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CACAO VALUE CHAIN ANALYSIS IN BELIZE


Gentry Mander A Field Practicum Report submitted in partial fulfillment of the requirements for a Master

of Sustainable Development Practice Degree at the University of Florida, in Gainesville, FL USA

April 2014

Supervisory Committee: Marianne Schmink, Chair Thomas Ankersen, Member


Deep gratitude and many thanks, especially to: My guide and friend, Elmer Tzalam; My organizational hosts, Jacob Marlin and Heather Barrett; My advisors, Dr. Marianne Schmink and Prof. Thomas Ankersen; My director and advisor, Dr. Glenn Galloway; My coordinator, Cindy Tarter; My funder, John D. and Catherine T. MacArthur Foundation; My family; My best friend and sounding board.


Table of Contents Introduction ........................................................................................................................................... 1 Background and Context .................................................................................................................... 3 Belize ................................................................................................................................................................... 3 Geography & History ..................................................................................................................................................... 3 Demographics and Socioeconomics ........................................................................................................................ 4 Environmental Issues .................................................................................................................................................... 5 Land Tenure ...................................................................................................................................................................... 6

Cacao and Chocolate ...................................................................................................................................... 8 History of Cacao Exporting in Belize ....................................................................................................................... 8 Cultivation and Processing .......................................................................................................................................... 9 International Market ................................................................................................................................................... 10 Conservation Threats ................................................................................................................................................. 13 Belize Cacao Agroforestry Restoration Project (BCARP) ............................................................................ 14

Conceptual Framework ................................................................................................................... 17 Literature Review .............................................................................................................................. 18 Cacao Agroforestry Systems in Buffer Zones for Conservation ..................................................... 18 Direct Trade vs. Fair Trade ........................................................................................................................ 20 Fair Trade ........................................................................................................................................................................ 21 Direct Trade .................................................................................................................................................................... 22

Niche Marketing as Safety Nets for Boom/Bust Cycles .................................................................... 22 Methods & Analysis ........................................................................................................................... 26 Value Chain Analysis .................................................................................................................................... 26 Design, Implementation & Analysis ........................................................................................................ 27 Value Chain Upgrading ................................................................................................................................ 29

Results and Discussion .................................................................................................................... 31 Key Actors ........................................................................................................................................................ 31 Maya Mountain Cacao Ltd. ....................................................................................................................................... 31 Toledo Cacao Growers’ Association ..................................................................................................................... 33

Value Chain of Cacao in Belize .................................................................................................................. 33 Market Map ..................................................................................................................................................................... 34 Enabling Environment ............................................................................................................................................... 38 Service Providers ......................................................................................................................................................... 39

Constraints & Opportunities ..................................................................................................................... 41 Enabling Environment ............................................................................................................................................... 41 Service Providers ......................................................................................................................................................... 42 Exporting ......................................................................................................................................................................... 43

Recommendations ............................................................................................................................ 48 Geographic Indication ................................................................................................................................................ 48 Enabling Environment Upgrade ............................................................................................................................ 48 Capacity Building .......................................................................................................................................................... 49

Bibliography ........................................................................................................................................ 52 Appendices .......................................................................................................................................... 58 Appendix 1: Sample Cacao Farmer Questions ..................................................................................... 58 Appendix 2: Sample Chocolate Maker Questions ............................................................................... 59 Appendix 3: Sample Exporter Questions .............................................................................................. 60


Abstract

The young developing nation of Belize is struggling with the classic conflict of

conservation and development. This conflict is especially pronounced in the rural,

southernmost district of Toledo, where the poor constitute a staggering 60.4% of the

population and deforestation for agriculture is on the rise. Can these conflicting interests

be reconciled?

The Belize Cacao Agroforestry Restoration Project initiated by the Belize

Foundation for Research and Environmental Education (BFREE) is attempting to promote

conservation-‐friendly agricultural practices that will also economically benefit local small

farmers. By promoting cacao agroforestry as an alternative livelihood, BFREE hopes to

develop buffer zones to Belize’s biodiversity-‐rich forest reserves. Although organic cacao

can be a valuable crop and lessen the threat to forested land and biodiversity, the economic

viability of cacao has not been examined in the context of southern Belize.

