Rainforest Alliance and NYU Stern School of Business Sustainable Cocoa Investment Challenge

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1 Rainforest Alliance and NYU Stern School of Business Sustainable Cocoa Investment Challenge It s not easy for smallholder farmers to obtain loans by themselves, so by helping them access the financing they need, we hope to improve their livelihoods, income potential and encourage sustainable practices. - Michelle Buckles, Director of Sustainable Finance, Rainforest Alliance Smallholder cocoa farmers are the backbone of a global industry worth billions of dollars, yet the vast majority of these farmers still live in extreme poverty, scraping a living from aging cocoa plantations with declining productivity. In Côte d'ivoire, supplier of 40% of the world s cocoa, yields are some of the lowest in the world, primarily due to aging trees, deteriorating soils and disease. In the absence of long-term financing options to renovate and rehabilitate their farms, many cocoa farmers are switching to other crops that provide better income opportunities. Investing in sustainable cocoa farming is crucial to ensuring a steady cocoa supply for the world s chocolate industry, and to improving the livelihoods of cocoa farmers across geographies. Through its different programs, the Rainforest Alliance is working to revive the cocoa industry in countries such as Côte d'ivoire by providing capacity building services to farmers and their cooperatives. This includes training farmers on farm renovation 1 and rehabilitation 2 techniques (hereafter referred to as R&R or rejuvenation ). In 2013, the Rainforest Alliance s Sustainable Finance Initiative embarked on a multi-phase project (the Cocoa Rejuvenation Finance Project) aimed at designing and implementing a sustainable finance mechanism that would enable smallholder cocoa farmers to access the financing and services they need to improve and upgrade their plantations (Appendix 9). The first phase of the Cocoa Rejuvenation Finance Project consisted of a feasibility study conducted in Côte d'ivoire during the summer of 2013 that demonstrated the business case and viability for this project (Rainforest Alliance, Sustainable Finance Initiative, 2013). The second phase of this project includes the design of a financing mechanism. 1 Renovation refers to the activity of replacing aging and underperforming tree stocks with new trees through replanting. 2 Rehabilitation refers to the activity of applying best agricultural practices on existing tree stocks with the objective to improve productivity. 1

2 To begin the next phase of the project, the Rainforest Alliance partnered with NYU Stern to create the Rainforest Alliance Sustainable Cocoa Investment Challenge. The Challenge asks students at NYU to help the Rainforest Alliance develop an innovative financing mechanism to provide long-term "rejuvenation loan packages" to smallholder cocoa farmers in cocoa producing countries (Appendix 15). Loan packages, which will include a holistic set of products and services, will be used by smallholder cocoa farmers to implement multi-year farm rejuvenation projects aimed at improving the productivity and sustainability of their cocoa plantation. Rainforest Alliance and Sustainable Agriculture Rainforest Alliance Since its founding in 1987, the Rainforest Alliance has worked to conserve biodiversity and ensure sustainable livelihoods by transforming land-use practices, business practices and consumer behavior. At the heart of the Rainforest Alliance s approach is the understanding that the health of the land is inextricably connected to the well-being of those who depend on it for their livelihoods. The Rainforest Alliance s approach includes training and certification to promote healthy environments and communities in some of the world s most vulnerable ecosystems. Training is provided by Rainforest Alliance project staff, consultants, agronomists, extension officers, and led-farmers through workshops, manuals, and an online platform. The Rainforest Alliance s training helps farmers implement sustainable practices and obtain certification. In order for a farm or forestry enterprise to achieve Rainforest Alliance certification, or for a tourism business to be verified, it must meet rigorous standards designed to protect ecosystems, safeguard the well-being of local communities and improve productivity. The Rainforest Alliance then links these farmers, foresters and tourism businesses to the growing global community of conscientious consumers through the green frog seal. The Rainforest Alliance Certified seal is an internationally recognized symbol of environmental, social and economic sustainability. Sustainable Agriculture Agricultural expansion is responsible for 70% of global deforestation, and is the single greatest threat to tropical forests. In biodiversity-rich regions around the world, farms are often responsible for soil erosion, water pollution and wildlife habitat destruction. Rainforest Alliance certification encourages farmers to grow crops and manage ranch lands sustainably. Through the standards developed by the Sustainable Agriculture Network (SAN), a coalition of nonprofit conservation organizations, the Rainforest Alliance certifies farms based on the three pillars of sustainability: environmental protection, social equity, and economic viability and recognizes that the well-being of communities and ecosystems is intertwined and dependent on development that is environmentally sound, socially equitable and economically viable. The SAN standards include principles for (a) efficient and productive agriculture, (b) biodiversity conservation, and (c) sustainable community development (Sustainable Agriculture Network, 2014). 2

