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All over the world, chocolate is associated with happiness, joy, and celebration. Paradoxically, its production comes with a whole lot of hazardous side effects for farmers and the planet. As the demand for cocoa grows every year, the need for sustainability in the cacao industry remains a remarkably significant concern. In the Philippines, there are ample opportunities to strengthen the sector and improve the yield while also improving the economic, social, and environmental outcomes for the cacao-producing region.
The Sustainability Challenge In The Philippines Cacao Industry
The Philippines’ Mindanao region contributes to more than 80% of the cacao production, but remains one of the poorest regions of the country. The chocolate supply chain is intensely complicated because most cacao farming is done by smallholder farmers who often have farms in remote areas with limited access to adequate technology and resources. There has been very limited investment and technical knowledge transfer to these farmers about growing climate-resistant crops in a sustainable fashion. As a result, the yields dwindle, and incomes diminish for farmers– encouraging them to cut down cocoa trees in favour of crops that generate better incomes at the expense of environmental degradation.
The Solution Exists Beyond The Realms Of Sustainability
Sustainability in cacao production is no longer restricted to the environmental ills of deforestation, soil degradation, and loss of biodiversity. For a more inclusive approach to sustainability, MEDA is implementing a five-year initiative, Resilience and Inclusion through Investment for Sustainable Agrikultura (RIISA) to address sectoral constraints by piloting an innovative market systems approach that identifies cacao market system gaps, mobilises investment capital, and strengthens local capacity; as well as strategically gathering learnings that can be replicated to strengthen the cacao sector’s enabling environment. It is important to look beyond environmental consideration to include economic, social, and governance aspects too. For example:
- Nearly 90% of the cacao production is carried out by smallholder farmers, and according to the Philippines Statistics Authority, it employs about 829,000 women farmers. The cacao market system represents a significant opportunity to contribute to poverty reduction, community resiliency building, and inclusive growth.
- Providing sufficient financial incentives for sustainably produced cocoa can help encourage farmers to adopt farming practices that are environmentally safe while preserving biodiversity. At the same time, incentivising financial intermediaries to mainstream gender and climate in their process to provide access to finance to cooperatives and smallholder farmers for the transition to organic production, and to small and medium companies for asset financing to increase capacity on processing and transformation would help to consolidate this promising industry in the Philippines.
- Developing a governance system that includes improving market linkages and works towards facilitating change in processes, policies, infrastructure, and mindset can tremendously improve farming practices, productivity and aggregation for a more stable cacao market.
In other words, when we look at sustainability through an integrated approach, we can overcome various challenges that hinder the adoption of sustainable cacao production practices across the Philippines. MEDA’s Integrated Market Systems Approach To Cacao Sustainability In the Annual National Cacao Congress held in Davao City in November 2022, Mennonite Economic Development Associates (MEDA) presented its project titled Resilience and Inclusion through Investment for Sustainable Agrikultura (RIISA) with the goal of bringing sustainability to the cacao sector through investments and support provided to smallholder farmers. MEDA believes that for sustainable business solutions in the Philippine’s cacao sector, there is a need to integrate gendered environmental, social, and governance considerations as discussed above.
RIISA is a 5-year initiative funded by Global Affairs Canada and aims to address cacao sustainability in the Philippines by:
- Focusing on and mobilising Environment, Social, and Governance (ESG) related investments in the sector to support small and medium enterprises as well as financial intermediaries.
- Supporting smallholder farmers through access to information, capacity-building trainings, and technologies to help them in adopting business practices that are environmentally sustainable and inclusive.
- Increasing awareness of ESG practices for key enabling stakeholders.
- Strengthening the local financial institutions and business service providers to enable them to adopt practices like gender equality and social inclusion, human rights, and environment and climate change.
The Takeaway
The global demand for cocoa is expected to increase at a compound annual growth rate of 4.37% between 2022-2030. MEDA aims to advance sustainable cocoa farming in the Philippines through persistent and continued efforts to collaborate with the government, private industry, and cacao farmers. MEDA believes that with better climate-resilient techniques, improved financial incentives, and equitable opportunities for all, RIISA can improve the face of a sustainable cacao market system in the Philippines.