Through informal, semi-‐structured interviews and a review of secondary data, I

conducted a value chain analysis to explore the economic opportunities and barriers for

smallholder farmers who cultivate organic, shade grown cacao in Belize. This exploratory

field practicum tracked the flow and prices of Belizean cacao beans domestically and

abroad, analyzed the enabling environment and the service providers, and investigated the

market potential and risks for fine flavor, organic, shade grown, bird-‐friendly cacao within

the unique context of Belize.

The value chain analysis demonstrated that while a strong market exists

internationally for cacao, the mechanisms for accessing this market as a small farmer in

Belize are insufficient. While the opportunities abound, the challenges faced due to a


limited enabling environment and few service providers will be a daunting, but not

insurmountable hurdle for reconciling conservation and development objectives.

CACAO VALUE CHAIN ANALYSIS IN BELIZE 1

Introduction

Belize struggles with a precarious balancing act as it develops as a nation. On one

hand, Belize has a duty to protect its rich, biologically diverse ecosystems. On the other

hand, the nation has to consider the practical realities of its people, especially Belizeans’

need to earn a living and feed their families. While nationally 15.8% of Belizeans are

indigent, this number jumps significantly in the rural district of Toledo where 49.7% of the

population is indigent (Halcrow 2010). Most of these impoverished individuals are farmers

(IFAD 2013). These farmers are often the people whose livelihoods conflict most with

conservation efforts. While on paper Belize has placed a significant amount of its land in

protected areas (DeVries et al. 2003), this protection is sometimes ineffective, and the rate

of deforestation, especially due to clear-‐cutting for agriculture, is on the rise (Butler 2012).

Belize faces a difficult question in its development: Can Belize reconcile these seemingly

conflicting interests of conservation and development through agriculture?

Organic cacao grown in a multi-‐tiered, diverse forest canopy with 40-‐70% shade

coverage can be a lucrative cash crop. If the system is healthy and well managed, it can also

yield subsistence products or additional cash crops. Not only could this decrease the

demand for cleared land, the sustained income could also decrease the demand for other

forest resources as well (Whinney 2013). Cacao agroforestry systems have also been

shown to play an important role in biodiversity corridors and buffer zones for protected

areas, as the intact forest system remains favorable for animal habitat (Gockowski & Sonwa

2008).

Through a unique, cooperative funding agreement the Belize Foundation for

Research and Environmental Education (BFREE) has initiated the Belize Cacao


Agroforestry Restoration Project (BCARP), which aims to improve local livelihoods,

establish buffer zones to the Maya Mountain North Forest Reserve, and restore neotropical

migratory bird habitat in Trio Village, Toledo District, Belize. Although organic cacao can be

a valuable crop and lessen the threat to forested land and biodiversity, the economic

viability of cacao has not been examined in the context of southern Belize. It is important

that organic, shade grown cacao has an accessible and profitable outlet in order for its

cultivation to meet the dual goals of improved livelihoods and conservation.

The objective of my field practicum was to conduct a value chain analysis of cacao

through a review of secondary data and through semi-‐structured interviews with local

farmers and various actors along the value chain. The purpose of conducting a value chain

analysis was to examine the economic viability of cacao by identifying the economic

opportunities and barriers for smallholder farmers that cultivate organic, shade grown

cacao in Belize. This field practicum tracked the flow and prices of Belizean cacao beans

domestically and abroad, analyzed the enabling environment and the service providers,

and investigated the market potential and risks for fine flavor, organic, shade grown, bird

friendly cacao within the unique context of Belize.


