The social enterprise – comprised of 850 cocoa farmers, mostly kichwa families from 21 communities in the Ecuadorian Amazon Region – has produced its own brand of chocolate through contract manufacturers Ecuatoriana de Chocolates and Salinerito since 2007.
Kallari’s main business is selling cocoa beans to the craft chocolate market.
Value at origin
Speaking to this publication in Tena, Bladimir Dahua, managing director of Kallari, said the association’s own chocolate factory would enable it to grow the company’s own chocolate business.
He said Kallari could lower retail prices from $2.20 per 50 g bar to $1 to $1.50 for its main product line, Sacha, allowing the brand to have broader consumer appeal.
The new factory, on a 1.5km sq m site, has a capacity of 50 kilos an hour and is supported by Ecuadorian government finance.
Dahua said the factory will allow Kallari to reduce costs and bring greater profits to farmers. The company will also add eight new jobs, bringing its workforce to 24 people.
Kallari’s two brands, Sacha and Kallari, are currently selling in niche high-end segments such as luxury coffee shops and have distribution in Sweden, Germany, Czech Republic and the UK.
The brands use fine flavour, centrally fermented cocoa that is certified USDA and EU Organic.
Around 10% of the beans the social enterprise and its 850 farmers produce are used in its own products, while 90% is sold as dry beans to bean-to-bar chocolate makers and couverture suppliers.
Swiss company Max Felchlin is its largest buyer.
What makes it a ‘social enterprise’?
Under the social enterprise arrangement, Kallari buys wet beans under long-term deals with its 850 farmers, who meet twice a year and vote for the group’s leader every two years.
Kallari distributes profits to farmers based on their annual production volumes at the end of each year.
The company has Popular and Solidarity Economy (EPS) status, a form of economic organization regulated by the Ecuadorian government in which members are the main beneficiaries.
Dahua said Kallari still has a buying and selling relationship with the farmers – who do not have shares in the company – but said the arrangement ensures more value goes back to farmers.
According to Dahua, a farmer in Tena in 1997 typically sold a 45 kg sack of cocoa for US$25, while middlemen at the port would sell a bag for $75, triple the rate.
Kallari's production capacity
Kallari’s 850 farmers in Tena have a planted area of 10,000 ha of cocoa and an annual production capacity of around 230 MT, 270 kg per farmer. Kallari sorts beans into three sizes. Smaller beans are sold to the local chocolate industry, while larger beans are sold for export or are used in the company’s own brands.
The group officially formed in 2003 to cut out middlemen and bring more benefits to cocoa farmers, who now sell a sack for between $125 and $150.
After conducting research, they deduced they could bring even greater value to farmers by producing chocolate, and began to produce their brand through contractors in 2007.
Organic certified and Fairtrade coming
Kallari is EU and USDA Organic certified. The group is currently working to become Fairtrade International certified.
Kallari was Rainforest Alliance certified in 2011, but dropped the certification as it represented additional cost and it saw limited demand among dry bean buyers, said Dahua.
Vanilla growing and processing
Kallari’s new chocolate factory is next door to the company’s vanilla processing plant, which has been operational since 2016. Cocoa is the main income for Kallari’s 850 farmers, but Kallari encourages a Chakra system of crop diversification, so many also sell vanilla. Kallari buys fresh vanilla from them and processes around 100 to 120 kg of vanilla per year at the Tena vanilla plant.