our interviews, this has potentially tightened a bit with
Transmar’s departure from the market and OLAM and ECON are expanding their
reach.
Seemingly, because of the issue of inconsistent fermentation in CCN51 and the negative
image the variety has in the region, Ecuador has seen a reduction in the amount of cacao
that is classified and exported as ‘fine and flavor’. Among our research team, there is
real concern that the ‘fine and flavor’ percentages for each country is a political issue
and not so much an actual objective criterion based system. We heard the opposite
sentiment from government officials in Ecuador. They are committed to carrying the
mantle of Nacional and, by association, ‘fine and flavor’. However, even if Ecuador could
reverse the trend and claim 100% of all cacao exported is ‘fine and flavor’, it is unclear
(unlikely) that the market is available to absorb the additional output at premium prices.
Farmgate Price
At this point in time, Ecuadorian cacao beans purchased at the farmgate are a reflection
of what the farmer has planted; a mixture of CCN51 and Nacional or plantings of one or
the other. We were told that when cacao is purchased from the farmers, over 90% of
200
the time farmers are not compensated for high quality or ‘fine and flavor’ beans.
Farmers are simply paid based on how much the cacao weighs and the form that it is
sold in (dried and fermented or en baba). There is little to no selection process that
occurs at the time of sale. A price is set for dried beans in those areas that do not have
the capacity to collectively ferment and dry or a separate price is set for en baba, wet
beans that have not been fermented or dried. Subsequent to our return, one of our
local contacts shared market transaction data that differentiates between province,
district and form (dried/fermented or baba). The basic conclusions were:
 ‘Fine and flavor’ receives a higher price than CCN51 (3% to 5%) when sold dried.
 ‘Fine and flavor’ receives a lower price than CCN51 when sold wet or en baba.
 The 3% to 5% price difference cannot compete with the returns associated with
higher yields (+/- 20%) from CCN51, net gain seems higher from CCN51
(considering same planting density).
The other striking difference with other cacao producing areas in the world is the
purchasing of en baba (wet cacao beans) to better control the quality and consistency of
cacao being sold. Farmers who are members of associations that sell certified beans
(UTZ, organic, Fair Trade, Rainforest Alliance), bring their wet cacao beans to a
centralized fermentation and drying facility. The price that they receive would be less
than what they would normally receive if they held on to the beans and did the
processes themselves, but because the beans are certified, they are able to get a higher
price. These beans are normally only for Nacional varieties but because of the
fermentation issues with CCN51, this process is becoming more prevalent with those
beans as well (Cofina discussed this at length as well as with Eduardo Marquez de la
Plata and Vincent Zeller).
Premiums were only mentioned in the context of specific certifications (UTZ, organic,
etc.) and for overall quality (for output from a large CCN51 plantation that has sorting
capacity and relatively large volumes). Additionally, there appears to be some benefit
accruing to farmer organizations, and potentially to their members, through
arrangements with private firms that provide some services (technical assistance, inputs,
forward contracting, etc.). There has been an increased level of regionalization in terms
of markets, flavor profiles, and other factors fostered by government-led research and
marketing.
In many ways, the country is well positioned to increase price premiums due to
consistency, quality, and quantity because they have been able to produce large
quantities that lead to more companies contracting cacao purchases in the country.
However, at this point in time most of the increased prices being attributed to quality
are due to certification programs, such as Free Trade, UTZ, organic, or Rainforest
Alliance. These markets are incredibly small, even if they are growing, and still impact
hundreds and not thousands of cacao producers in the region.
In any case, we uncovered no evidence of farmers receiving premiums for their cacao
based on the quality designation that was ultimately received at the port, nor was there
evidence that their cacao was being discounted solely because it was from the CCN51
variety.
Conclusion
Because of the yield differentials but no price differentials, there seems to be an ongoing
war that has pitted the Nacional varieties against CCN51. People across the country line
up on one side or the other. The issue is that both can be important tools for
development strategies in the country. What needs to occur is some real technical
assistance for producers to either ferment CCN51 well or bring the beans to
fermentation and drying stations where trained people can take on the task of ensuring
the quality of the beans. Leaving the system the way it is, or continuing the war, will not
help the country to move beyond the problems. CCN51 is not going away, the
productivity of the variety and the fact that it has been in production for decades and all
over the country, makes it the choice for many producers. The new higher yielding
Nacional hybrids (some even crossed with CCN51) need to be tested over a longer
period of time and in different ecological zones and nursery programs need to be scaled
up to be able to meet the demands and needs of the producers.
In this vein, there is some interest with regionalization and diversification to maintain
genetic pools throughout the country for disease resistance, pest issues, or flavor
profiles. This makes sense, but this should be the responsibility of the government or
chocolate corporations since the farmers are not compensated for the reduced yields.
In other words, the current yields of arriba systems are so low that any existing
premiums do not come close to making up the difference in revenue relative to farmers
202
who are farming in higher yielding systems (ie. CCN51). We do not expect corn
producers in the USA to give up their hybrid corn varieties to maintain genetic diversity
in the fields. We expect that to happen at research institutions and through funding
from the corn industry.
Most Ecuadorian cacao is sold for mass market chocolate and some large corporations,
who hold most of the market share, will pay market price or a little amount more ($100
– 300 MT) for certification, quality or a special story. All of our conversations in
Ecuador and Colombia have led us to believe that this market is small and growing but
could not absorb the thousands of MT needed to raise thousands of cacao producer’s
incomes through stable price premiums. Given this situation, along with the tangible
yield differences, it is not clear if simply embracing regional diversity can raise farm
income at the same magnitude or rate as using high yielding varieties, irrespective of
their flavor profile.
Agenda Quito and Guayaquil, Ecuador  February 12 - 18, 2017