3 Rainforest Alliance and Cocoa Certification The Rainforest Alliance has worked to strengthen the position of smallholder cocoa farmers since 2006 by training farmers to conserve natural resources, secure a decent income, increase productivity and gain access to the growing global market for sustainably produced cocoa. With the support of locally based technicians and group administrators who help prepare farmers for certification, 279,000 cocoa farms in 17 countries have achieved certification (Appendix 2 and 3); through the Rainforest Alliance s technical training programs, cocoa farmers learn methods that increase efficiency, productivity and resilience. These farmers safeguard the health of 1.3 million hectares of land and contribute to building a better economic foundation for future generations (Sustainable Agriculture Network, 2014). As of 2013, cocoa from Rainforest Alliance Certified farms accounts for 10% of the world cocoa market (Rainforest Alliance, 2013). Independent studies show that Rainforest Alliance training leads to increased yields and income, along with many benefits for farmers, families and the communities that depend on cocoa. In 2011, for example, certified farms in Côte d Ivoire produced 576 kg of cocoa per hectare compared with 334 kg/ha on non-certified farms (Committee on Sustainability Assessment, 2012). Rainforest Alliance s Sustainable Finance Initiative In 2012, the Rainforest Alliance sought to increase its value-add to producers and industry by helping smallholders and small and medium sized enterprises (SMEs) increase access to finance by establishing the Sustainable Finance Initiative. The initiative s objectives are three-fold: 1) to improve the economic sustainability of smallholders and producer groups through access to financial literacy and business management education; 2) to increase access to finance for smallholders and producer groups by promoting financial product innovation and by linking them to social lenders and local financial institutions; 3) to increase understanding of the economic benefits of sustainability for producers and the financial community. While smallholder farmers in developing countries recognize the benefits of adopting sustainable best practices involved in Rainforest Alliance certification, many find it challenging to make the initial financial investment that certification and general productivity improvements,require with limited access to financing. For example, SMEs may need to increase pay to improve worker safety, build waste management systems, or install new technology to obtain certification. Small cooperatives rarely have that kind of money sitting in the bank, and need to borrow the capital to make these investments, says Michelle Buckles, Director of the Sustainable Finance Initiative. Smallholder farmers often find it difficult to obtain loans by themselves; the Sustainable Finance Initiative hopes to address this challenge by assisting small and medium-sized enterprises access funding from financial institutions. The Sustainable Finance Initiative provides support to certified producers and SMEs, and those in the process of achieving certification, by helping to identify their financial needs, 3

