18 May 2020
Creating added value: CONACADO’s journey to bring semi-finished cocoa products to market
CONACADO, a Fairtrade certified cooperative in the Dominican Republic, is embarking on a new business venture: a processing plant for semi-finished cocoa products. Its launch will open-up new business opportunities for producers and communities.
Who doesn't enjoy a piece of chocolate or a cup of hot cocoa? Even the COVID-19 pandemic hasn't slowed the consumption of this delicious delicacy. Millions of people around the world have filled their pantries with chocolate to better cope with confinement and lack of social contact.
But, where does all that chocolate come from? Approximately two-thirds of the world's cocoa comes from West Africa, mainly Ghana and Ivory Coast. The rest comes from mostly from Latin America and the Caribbean. However, none of the major cocoa-producing countries are chocolate makers. The United States, Germany, Switzerland, and Belgium are the world’s main producers of chocolate and other cocoa products. And it is in this production and commercialisation of processed products where greater economic benefits are generated; benefits that rarely reach the producers who harvest the cocoa beans.
Going from selling raw materials to commercialising value-added products is the ambition of many small cocoa producers around the world. Still, this journey is not easy. It requires significant investments into equipment, machinery and human resources. Nevertheless, some organisations choose to take on this challenge. One of them is CONACADO, an organisation certified by Fairtrade in 1997, which has more than 10,500 members.
A long road: moving towards value-added products
CONACADO's aspiration to commercialize value-added products goes back a long way. By mid-2000, the cooperative was already offering significant volumes of semi-processed cocoa. Since the cooperative did not have its own processing plant, it worked with local private operators. It wasn’t until 2008 that CONACADO had the opportunity to acquire its own processing facility in the community of San Francisco de Macorís, an old plant with an annual cocoa processing capacity of nine thousand tonnes. The investment made was about US$3 million; an amount raised thanks to the contributions of each producer partner and, to a large extent, funds from the Fairtrade Premium.
In 2014, due to market demand and low production levels given the age of the machinery, CONACADO decided to refurbish and expand. They made an investment of more than US$20 million which was possible by the combining the profits from cocoa bean commercialization, and part of the funds from the Fairtrade Premium, as well as financing from local banks and international social investor Oikocredit.
“Once the new plant comes into operation, it will have the capacity to process approximately 25,000 tonnes of cocoa per year. We expect operations to begin this summer, with the first products from the plant, such as liquor, butter and powder, to be commercialised this autumn, opening up new business opportunities for CONACADO members,” says Franklin Gómez, a CONACADO member who led many of the refurbishment works.
“The Fairtrade system has been a sort of ‘seed’’ for CONACADO, since, throughout its history, the correct focus and use of the Premium has allowed us to build the best infrastructure capacity and quality for post-harvest management in the region. Thus ensuring our members’ production quality and reducing potential losses. This has happened while also achieving an annual community social investment of at least 30% of the Fairtrade Premium funds. Another important part has been a focus on sustainability programmes and increased productivity," explains Miguel Mendoza, CONACADO member.
In addition to commercialising the semi-finished products from the new plant in international markets, CONACADO also seeks to encourage chocolate consumption among the Dominican population and to motivate entrepreneurs in the country to venture into chocolate production using the country's raw materials. In order to achieve this, the cooperative wants to establish alliances with private Dominican companies that use cocoa as a raw material in their production processes, such as, ice cream parlours, cosmetic companies or local chocolates for the tourism sector.
“We understand the processing plant is a great contributor to our development objectives. They not only are our dream as an organisation, but as a country, and whose success we hope to be able to share with all socially responsible consumers, who indirectly have been of great support to this project, with the entire global Fairtrade system, and with all ethically committed operators (Fairtraders),” explains Isidoro de la Rosa, general manager of CONACADO.
But CONACADO's plans do not stop at the commercialisation of
semi-finished products. The cooperative has now begun to evaluate
conditions for producing chocolate themselves. They are currently in the
analysis, design and management phase with suppliers of machinery and
financial resources for the production of chocolate in tablets and rolls
as from 2021.
An inspiration to other cocoa producers
The CONACADO project serves as an example and inspiration for other small cocoa producer cooperatives around the world. In fact, several Fairtrade certified cocoa producer organisations such as Ecookim in Ivory Coast, Norandino in Peru, El Ceibo in Bolivia and COAGRGSAL in Honduras, have also begun projects for the construction of their own processing plants with the aim of creating more added value for their members. With the dedication and effort of their cooperatives, and the continued support of responsible consumers around the world who choose Fairtrade products, that goal is now within reach for many producers.
"This is empowerment and this is precisely what Fairtrade International is promoting,” concludes Abel Fernández, commercial manager of CONACADO.