Background and Context

Belize

Geography & History

Belize is located in Central America,

bordering Mexico to the north and Guatemala to

the west and to the south. To the east, Belize

borders the Caribbean Sea and the Belize Barrier

Reef. The Belize Barrier Reef is a World Heritage

Site, and a large segment of the Mesoamerican

Barrier Reef system, the second largest barrier

reef system in the world. With 8,805 square

miles of land, Belize is slightly larger than El

Salvador (8,124 square miles), the only other

Central American country that borders only one ocean. While El Salvador is similar in area

to Belize, it has a population of more than 6 million, whereas Belize has a population of

approximately 340,000. Historically, Belize’s demographic makeup was substantially

Caribbean, but emigration by many Creoles and the influx of Central American immigrants

has changed the ethnic composition. Although English is the official language, Spanish is

now the most commonly spoken language. Central American immigrants are establishing

new communities in rural areas. The development of new communities threaten Belize’s

many protected areas as new roads provide access to previously secluded areas that are

high in biodiversity.

Figure 1: Map of Belize


Though fairly young as a sovereign nation, Belize has a rich Maya and colonial

history. The current Maya population (10.6% of the total population) traces their ancestry

back to the several Maya city-‐states found in Belize until their decline at the end of the first

millennium A.D. During the 17th and 18th century, the British and the Spanish disputed the

region, which formally became British Honduras in 1854. Conflict between the United

Kingdom and Guatemala continued, and delayed Belize’s independence until 1981, with

Guatemala refusing to recognize Belize’s independence until 1992. Belize’s connection with

the United Kingdom persists despite its independence, as it is a member of the

Commonwealth of Nations. Even after independence, Belize’s court of last resort was the

Privy Council in London until 2010 when Belize joined the Caribbean Court of Justice (CIA

2013).

Demographics and Socioeconomics

Belize is 96 of 187 countries and territories on the 2013 Human Development Index

(HDI), placing it in the medium human development category (UNDP 2013). The HDI

measures health, education, and living standards. Belize’s HDI value is 0.702, which is up

from 0.621 in 1980. This value is above average for countries in Latin America and the

Caribbean. Since 1980, the life expectancy at birth has increased by 6.1 years to 76.3 years,

mean years of schooling has increased by 0.7 years to 8 years and the gross national

income per capita increased by 61% to $5,327 (UNDP 2013). The gross domestic product

(in current USD) in 2011 was $1.474 billion (UNdata 2014).

Rural areas of Belize tend to be poorer than urban areas, especially in Toledo

District, where BFREE operates. Toledo District is the poorest and least developed district

in Belize; 82% of the population is rural. (Halcrow 2010). Ten percent of the population of


Belize (OPHI 2013) and a variety of cultures call Toledo home: Maya, including Mopan and

Kekchi Maya, Mennonites, Mestizos, Creole, Garifuna, East Indians, and immigrants from

elsewhere in Central America (Halcrow 2010). The Maya constituted 69.4% of the

population of Toledo in 2009. In 2009, 25.5% of the population of Belize was poor1, and an

additional 15.8% were indigent (41.3% total poor population). In contrast, 10.7% of the

population of Toledo was poor and an additional 49.7% were indigent. The 2009 total of

poor Belizeans was 60.4%, significantly lower than 79.0%, the total of poor Belizeans in

2002 (Halcrow 2010). Most of the impoverished are farmers, who either farm their own

land or work for wages on large plantations. More than half of Belize’s poor are subsistence

farmers. Children are more vulnerable to poverty than other age groups, especially

children of Maya descent (IFAD 2013).

Environmental Issues

It is estimated that tropical rainforests account for more than half of the plant and

animal species on earth, while covering only 7% of the land area. Approximately half of the

tropical rainforests have been destroyed in the last century and an estimated 27,000

species are lost each year due to the destruction of their habitat, for which agriculture is

mostly to blame (Gockowski & Sonwa 2008).

1 Acknowledging the difficulties in measuring poverty, the Country Poverty Assessment calculates two poverty lines:

The Household Indigence Line represents the minimum cost of a food basket needed to provide a healthy, local, balanced diet of 2,400 calories for an adult male. This number is then adjusted for the household’s age sex composition. Households whose expenditure is below this amount are defined as indigent, as it is unable to satisfy its basic food needs. The General Poverty Line is made up of the Household Indigence Line plus an allowance for non-food expenditure. Households whose expenditure is below the amount that includes non-food items, are defined as poor (Halcrow 2010).


