What we do

How can cacao support peacebuilding?

Although Colombia’s conflict may feel a world away, its effects are in fact much closer than we might imagine.

Demand for cocaine was higher in 2018 than at any time before in history, and its production and trafficking continues to destabilize the entire American region by diminishing the rule of law, transparency and the trust of citizens. The violence caused by the cocaine trade is linked to the changing patterns of migration in the region, and we see this with huge numbers of Central American migrants traveling North to the US-Mexico border to seek asylum.

The absence of peace is closely correlated with the lack of sustainable development and fair profits. Colombian small farmers face the dilemma of either growing illicit crops as a means of survival because they are more lucrative, or farming legal crops in poverty. Indeed, the majority of Colombia’s cacao farmers operate on just three hectares of land, and many of these farmers live below the poverty line ($2 USD / day).

After Colombia’s 2016 peace agreement was finalized, the Colombian government deployed a national program to substitute coca (the base ingredient in cocaine) for productive crops such as cacao (the base ingredient in chocolate). In return, farmers receive multiple benefits, including money and technical assistance. However, this state funding is not sufficient to ensure their ability to successfully transition to the sustainable cultivation of legal crops.

The participation of the private sector is therefore fundamental to mobilizing the capital, tools, and services necessary to improve the probability of a farmer’s success. This is also relevant because the world faces a dramatic shortage of cacao, with a predicted deficit of 1 million tons per year by 2020 (representing ¼ of global production).

Colombian cacao has a competitive market advantage in that the majority of it is “fino de aroma” or fine flavour cacao – which is more flavourful and aromatic than most of the cacao produced in the world. The demand for this premium quality cacao is growing in countries like the US and Canada, as well as in Europe, where gourmet chocolatiers are proliferating. There is also a growing awareness of ethical and fair trade principles in this market, leading to increasing demand for better quality and specific flavors, as well as better traceability for cacao origin, and socioeconomic and environmental impact (CBI, 2017).

Choco4Peace seeks to connect these two opportunities to make investing in Colombia’s small cacao farmers profitable and low-risk, by providing them with access to markets, capacity building, insurance, technology and certification services.

By bringing Colombia’s cacao into international markets and removing middlemen from the value chain, farmers will be able to command much higher prices than they would selling to the domestic market, enabling them to make a living for them and their families by cultivating cacao, bringing greater prospects for peace in Colombia, creating good for people and planet, and giving the world a taste of some of the best chocolate there is.

What are the goals we have committed to?

Choco4Peace commits to creating good for people and planet, and we align and measure our work with six of the UN Sustainable Development Goals:

 

  • No Poverty (1)
  • Gender Equality (5)
  • Decent Work and Economic Growth (8)
  • Responsible Consumption and Production (12)
  • Climate Action (13)
  • Peace and Justice Strong Institutions (16)

 

The United Nations has stated that poverty, rather than solely economically defined, includes factors such as malnutrition, lack of access to education and exclusion from decision-making processes. Families in post-conflict regions of Colombia suffer from poverty in all forms, as they lack access to opportunities to achieve success due to insufficient education, nutrition and geographic remoteness.

 It is difficult for rural and remote Colombian farmers to find viable sources of income outside of the cocaine industry because guerrilla groups often control this territory, and communities are cut off from important resources and services. By giving farmers access to international markets and finance, Choco4Peace works to reduce poverty and give these farmers and their families a stable livelihood, in line with SDG 1.

 Violent conflict and poverty often disproportionately affect women. Choco4Peace’s pilot program focuses on integrating women into the cacao sector first, giving them the tools and education they need to become financially independent, in line with SDG 5.

 By integrating farmers into the cacao industry, Choco4Peace enables them to walk away from the cocaine industry, increasing revenue for the country and promoting decent work for farmers, in alignment with SDG 8.

 While cacao farming contributes to many positive aspects of sustainable development, cacao farms around the world are increasingly encroaching on valuable rainforest ecosystems and tropical dry forest areas, causing soil erosion and irreversible losses of biodiversity. By providing farmers with the tools and education they need to grow cacao sustainably and responsibly, Choco4Peace not only encourages sustainable development in alignment with SDG 12, but also promotes the mitigation of climate change by producing cacao in a manner that will conserve soil, water and land, in alignment with SDG 13.

 Perhaps most importantly, Choco4Peace is taking critical action to securing Colombia’s fragile peace. By making cacao production more profitable for farmers, we create an economic incentive to walk away from cocaine production, creating the peace and stability necessary for the government to effectively support rural farmers, in line with SDG 16.

How and why do we use Blockchain technology?

Choco4Peace has created a Decentralized Inclusive Economic Network to provide farmers with access to markets, services, and finance

 Being able to borrow money is one of the most important ways of growing a business, and this is especially important for small farmers who want to lift themselves out of poverty. Unfortunately, for a number of reasons, small farmers have a particularly difficult time borrowing money. They often: 

  • Live in remote areas, physically cut off from mainstream banking services
  • Do not own the land they farm, so they cannot use this land as collateral when asking for a loan
  • Lack the financial literacy to manage an enterprise
  • Are subject to crop failures and natural disasters
  • Cannot afford to borrow enough to be worth the cost of administering the loan

 All of these factors make small farmers very risky investments, and as a result, small farmers around the world together face a financing gap of approximately half a trillion dollars.

 Choco4Peace uses hyperledger blockchain technology to power our Decentralized Inclusive Economic Network to fill this gap.

 This platform connects cacao farmers in Colombia with global markets, investors, and other socioeconomic services such as capacity building, crop insurance, technology, and certification. On this platform, all interactions are recorded in real time in a transparent, traceable manner, and all actors within the supply chain can identify and track a product’s movement through the network. For example, consumers can trace the origin of the cacao in our chocolate back to the farms where it was produced.

 More importantly, it also allows us to demonstrate to an investor, for example, that a farmer has access to a buyer, such as a chocolate maker, or to crop insurance. This gives stakeholders the security they need to ensure returns on their investment, and guarantees that farmers are engaging in a fair trade system and being equitably compensated for their crop.

 Agricultural value chains are often characterized by an excess of intermediary parties between farmers and consumers, contributing to their overall inefficiency. The use of blockchain technology increases transparency and traceability, reducing the need for third parties and enhancing trust among members along the supply chain.

 Lastly, we can use Blockchain to measure not only cacao origin, but also the socioeconomic and environmental benefits of an investment, in alignment with the UN Sustainable Development Goals. For example, we can demonstrate increases in farmer income as a result of access to international markets, and investors can pass these benefits on to their shareholders.