MONDAY, FEBRUARY 13
9:00 AM: Meeting with US Ambassador Todd Chapman, FAS Ag Attaché Kirsten
Luxbacher, FAS Ag Specialist Henry Vega, US Embassy, Avigiras E12-170 y Ave Eloy
Alfaro
10:30 AM: Jorge Gaibor and Marco Fernando Guilcapi, (MAGAP - Gerente de
Proyectos de Reactivacion de Cacao y Café), Avenida Eloy Alfaro y Amazonas, 13o Piso,
Edificio MAGAP, Centro de Quito
1:30 PM: Leonor Zambrano, La Gran Minga de Cacao Nacional, Hernando de la Cruz,
N32-153 y Av. Atahualpa, Quito (http://www.mingadelcacao.com)
3:00 PM: Jose Luis Zambrano, INIAP, Avenida Eloy Alfaro y Amazonas, 4to Piso, Edificio
MAGAP, Centro de Quito
4:30 PM: Juan Rodriguez, Programa ProCambio, Pedro Ramírez, Programa Amazonia
Norte, GIZ, 2do Piso, Edificio MAGAP, Centro de Quito
TUESDAY, FEBRUARY 14
9:00 AM: Regula Chavez, Swiss Contact, Av. Orellana E11-14 y Coruña, Edificio M.
Gabriela, 5° piso, Quito
10:30 AM: Gabriela Paredes, Project Management, Pacari, Julio Zaldumbide N24-676 y
Miravalle, La Floresta
1:30 PM: Thomas Hollywood, Alex Moncada, Jairo Andrade, Catholic Relief Services,
De los Naranjos N44-491 y Las Azucenas, Quito
4:00 PM: Gonzalo José Chiriboga, Republica de Cacao, Ave. Colón E8-85 y Yanez
Pinzon
Edificio El Dorado, Piso 3, Quito
WEDNESDAY, FEBRUARY 15
8:30 AM Juan Pablo Zuñiga and Merlyn Casanova, ANECACAO, Asociacion Nacional
de Exportadores de Cacao, Avenida Miguel H. Alcivar, Edificio Torres del Norte, Torre
B, Local 6
10:00 AM: Lina Marcela Naranjo, Chocolates La Universal, Eloy Alfaro 1103 y Gomez
Rendon,
Guayaquil
11:30 AM: Luis Valverde, Vice Minister of Agriculture for Ecuador and Patricia Fietz,
Consul General, US Consulate, Av Rodriguez Bonin, Guayaquil
12:30 PM: Lunch and Meeting with Roberto Granja, Jose Carbo, OLAM, Vignesh
Thirukonda, OLAM and Aldo Zolezzi, Barry Callebaut at Lo Nuestro, Victor Emilio
Estrada 903, Guayaquil
3:30 PM: Renato Proaño, Coordinator of Sustainable Development, and Ricardo
Zambrano, Vice President of Cofina, Km 11 ½ via Durán Tambo (300 metros despues
del peaje)
6:30 PM: Dinner with Kate Cavallin, Randall Camacho, Pam Schreier, Patricio Espinoza
ECOM, Hector Ballesteros, Andino Veco Km. 4.5 Via Duran Yaguachi
THURSDAY, FEBRUARY 16
9:30 AM: Danilo Vera, Rey Gastón and Juan Jimenéz, Programa de Cacao, INIAP, Km 5
de la vía Quevedo - El Empalme
1:00 PM: Producer associations (Ricardo Alvarez from INIAP is setting up)
4:00 PM: Intermediaries or Points of Sale (Ricardo Alvarez from INIAP is setting up)
204
FRIDAY, FEBRUARY 17
8:00 AM: Dr. Paola Calle Delgado, Deputy Dean of the Faculty of Life Sciences, Ramon
Espinel, Dean of the Faculty of Life Sciences, ESPOL, Kilómetro 30.5 Vía Perimetral,
Campus Gustavo Galindo - Prosperina. Facultad Ciencias de la Vida
11:30 AM: Sergio Cedeño Amador, Farm Administrator, Hacienda Cañas, Naranjal
2:30 PM: Lorena Vera, Administrator for producer organization, APROCAFA
6:00 PM: Dinner with Eduardo Marquez de la Plata and Vincent Zeller, Brokers and
Exporters, Hilton Hotel in Guayaquil Centro
Appendix H. Enterprise Budget Tables
Cost Year1 Year2