4 developing borrower profiles, providing business and financial management technical assistance, developing supply financing mechanisms where necessary and linking producers and SMEs to the appropriate financial institutions. It is important to note that while the Rainforest Alliance does not lend money or assess credit worthiness directly, it makes introductions to lenders, who then complete their own due diligence. The Sustainable Finance Initiative also works to educate these institutions about the investment needs of sustainable producers and to influence the design of financial products suitable for sustainable producers. The Global Cocoa Market Farmed on over 18 million acres (7.5 million hectares) of tropical land, cocoa provides a means of livelihood for some five million farmers 90% of whom are smallholders (<5 ha) (Mars, Inc.). Cocoa is primarily grown in Africa, Asia and the Americas; however, Côte d Ivoire and Ghana account for 60% of the world s cocoa supply (Green America, 2014). In 2013, Côte d Ivoire produced 1,449 thousand tons of cocoa and Ghana produced 835 thousand tons (ICCO, 2014). Consumption of cocoa dates back 4,000 years to the pre-olmec people of Mesoamerica, and was historically used to create a ceremonial beverage. Introduced by the Spaniards, chocolate gained widespread popularity throughout Europe by the mid-1600s (World Cocoa Foundation, 2014). People around the world now consume over three million tons of cocoa beans per year in thousands of different forms, creating an $83 billion global industry (Green America, 2014). The United States is the biggest importer of cocoa beans, and the second biggest exporter of chocolate candy, after the European Union. Currently, over 3.5 million tons of cocoa are produced annually (Fairtrade Foundation, 2013). While the World Cocoa Foundation cites a 3.1% annual production increase between 2008 and 2012, many predict supply growth will slow due to climate change and cocoa farm deterioration, particularly in West Africa. At the same time, industry forecasts predict a 30% growth in demand to more than 4.5 million tons by 2020, owing in part to the growing middle class in emerging markets in China, Brazil, India, and Eastern Europe (Fairtrade Foundation, 2013). The supply gap may force prices to rise; in fact, many already predict cocoa prices to rise close to 50% in ten years. In sum, productivity will have to increase in order to meet the world s growing demand for chocolate (Josephs, A Race to Satisfy World's Hunger for Chocolate, 2012) (Appendix 6). Historically, cocoa prices have been less volatile than large scale grains, such as wheat and corn, and more stable relative to palm oil and rubber. Since 2013, however, cocoa futures prices have been on a steady upward trend, increasing by 37% between 2013 and 2014 (World Cocoa Foundation, 2014) (Appendix 4). The ICCO Daily Price closed around $2,900 per metric ton on November 28 th, 2014 (ICCO, 2014). Cocoa Value Chain Cocoa is an important export and cash crop for cocoa producing countries and it is also a significant import for cocoa consuming countries, which generally do not have climates suitable 4

5 for producing cocoa. To get from producers to consumers, cocoa beans travel along a complex global value chain through farmers, cooperatives, buyers, shipping organizations, processors, manufacturers, chocolatiers and distributers (World Cocoa Foundation, 2014). The cocoa value chain also includes a wide range of value-add service providers, such as certifiers, technical assistance providers, government services extension and financing partners who support both growers and buyers in their daily activities (Appendix 6). From the pod to the bar Cocoa trees grow in hot, rainy, tropical climates, and they are generally located within degrees latitude from the equator, ideally with lush vegetation to provide shade for the trees. Farms tend to be two to four hectares and produce between 300 and 600 kilograms of cocoa beans per hectare, depending on the country and region (World Cocoa Foundation, 2014). The trees begin producing pods at peak production levels after five years and continue for about ten years. A cacao tree typically produces 40 pods annually, and each pod contains between 20 and 60 beans it takes approximately 400 beans to make one pound of chocolate (Rainforest Alliance, 2014). Most countries have two harvests per year, one peak harvest during the high season and one second harvest during the low season. Once the cocoa beans have been harvested, farmers pack the beans into boxes or leave them in piles to ferment and dry. After drying, farmers packs the beans into sacks and sell them directly to local buyers or bring them to a cooperative. By pooling the cocoa of many farmers, cooperatives act as an intermediary between farmers and buyers and help farmers receive better prices. After cooperatives sell their cocoa to a buyer, the cocoa is transported to an exporter. The exporter inspects the cocoa and brings it to a port. The beans are then shipped to a processing location, where they are checked by a buyer and then remain until needed by the processor. Upon request, the manufacturer receives the beans, inspects and cleans them, then roasts and grinds them into cocoa liquor. The processor then presses the cocoa liquor to divide it into cocoa butter and cocoa cakes (cocoa cakes can be sold as is or ground into a powder). To make chocolate, cocoa liquor is mixed with sugar, cocoa butter, and sometimes milk, and poured into a conch that stirs the mixture under heat. Challenges in the Cocoa Value Chain The cocoa value chain faces a number of significant challenges that affect both growing and selling the crop. Factors such as education, regulations and access to market information significantly affect the price farmers receive for their crop (World Cocoa Foundation, 2014). While smallholder cocoa farmers produce up to 90% of cocoa supplied to the global market, the majority live in extreme poverty which is partially attributable to smallholder farmers lack of 5

