Market System        Facilitators engaging          with CorporatesMotivations and incentives – the case of cocoa in      ...
Cocoa production in BrazilDeclined over two decades due to plant disease and global price dynamics          Participation ...
Cocoa production in BahiaConcentrated in the hands of a few large and very large producers      100% = ~ 54,000 producers ...
The Large Private sector involvement                                                                                      ...
CARE’s intervention in partnership with   Cargill• A five year project• Objective : sustainably increase  the cocoa produc...
Different stages of the partnership and              motivations  1   Resources mobilization                 2    Piloting...
Evolution of the interaction*1   Resources mobilization                  2    Piloting new business models                ...
Business MotivationsIssue Ripeness: a how the corporation chooses  where to get involved       Lead                       ...
Challenges                                  Learned Lessons•   Cultural:                                    •   Build the ...
Please visit      www.care.org     www.care.org.br  for more information or        email to:nardi@careinternational.org
Market System Facilitators engaging with Corporates
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Market System Facilitators engaging with Corporates

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2011 SEEP Conference

Market System Facilitators engaging with Corporates: Motivations and incentives – the case of cocoa in Bahia (Brazil)

Gianluca Nardi, CARE

Published in: Business, Technology
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Market System Facilitators engaging with Corporates

  1. 1. Market System Facilitators engaging with CorporatesMotivations and incentives – the case of cocoa in Bahia (Brazil)
  2. 2. Cocoa production in BrazilDeclined over two decades due to plant disease and global price dynamics Participation of Brazilian Production into world production 18 15 12 9 6 3 0 Anos Percentage Participation
  3. 3. Cocoa production in BahiaConcentrated in the hands of a few large and very large producers 100% = ~ 54,000 producers 100% 26% 80% 60% 79% Producers largers than 10ha Producers < 10ha 40% 74% 20% 21% 0% Number of producers Cocoa production Tons
  4. 4. The Large Private sector involvement Market Functions Business Environment ?Some strong R&D Institutions (Universities) International Brazilian customers ? Government plan to stimulate Customers cocoa industry in Bahia Cocoa Producers Retailers ? Local Presence of big cocoa Association of Bahia processors ?Lack of capacity of Federal TA and R&D institution CEPLAC Technical assistance from Fine chocolate producers International NGOs ? Widespread debt default (CARE, IESB, Floresta in Europe Organic Processing problem because of past cocoa Viva, Ist. Cabruca, MST) crisis ? Lack of appropriate credit Cosmetic schemes for cocoa investment Small fine chocolate Large MNCs producer in Bahia Industry (Cargill, Barry, ADM etc) Domestic ? Widespread cocoa disease Processing problem (witches’ broom) ?Competition with low cost Embedded TA commodity cocoa from Africa Commercialization from Small and Asia Cooperatives (CABRUCA) cooperatives Intermediaries ? Difficult local dialogue and chocolate Organic Cocoa comm. ? Conflicting state and federal producers legislation about Cabruca agroforestry system Technical Large scale Farmers Small scale Farmers assistance, R&D Production from Government (CEPLAC) Government plans to promote cocoa Financial Institutions Fertilizers / chemicals Seedlings suppliers Input supply industry, R&D from suppliers (CEPLAC) Universities (UESC) Legend: Commercial, paid Temporary, subsidized One way, for free Development Business services Embedded Business Core Market Customers agencies providers services environment Businesses
  5. 5. CARE’s intervention in partnership with Cargill• A five year project• Objective : sustainably increase the cocoa production and income of around 4,000 small cocoa producers in Bahia• Why with Cargill: – previous fundraising relationship – Main Value Chain stakeholder Breaking cocoa at PA Rochedo Settlement
  6. 6. Different stages of the partnership and motivations 1 Resources mobilization 2 Piloting new business models – NGO: better market conditions – NGO: mobilize resources for 4,000 smallholders, pilot – Business: CSR – Business: branding, increase supply base, pilot new model 5 Transformation – Policies design, changing systems 3 Mutual learning and 4 Engagement influence – NGO: large scale social impact – NGO: strategic, broader in Bahia (40,000 producers) partnership, learning – Business: improve the – Business: add sustainability to competitiveness of cocoa market core business, learning system in Brazil
  7. 7. Evolution of the interaction*1 Resources mobilization 2 Piloting new business models – discussion, conversation– Debate, discussion (Bilateral) (Bilateral) 5 Transformation – Generative Dialogue3 Mutual learning and 4 Engagement influence – Dialogue, generative dialogue – Skillful conversation (bilateral) (multilateral) * Using Peter Garrett’s terminology
  8. 8. Business MotivationsIssue Ripeness: a how the corporation chooses where to get involved Lead High 1 1,2,3 4,5 Take action Society Expectations Light touch Medium Irrelevant 1 1,2,3 1,2,3 Low 1,3 1,3 Low Medium High Relevance to Business Source: Shape the Future, McKinsey 2010
  9. 9. Challenges Learned Lessons• Cultural: • Build the right skills in NGOs and – Difference in business and NGO corporations cultures / languages • Measure / understand the overall – Need to clarify motivations impact on business• Business model – Easier / more efficient working with • Negotiate to involve the large producers competitors in the dialogue – Risk of free riding from other cocoa • Involve private sector higher up in processors the VC (Chocolate makers) – Risky for SPs to make exclusive • Sharing investment / risk commercialization agreements – Medium to long term profitability• Enabling environment – Different visions / expectations around • Leverage the advocacy potential of the role of the Government the private sector
  10. 10. Please visit www.care.org www.care.org.br for more information or email to:nardi@careinternational.org

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