UNOCACE: Cocoa of Fine Aroma

The geographical specifics of Ecuador make the country hardly industrial. Family and agrarian structures have been kept, in spite of large migrations towards the cities over the last thirty years. The production of cocoa is way below that of bananas, shrimps or flowers but it includes some black gold: the "Cacao Arriba Nacional" variety, which only exists in Ecuador and is named the best in the world.

Cocoa has been cultivated in Ecuador from the 17th century, and was the main product of export up to the 1920s. At that time, several diseases appeared and spread: witches’ broom (“escoba de bruja”) and cocoa pod borer (“monilla”), destroying crops everywhere. In the 1960s, cocoa plantations once again grew, through land reform, and large estates disappeared.

In this framework, UNOCACE (Union of Organizaciones Campesinas Cacaoteras del Ecuador) plays an important role in the promotion of partnership of small cocoa farmers. The organization was established in 1999 and holds 18 farmer associations, located in 4 different provinces in South-Western Ecuador.

It brings together around 2,020 active cocoa growers and 10,394 hectares of plantations, out of which 9,087 are certified as organic, and the remaining share is experiencing a transition process. UNOCACE’s main service is to market and export dried organic cocoa beans that have been certified. The organization offers other services as well, including technical assistance, training, pre-export financing, and quality control of production.

The organic premium is redistributed to the farmers in the price they get for their cocoa. The fair trade premium (Equitable by Ecocert) is not distributed to members but used for a development fund aimed at technical assistance projects and all activities for the benefit of the members. The fair trade certification has been a great chance to open new markets and bring higher benefits to the farmers.

During the introductory meeting in January 2013, the GM for UNOCACE presented an interesting business case for why Oikocredit could be a good partner in the future. UNOCACE has relied solely on one buyer - a wholesaler of cocoa and other products - for all of its organic production and financing since the year 2000.

However, at the beginning of 2013, they decided to diversify the framework of buyers, in order to get better prices that enable them to pay for the expansion in technical and production training services that UNOCACE needs in order to renovate the plantations and upgrade the genetic varieties of plants on most of the members' farms.

As of May 2013, UNOCACE made use of two Oikocredit products: A long term loan of USD 145,000 and a credit line of USD 500,000, renewable year by year.

This fresh funding has been used by UNOCACE to finance the harvest seasons in the different regions covered, and to diversify its range of buyers, reaching three new ones in Switzerland, France and Japan. Moreover, by the coming years, Oikocredit is very confident that the potential impact of the project will be significant in that the price increase will allow not only for improved services to the UNOCACE members, but will also be directly transferred to the farmer in terms of additional income.

By 2014, Oikocredit expects to support the organization with funds of capacity building to support the strengthening of some pending issues related to internal control, external audit and governability.

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