6 market information and ability to negotiate. In Côte d Ivoire, for example, 60% of cocoa farmers live below the poverty line (Barry Callebaut, 2014). Other challenges include aging farmers the average age of farmers in West Africa is 51 years old and child labor. An estimated 1.8 million children work in cocoa production in West Africa (Green America, 2014). Of greatest concern to the cocoa industry, however, is low productivity, attributable to aging trees that are past peak productivity, pests and disease, and depleted soil fertility. In West Africa, for example, 30-40% of crops are lost every year due to disease, and 30% of soils are somewhat or highly degraded, resulting in weak trees and meager harvests (Barry Callebaut, 2014). Without access to adequate training and financing, smallholder farmers are unable to curb tree stocks from deteriorating and to prevent yields from declining. Landscape of Technical Assistance Provided to Farmers Improving Agronomic Techniques through Farmer Field School Recognizing the challenges farmers face and the impact their management decisions have on the environment, Farmer Field Schools (FFS) were created in the 1980s to teach better crop management practices. Since then, FFS have been established throughout Asia and Africa and address a variety of commodities and topics, including cocoa, vegetables, rice, livestock, natural resource management, climate change and social issues (David S et al, 2006). Farmer Field Schools are a participatory training and adult education program that, on average, consist of participants that meet regularly during the cropping cycle. Taught by trained facilitators, FFS aim to provide farmers with knowledge of the agro-ecosystem to help them make better crop management decisions (David S et al, 2006). Agronomic techniques are often passed down through generations of families and tend to be outdated. FFS teach best management techniques for weeding, pruning, grafting, harvesting and fermenting, and encourage farmers to experiment on their farms. The application of new techniques learned at FFS has resulted in significant productivity increases for many farmers (IDH, 2013). The Rainforest Alliance works in Côte d Ivoire, Ghana, and various cocoa producing countries in South America to help smallholder farmers improve their land management and maximize yields through Farmer Field Schools. After FFS, many farmers often time go on to seek Rainforest Alliance certification. Improving Financial Literacy and Farm Management Skills In addition to Farmer Field Schools, many firms and nongovernmental organizations have developed training materials to increase financial literacy and management skills for smallholder farmers. In cocoa, as well in other crops, smallholder farmers lack basic literacy and numeracy skills that prevent them from properly managing their farms resources; quantitative analysis is required to calculate yields, costs, and revenues, for example. Training materials that address these issues teach basic financial concepts, such as budgeting, investment, and management skills, like recordkeeping and land-use planning. Training often involves exercises, 6

7 simulations and presentations that aim to teach farmers the value of implementing better management practices on their farms (International Finance Corporation, 2013). An example of a farmer business school in the cocoa sector can be found in Côte d Ivoire and Indonesia administered by GrowCocoa, and independently-run joint venture project between Olam and Blommer Chocolate. The school addresses a number of topics, such as the economics of food and cash crops and basic nutrition, and aims to help farmers understand and anticipate yields (Nieburg, 2013). Improving Access to Finance Beyond improving smallholders agronomic techniques and farm management skills, there is an increasing need to unlock smallholders access to finance to improve productivity. In cocoa, this means unlocking farmers access to both short-term and long-term financing to revive cocoa plantations through paying for inputs, planting materials, small equipment and additional working capital. Across crops and geographies, smallholders have a difficult time accessing finance. They often lack credit history and collateral, and are therefore not ideal candidates for traditional loans. In addition, financial institutions see investing in agriculture as risky, because crops are unreliable, weather is unpredictable, and prices often fluctuate. For these reasons, smallholders access to finance has been fairly limited and even nonexistent. In some cases, cocoa farmers and their cooperatives receive short-term financing from buyers who are primarily motivated by their need to secure cocoa supply during harvest seasons. These capital injections in the form of trade finance, input finance or investment in capital over a 6 to 9 month period have created strong dependencies between the farmers and the buyers providing these lines of financing. The key reasons cocoa farmers would sell to a specific buyer are 1) the immediate availability of cash (even if this means selling at a price below market) and 2) the availability of credit for inputs (or subsidized inputs). In the latter case, inputs are provided upfront by buyers, obligating farmers to deliver their harvest to these same buyers in order to repay their debt. It happens, however that, farmers in need of liquidity or of finding more attractive prices elsewhere sell their cocoa through other channels. This creates a constant tension between cocoa farmers and cocoa buyers. On one hand, farmers are seen as unloyal to the buyer providing the pre-harvest inputs; on the other hand, buyers are seen as predatory, exhibiting a sense of ownership of their supply chain. Industry stakeholders, development finance institutions, and socially-minded investors are increasingly aware of the financing gap that exists in the cocoa sector and are increasingly interested in finding financial solutions. Since 2009, access to finance has been on the agenda of the World Cocoa Foundation s (WCF) various programs as a tool to improve smallholders access to fertilizers and crop-protection inputs. Under its Cocoa Livelihood Program (CLP), two microfinance institutions, Advans in Côte d Ivoire and Opportunity International Savings & Loan in Ghana, have provided short-term crop-protection and fertilizer loans to cocoa farmers since They now reach several thousand farmers each year (World Cooca Foundation, 2012) (Appendix 5). Additionally, some social lenders, such as Alterfin and Root Capital in Côte d Ivoire, have made successful investments into large cocoa cooperatives in the form of 7

