Barry Callebaut expects 23% cocoa farmer income boost under credit deal

22-Aug-2016 - Last updated on 23-Aug-2016 at 13:28 GMT

Barry Callebaut to brings one-year loan packages to 103,000 farmers through a partnership with IFC and IDH.

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Barry Callebaut expects farmer income to grow 23% within two years under a $9m partnership with IFC and IDH to support up to 103,000 smallholder cocoa farmers in Côte d’Ivoire by 2020.

IFC is a member of the World Bank Group, and IDH is a Sustainable Trade Initiative.

Productivity package on a credit basis

The partnership will provide “in-kind credit to farmers in the form of inputs and farm services,” meaning providing materials, such as fertilizers and pesticides, for famers’ professional use on a credit basis, according to Barry Callebaut.

Barry Callebaut’s spokesperson, Bjoern Emde said "productivity package,” will also provide training in areas like pruning and crop protection to farmers and farmer cooperatives.

All farmers to open savings account

In order to receive the productivity package on credit, farmers are assisted in opening a bank account at Advans, one of the microfinance institutions in West Africa.

Currently, there are 4,000 farmers have already opened their accounts. Barry Callebaut is hoping to eventually help all farmers in the program open savings accounts.

After a few years, “farmers will have a positive operational and financial track record and thus become bankable, making it possible for local financial institutions to provide loans directly to farmers”, the company said.

The pre-financed loans vary depending on farm size and the package chosen in collaboration with Barry Callebaut’s farmer coach and based on farm needs, Emde said.

But he said they were typically one year loans following the annual cocoa season.

Rainforest Alliance has previously said longer term loans of around four years are needed for farmers to fully renovate their farms and repay the loans.

Barry Callebaut's Emde said: "We agree that longer term loans are needed and are working to extend our offer in that direction; the current effort is a stepping stone towards reducing the risks associated with that."

Strengthen relationships with suppliers

Barry Callebaut is hoping to increase famers’ income by 23% in two years through the new partnership.

“We see [there will be] a positive effect on farm productivity,” Emde said, “and supporting and advising the farmers pursuing a professional farm development path helps us strengthen our relationships with our suppliers, better understand their needs and challenges and strengthens our value chain for the benefit of everyone.”

[Additional reporting by Oliver Nieburg]