Living incomes from cocoa and coffee in Latin America

Challenges

• In Ecuador, more than 85% of cocoa and coffee producers have low incomes and are vulnerable to the effects of climate change. In addition to low diversification and loss of biodiversity, smallholders face limited access to niche markets and high interest rates on financial products (10%/year). Most producers are not linked to cooperatives or associations: this is the case for only 19% of coffee producers and 7% of cocoa producers.
• In Honduras, most coffee and cocoa producers live below the poverty line (USD 1.53/day compared to a desirable USD 2.72/day). The market for business development services for agricultural organisations is limited. In addition, a large part of the country's economy depends on low-value-added agricultural exports, in rural areas that are being abandoned and that are technologically stagnant.
• In Guatemala, inequalities lead to high levels of poverty, particularly among women, youth and migrants. Cocoa production is increasing (with an estimated 15% annual increase in area) and is part of the local diet, although producers need to diversify their production and markets. Coffee has played an important role in reducing unemployment: it provides 500,000 jobs. However, private investment is needed to introduce low-carbon products with high market value.  
• In Peru, the dynamism of the agricultural sector was key after COVID-19, although the country suffered a 10-year setback in the fight against poverty. Faced with the challenge of economic recovery, producers have to change their business vision. The government and businesses need to work together on a common agenda, scaling up solutions to the limited access to finance, availability of technical assistance, and a weak institutional environment.

Expected results by 2026

1. Contribute to the growth of the agricultural sector by improving the access of producers to the public and private financial system. This will be done by working with financial institutions (ethical banking) to develop financial products adapted to the coffee and cocoa production.
2. Promote the conservation of forests, associativity and the implementation of traceability/certification systems within agroforestry systems, in order to facilitate access to differentiated markets and better incomes for producers.
3. Promote productive diversification of coffee/cocoa with crops that can be grown in cocoa and coffee growing landscapes, and facilitate market linkages (short chains) for these crops, hence contributing to the country's climate commitments (e.g. carbon neutral country by 2050). This has several benefits: reduced vulnerability to climate change, improved profitability/resilience of farms, food security for families and communities, access to nutritious and sustainable products for local consumers.
4. Mainstream the implementation of IWA29 through coffee/cocoa policies to enable organisations to access globalised markets and agricultural services (projects/programmes, incentives, credits, tax benefits).
5. Evidence and scalable models for impact, promoting regulatory frameworks and agendas for innovation, women/youth inclusion and financial inclusion.