8 investment loans to acquire or maintain equipment, and of trade finance, for cooperatives to purchase the farmer s cocoa at harvest. Rainforest Alliance Cocoa Rejuvenation Finance Project In 2013, the Rainforest Alliance s Sustainable Finance Initiative embarked on a multiphase project, the Cocoa Rejuvenation Finance Project (CRFP), aimed at designing and implementing a sustainable finance mechanism (hereafter CRFP mechanism ) that would enable smallholder cocoa farmers to access the financing and services they need to upgrade their plantations and improve their productivity in a sustainable manner (Appendix 10). The first phase of the project consisted of a feasibility study conducted in Côte d'ivoire during the summer 2013 that demonstrated the business case and viability of the project (Appendix 1). Results of the Feasibility Study During the feasibility analysis phase, the Sustainable Finance Initiative produced a flexible and robust investment decision-making tool 3 based on farm-level economics that shows the costs and benefits of implementing cocoa farm rejuvenation practices (Rainforest Alliance, 2013). The analysis derived from using this tool showed that long-term loans for cocoa farm rejuvenation are theoretically possible with no loss of income to the farmers and can be repaid through the resulting increase in productivity and farm revenue. Building on the positive results of the study, the Sustainable Finance Initiative worked closely with Dalberg Development Advisors Initiative for Smallholder Finance to assess the amount of financing needed to implement cocoa farm rejuvenation at scale and to provide thousands of rejuvenation loan packages to smallholder cocoa farmers in Côte d Ivoire. The portfolio level analysis showed significant potential impact of large-scale cocoa farm rejuvenation on the Ivorian cocoa industry and economy at large. The analysis also demonstrated the need for a large-scale financing program to deploy "rejuvenation loan packages to a large number of farmers. Assuming rejuvenation loan packages can successfully be deployed to 100,000 smallholder cocoa farmers in Côte d Ivoire only, an estimated $200 million in capital is required (Appendix 19). Such a widespread investment could lead to nearly $3.7 billion longterm added value to the Ivorian cocoa industry over 10 years, according to Dalberg. Next Steps Based on the results of the feasibility study, the Rainforest Alliance is engaging with a wide range of cocoa industry players, development finance organizations and technical assistance providers. The Rainforest Alliance now seeks the help of NYU students participating in the Sustainable Cocoa Investment Challenge to develop a practical mechanism to provide long-term "rejuvenation loan packages to smallholder cocoa farmers in Côte d Ivoire and other cocoa producing countries. 3 The framework of this tools is extensively described into the Feasibility Study Report published by the Sustainable Finance Initiative in

