For decades, rural communities on the slopes of the tropical Andes in Peru have been caught between drug traffickers and poverty, leading many farmers to cultivate illegal coca to earn a steady income. In response, USAID and the government of Peru have financed projects encouraging farmers to switch from coca to cocoa. In addition to being a legal crop, cocoa is well-adapted to a warming climate.
Cooperativa Agroindustrial Cacao Alto Huallaga was founded as an association of cocoa producers in the valley of Alto Huallaga in 2009. Cacao Alto Huallaga’s cocoa is organic, Fairtrade, and UTZ-certified, attracting a premium price from European buyers focused on high-quality cocoa. In 2018, the cooperative generated more than $5M in sales. With high revenues at a premium price, the business can guarantee a good income for its 450 farmer-members. But it hasn’t always been easy. In 2013 and 2014, Cacao Alto Huallaga faced quality issues that made their buyers reluctant to purchase their product. General Manager Jorge Simon Ccollana worked hard to improve the quality and broaden the cooperative’s customer base over the next few years to four international and two local buyers. The cooperative has built five collection centers in nearby communities, through which they also disseminate training to farmers and assure quality control. These improvements were possible, in part, because of financing from two CSAF members—Rabo Rural Fund and Shared Interest—as well as from a local lender.
Cacao Alto Huallaga’s story illustrates the pressing need for early-stage lending, as well as technical assistance that builds business capacity to address quality control and other challenges. As cocoa cultivation continues to expand in Peru—particularly as climate change makes coffee farming more difficult—technical assistance and financing must be made accessible to many more small farmer cooperatives.