Publication | Rethinking procurement models in the cocoa sector: recommendations for more inclusive business models

Without a good and profitable business model that works for everyone, and especially smallholder farmers and buyers, sustainable cocoa initiatives are unlikely to be scaled up. As such, inclusive business relationships involving buyers, processors and producers can be a powerful enabling factor in the transition towards sustainable food systems.

That is why we are excited to launch “Rethinking procurement models in the cocoa sector: recommendations for more inclusive business models”. In this publication, we assess the extent to which the business models we support in our sustainable cocoa programme in Africa, Southeast Asia and Latin America align with the principles of inclusivity and equity with reference to CIAT’s LINK methodology, the Voice Network’s Good Purchasing Practices and Beyond Chocolate’s Roadmap for Belgian Chocolate Makers.

We particularly looked at how a range of practices, such as pricing, risk sharing and interventions that support cocoa production, access to finance, data collection, women, youth, joint innovation and transparency, contribute to addressing existing inequalities in the cocoa sector.

Besides identifying insights that help us refine our own strategies, we have also identified high-potential best practices for private sector companies and for service providers like Rikolto to enhance their efforts to foster more inclusive and equitable business models.

Are you a working in a cocoa buyer company, and interested in taking your inclusive sourcing practices to the next level?

It is clear that there is no one-size-fits-all solution for cocoa buying companies to make their purchasing models more inclusive. However, several interventions have significant potential to improve cocoa farmer incomes while remaining within the core business model of buyer companies. Here are just three of them:

1. Offer long-term contracts that offer room for price renegotiation and prepayments, to support long-term investments in cocoa and to protect farmers from market volatility;
2. Invest in interventions that increase producers’ productivity and resilience, and that support income diversification;
3. Communicate transparently in external communication about all the investments made and how inclusion and sustainability are embedded in the company’s purchasing practices.

Are you a support actor eager to collaborate in making commercial relations between farmer organisations and cocoa buyer companies?

Here are just three of the recommendations to generate win-win solutions for all parties involved in cocoa business models:

1. Bolster your coaching role with farmer organisations and support them to become more attractive business partners. This could also mean supporting farmer organisations to negotiate longer-term agreements with buyer companies and integrating Living Income differentials based on the Living Income Reference Price gap;
2. Support balanced partnerships, high-volume agreements and high involvement of farmer organisation members, to increase buyer companies’ willingness to invest in additional financial benefits, certification support, and risk-sharing mechanisms;
3. Advocate with companies to cover data collection costs, but also for open and fair data stewardship, ideally by farmer organisations.