9 The Rainforest Alliance envisions the CRFP mechanism to be an innovative and precompetitive 4 financing mechanism through which debt and capital providers would work closely with cocoa value chain participants to facilitate smallholder cocoa farmers access to "rejuvenation loan packages. These packages will contain a holistic set of goods and services necessary to successfully implement multi-year rejuvenation plans. To mitigate repayment risk and address the structural barriers 5 inherent in the cocoa industry, these packages will be designed as innovative blends of cash and in-kind loans to be repaid in cash and in crop delivery by the farmers over one or several harvest seasons (Appendices 12 to 18). Ultimately, the right CRFP mechanism will allow large scale debt and capital providers to connect with smallholder cocoa farmers across geographies, providing them access to the products and services they need to implement rejuvenation practices. The mechanism will also provide a source of funding for all capacity building and technical assistance activities required to implement long-term lending activities to smallholder cocoa farmers; it will offer an innovative financing solution in a sector where many structural barriers have, until now, kept smallholders from accessing rejuvenation finance. 4 Meaning that the mechanism will not give preference to one-buyer or the other and will benefit the industry at large. This also implies that the cost of setting up such a mechanism and its risk will be shared across the industry without penalizing one particular player. 5 Example of structural barriers are i) the specific structure of the national cocoa markets and their economics, ii) the remote location of cocoa farms from the markets, iii) the fact that famers do not necessarily have bank accounts or access to established mobile banking systems, iv) social and/or cultural barriers in understanding borrower-lender relationship, etc. 9

10 Appendices: Appendix 1: Feasibility Study Rainforest Alliance, Sustainable Finance Initiative. (2013). Investing in Sustainability and Productivity Improvements to Transform Cocoa Production and Livelihoods in Co te d Ivoire. Available at Appendix 2: Breakdown of Rainforest Alliance Certified Cocoa Operations Source: Rainforest Alliance, Oct 2014 Appendix 3: Cocoa Producing Countries where the Rainforest Alliance works Source: Rainforest Alliance, 2014 Appendix 4: Cocoa Price, London Cocoa Terminal Market, in GDP/ton Source: Rainforest Alliance, Oct 2014 Source: Barry Callebaut Annual Report 2013/14 10

11 Appendix 5: Global cocoa production (000 metric tons, ) Appendix 6: Forecasted global cocoa production in millions metric tons Source: Dalberg Development Advisors, 2011 Source: Dalberg Development Advisors, 2013 Appendix 7: Cocoa stakeholders and their primary activities Source: Dalberg Development Advisors,

12 Appendix 8: Example of short-term input finance mechanism implemented in Cote d Ivoire under the WCF s CLP Program Please refer to p.7 of the IDH Growth Fund Presentation, available at: Appendix 9: Rainforest Alliance R&R Logic Framework Source: Rainforest Alliance Sustainable Finance Initiative Appendix 10: CRFP Project Phases Source: Rainforest Alliance Sustainable Finance Initiative 12

13 Appendix 11: Potential impact of rejuvenation on a farm (kg/ha cocoa yielded and year after intervention) Source: Rainforest Alliance Sustainable Finance Initiative, 2014 Appendix 12: Expected necessary steps to disburse rejuvenation loan packages to farmers as part of the CRFP Source: Rainforest Alliance Sustainable Finance Initiative,

14 Appendix 13: Example of a farm-level rejuvenation plan (Illustrating Step 2 in Appendix 12) The following tables were extracted from the investment decision making tool developed by the Rainforest Alliance as part of the CRFP Feasibility Study. Numbers given as example only. 14

15 15

16 Appendix 14: Example of a farm-level rejuvenation loan structure (Illustrating Step 3 and 4 in Appendix 12) The following tables were extracted from the investment decision making tool developed by the Rainforest Alliance as part of the CRFP Feasibility Study. Numbers given as example only. Appendix 15: Expected composition of rejuvenation loan packages financed by rejuvenation loans (Illustrating Step 5 Above) Training Inputs Farmer training on best agricultural practices and rejuvenation techniques Farmer financial literacy and credit management training Planting Materials Fertilizers Pesticides Fungicides Other inputs Before loan is disbursed to the farmer. To be paid through financing mechanism directly to service providers. When cocoa tree replanting is happening based on individual project plans. To be paid through financing mechanism directly to providers or by farmers at delivery using cash loan. Every year volumes vary annually depending on individual project plans. To be paid through financing mechanism directly to input providers or by farmers at delivery using cash loan. 16

