BrazilHow Palladium helped Peru transform its cacao market
The Peru Cacao Alliance from international development advisory Palladium has helped to boost Peru’s cacao production while improving conditions across the value chain.
The prices for cacao have quadrupled since last year, reaching record highs. Climate change is the main culprit: Ghana and Cote d’Ivoire, two major producers, have been plagued by scorching heat and intense rain, with the cacao crop ravaged by a viral infection.
What’s more, child labor and other social issues have haunted the industry for decades. Climate issues are also a top concern: For example, the EU enforced new rules last year that banned importing products that could be linked to deforestation, targeting producers in countries like Peru, Brazil, and Indonesia, among many others.
Clearly, major changes are needed in the entire supply chain, down to the farms that produce the cacao fruits, many of which can be found in the Amazon region of Peru, which is the focus of the Peru Cacao Alliance.
Since its inception, the initiative, which is led by Palladium and supported by USAID, managed to design and carry out an effective program to address these issues. The program, which ran from 2012 to 2022, helped raise Peru from 10th to 2nd in terms of fine flavor cacao production while also raising farmers’ incomes and reducing poverty across the board in the nation’s cacao regions.
This was done through a variety of phases. Firstly, projects helped famers to increase their average yield from 1 hectare of cacao to 5 high-producing hectares of cacao with plantains and trees, applying an intensive agroforestry model.
During this first phase, the Alliance reforested over 29,000 hectares of cacao. The amount of carbon sequestered through this amounted to around 211,467 tons of greenhouse gases annually, according to an independent analysis.
“Cacao farming in the Amazon is environmental protection. If we can improve yields and incomes among Alliance famers, we will keep them from cutting down more trees,” said José Iturrios Padilla, director of Peru Cacao Alliance.
A second phase helped farmers to boost their business and financial skills. This helped to increase productivity and allowed farmers to access new markets. This initiative was collaborative, with farmers helping each other adopt new techniques to avoid climate change-related issues.
The Alliance succeeded in helping famers better navigate difficulties and ultimately increase their incomes. It also better prepared Peruvian famers to navigate the various regulatory obstacles they need to overcome in order to access higher-value markets like the European Union.
Peru ranks as one of the most biodiverse countries in the world, home to a remarkable range of plants and animals. Cacao is also grown in similar tropical environments in West Africa, where the same climate and labor-related problems have been increasing.