Activity Unit Unit # Cost # Cost
Direct costs COP$ COP$ COP$
Soil analysis NA
Soils preparation
Trees clearance Daily 60000 7 $420,000 -
Prepare soil Daily 30000 8 $240,000 -
Layout Daily 30000 4 $120,000 -
Dig holes Daily 30000 8 $240,000 -
Shade Establishment
Prepare, plant banana Daily 30000 6 $180,000 -
Sowing of timber trees Daily 30000 NA $- -
Cacao Establishment
Cacao hybrid plant Plant 600 800 $480,000 70.00 $42,000
Banana seed Root 1000 400 $400,000 -
Timber trees Plant NA NA -
Plant cacao Daily 30000 5 $150,000 1.00 $30,000
Fertilization
Sowing
Organic fertilizer Kg. NA -
Chemical fertilizer (10 - 30 - 10) Kg. NA -
Crop NA
Urea Bag 70000 NA 1.00 $70,000
Triple Phosphate Kg. NA -
Potassium Kg. NA -
Application of fertilizer Daily 35000 NA
Weed control
Herbicide glyphosate Gal. 55000 1 $55,000 -
Apply herbicide Daily 30000 3 $90,000 -
Weeding Daily 30000 24 $720,000 24.00 $720,000
Phytosanitary Control
Copper oxychloride 50 PM Kg. NA -
Clorotalonil Kg. NA -
Lime Kg. NA -
Fixative Lt. NA -
Apply Fungicide Daily NA -
Shade
Pruning of shade trees Daily NA -
Management of banana crop Daily 30000 0 $- 2.00 $60,000
Pruning
First pruning Daily 30000 NA -
Second pruning Daily 30000
Phytosanitary pruning Daily NA -
Harvest & post-harvest
Banana Daily 30000 NA 2.00 $60,000
Cacao Daily 30000 NA -
206
Subtotal direct costs $3,095,000 - $982,000
Indirect costs
Equipment and tools
Motorized irrigation Unit NA $- -
Manual irrigation Unit 240000 1 $240,000
Small chainsaw Unit NA $-
Pruner Unit 45000 NA $-
Pruning shears Unit 65000 $-
Weed trimmer Unit 1200000 0 $-
Blades for weed trimmer Unit 4000 0 $- - $-
Machete Unit 12000 3 $36,000
Bucket Unit 15000 NA $-
Vine basket Unit 60000 NA $-
Bag Unit 3000 NA $-
Fuel Gal. 7500 0 $- - $-
Oil 1/4 Gal. 14000 0 $- - $-