17 Services Every year as needed. Agronomic services related to the To be paid through financing mechanism directly to utilization of inputs (e.g. spraying service providers or by farmers at delivery using cash of inputs) loan. When cocoa tree replanting is happening. Agronomic services related to To be paid through financing mechanism directly to rejuvenation practices service providers or by farmers at delivery using cash loan. Others Additional labor As needed. Source: Rainforest Alliance Sustainable Finance Initiative, 2014 Appendix 16: Cocoa Cultivation Calendar Activities Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Nursery setting Planting Pesticides Fungicides Fertilizers Weeding - Pruning Main harvest Small harvest Source: Rainforest Alliance, 2014 Appendix 17: Scope of Technical Assistance (TA) expected to implement CRFP mechanism Source: Rainforest Alliance Sustainable Finance Initiative,

18 Appendix 18: Farmer-Cooperative-Buyer traditional scheme and suggested options for farmer loan repayment Appendix 19: Estimated amount of capital needed to provide rejuvenation loan packages to 102,500 farmers in Côte d Ivoire Source: Rainforest Alliance Sustainable Finance Initiative 18

19 Appendix 20: Examples of portfolio level analysis Example 1 19

20 Example 2 20

21 References: Barry Callebaut. (2014). Cocoa Sustainability Report Retrieved from Committee on Sustainability Assessment. (2012). Rainforest Alliance Certification on Cocoa Farms in Co te d Ivoire. Retrieved from David S et al. (2006). A guide for conducting farmer field schools. International Institute of Tropical Agriculture. Fairtrade Foundation. (2013, March 28). The future of chocolate: why cocoa production is at risk. Retrieved from The Guardian: Green America. (2014, October 15). Big Chocolate brings in $83 billion per year. Where does all this money end up? Green America. Retrieved from Gro Intelligence, BBC & CDI. (n.d.). The Distribution of Chocolate Profits. ICCO. (2014). International Cocoa Organization. Retrieved from IDH. (2013). Cocoa Farmer Field School in Cote d'ivoire. Retrieved from MQ International Finance Corporation. (2013). Working with Smallholders: A Handbook for Firms Building Sustainable Supply Chains. Retrieved from ICCO. (2014, December 1). ICCO Daily Prices of Cocoa Beans. Retrieved from International Cocoa Organization: fdbba2fff494779b2ad/Handbook+- +Working+with+Smallholders.pdf?MOD=AJPE RES Josephs, L. (2012, March 29). A Race to Satisfy World s Hunger for Chocolate. Wall Street Journal. Retrieved from Josephs, L. (2012, March 29). A Race to Satisfy World's Hunger for Chocolate. Wall Street Journal. Retrieved from Mars, Inc. (n.d.). Cocoa Sustainability at Mars. Nieburg, O. (2013). The farmer is a businessman and we need to approach him as such. Confectionarynews.com. Retrieved from /The-farmer-is-a-businessman-and-we-need-toapproach-him-as-such-GrowCocoasustainability-director Rainforest Alliance. (2013) Annual Report. Retrieved from Rainforest Alliance. (2013). Investing in Sustainability and Productivity Improvements to Transform Cocoa Production and Livelihoods in Co te d Ivoire. Retrieved from Rainforest Alliance. (2014). Cocoa: The Food of the Gods. Retrieved from Rainforest Alliance, Sustainable Finance Initiative. (2013). Investing in Sustainability and Productivity Improvements to Transform Cocoa Production and Livelihoods in Co te d Ivoire. Retrieved from 21

22 Sustainable Agriculture Network. (2014, October 31st). List of Rainforest Alliance Certified Farms and Operations. Sustainable Agriculture Network. (2014, December). SAN Home Page. Retrieved from World Cocoa Foundation. (2014). Challenges. Retrieved from World Cocoa Foundation: World Cocoa Foundation. (2014, April). Cocoa Market Update. Retrieved from World Cocoa Foundation: content/uploads/cocoa-market-update-as-of pdf World Cocoa Foundation. (2014). History of Cocoa. Retrieved from World Cocoa Foundation: World Cooca Foundation. (2012, September 28). WCF Cocoa Livelihoods Program Improving Access to Credit. Retrieved from 22