Maintenance and spare parts Daily 25000 $- - $-
Transport
Banana Unit 120 200 $24,000 -
Cacao 120 800 $96,000 -
Dried cacao Trip 10000
Rent land/farm (annual tax) Ha 100000 1 $100,000 1.00 $100,000
Subtotal Indirect costs 1005 $496,000 1 $100,000
Total costs $3,591,000 1.00 $1,082,000
Incomes
Plantain Kg. 800 3500 $2,800,000
Cacao Kg. 6500 0
Total Incomes $- $2,800,000
Income – Total Costs $(3,591,000.0) $1,718,000
Profitability $(1,873,000)
Contact:
Tamara J Benjamin (Purdue University)
tamara17@purdue.edu
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AN ANALYSIS OF THE SUPPLY CHAIN OF CACAO IN COLOMBIA

Technical Report · October 2018

Tamara Benjamin Gary Burniske

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Marcia Croft Marieke C. Fenton

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ANÁLISIS DE LA CADENA PRODUCTIVA DEL CACAO EN COLOMBIA View project

An Analysis of the Supply Chain of Cacao in Colombia View project

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AN ANALYSIS OF THE SUPPLY CHAIN OF

The authors would like to thank

EXECUTIVE SUMMARY ................................................................................................................................................12

HOW CACAO MARKETS WORK – COLOMBIA VERSUS ELSEWHERE ...........................................................................40

POST-HARVEST PRACTICES & PRICES .........................................................................................................................52

THE SUPPLY CHAIN OF CACAO IN COLOMBIA ............................................................................................................55

CACAO PRODUCTION - THE BASICS ............................................................................................................................ 77

Cacao Varieties and Planting Materials .................................................................................................................79

Extension and Technical Assistance Services along the Supply Chain.....................................................................81

Youth and Labor Constraints ..................................................................................................................................94

Post-Conflict Environment ......................................................................................................................................95

Define Roles and Responsibilities of Associations ........................................................................................... 107

CONCLUSIONS ........................................................................................................................................................... 120

BIBLIOGRAPHY .......................................................................................................................................................... 122

APPENDICES .............................................................................................................................................................. 125

Appendix E. Facilitated Discussion Notes.............................................................................................................. 166

Appendix H. Enterprise Budget Tables .................................................................................................................. 205

ANDI Asociación de Industriales de Colombia

ANI Agencia Nacional de Infraestructura

BMC Bolsa Mercantil de Colombia

CIAT Centro Internacional de Agricultura Tropical

COP Colombian peso

CORPOICA Corporación Colombiana de Investigación Agropecuaria

CPGA Centro Provincial de Gestión Agropecuaria

DANE Departamento Administrativo Nacional de Estadística

DNP Departamento Nacional de Planeación

ELN Ejército de Liberación Nacional

EPSAGRO Empresa Prestadora de Servicios de Asistencia Técnica

FAOSTAT United Nations Food and Agriculture Statistics

FARC Fuerzas Armadas Revolucionarias de Colombia

FEDECACO Federación Nacional de Cacaoteros

FINAGRO Fondo para el Financiamiento del Sector Agropecuario

FOB Freight on Board or Free on Board

GOC Government of Colombia

ICCO International Cocoa Organization

ICE Intercontinental Exchange

ICR Incentivo a la Capitalización Rural

INCODER Instituto Colombiano de Desarrollo Rural

MADR Ministerio de Agricultura y Desarrollo Rural

PAAP Proyecto Apoyo a Alianzas Productivas (Productive Alliances

SENA Servicio Nacional de Aprendizaje

UAF Unidad Agrícola Familiar

UMATA Unidad Municipal de Asistencia Técnica

UNODC United Nations Office on Drugs and Crime

UPA Unidad de producción Agropecuaria

UPRA Unidad de Planificación Rural Agropecuaria

USAID United States Agency for International Development

USDA United States Department of Agriculture