Belize supports a high level of biodiversity: more than 150 species of mammals, 540

species of birds, 151 species of amphibians and reptiles, 600 species of fishes and 3,408

species of vascular plants. Belize also boasts a large array of ecotypes, a genetically distinct

geographic variety or population within a species that is adapted to its particular

environment. Belize is home to the world’s second largest barrier reef system and plays a

significant part in maintaining the Mesoamerican Biological Corridor, a network of

protected areas stretching from Mexico to Panama (BERDS 2009).

Belize maintains substantial forest cover, but reported forest cover and

deforestation rates have been inconsistent or outdated. Cherrington et al. found that forest

cover in Belize was approximately 75.9% in 1980 and dropped to 62.7% in 2010, a 0.6%

per year rate of deforestation for this time period (2010). This rate is significantly lower

than the Food and Agriculture Organization’s estimates of a 2.3% rate of deforestation

(Cherrington et al. 2010). But since 2010, based on satellite imagery, deforestation has

accelerated in Belize. In 2012, the forest cover had fallen to 61.6%, an annual loss of 31,214

acres (Butler 2012). Deforestation in Belize has been most facilitated by the creation of

roads, which opens forest area to logging and to the expansion of agriculture. Roads play a

considerable role in determining land use, by lowering the cost of migration, increasing

land access and land clearing; and in determining rents, by affecting the costs of inputs and

potential outputs (Chomitz 1996).

Land Tenure

While the Maya constitute 10.6% of the Belizean population, in Toledo District

69.4% of the population is Maya. With the exception of a few private lands and indigenous

reserves, land in Toledo District is owned by the Belizean government. The British


established the indigenous reserves in 1868 (Levasseur & Olivier 2000), but the 1992

Belize National Lands Act that replaced the 1868 colonial law does not recognize the

reserves. Belize continues to deny the majority of Maya communities any ancestral land

rights to the lands they live on, despite rulings from the Inter-‐American Court of Human

Rights (DeVries et al. 2003). Since the establishment of the reserves, most Maya

communities have outgrown the reserves and are living and farming illegally on

government land. Despite the on-‐going conflict in land rights in Toledo, the Maya continue

to live in communal land tenure systems. An elected alcalde manages the land and is also

the head of the community. To claim a plot within the reserve, one must clear it and farm it.

Claimed land can then be inherited or given to family (UC Berkeley 1998). Since the Maya

do not own land and typically do not have a lease, it is very difficult for them to obtain a

financial loan.

The land tenure situation is not the same where BFREE is working. BFREE works in

the frontier community of Trio, which consists mainly of Spanish-‐speaking, Central

American immigrants. The community of Trio was expanded in 2006, when a 1,483-‐acre

piece of land was carved out of the Maya Mountain North Forest Reserve and de-‐reserved

for agricultural plots for lease, likely in exchange for political votes. Contrary to the Maya’s

lack of land rights, these immigrant farmers have 30-‐acre plots leased from the

government.


Cacao and Chocolate

History of Cacao Exporting in Belize

From 1984-‐1987, Hershey Corporation, the Belize Ministry of Natural Resources

and Agriculture (MNRA) and United States Agency for International Development (USAID)

implemented a program called Belize Accelerated Cacao Production Project, administered

by the Toledo Agricultural Marking Project (TAMP VITA) (Fairtrade Foundation 2009)

(Goss 2013). The program targeted the Maya, the majority of whom were subsistence

farmers and encouraged them to cultivate cacao. Hershey Corporation developed a cacao

plantation of 300-‐400 acres and committed to buy beans from farmers in Toledo and Stann

Creek Districts (Goss 2013). In 1988, the trees began to bear fruit and farmers received

$0.625 USD/lb. for dried beans. However, the market was short-‐lived. In 1991 there was a

significant drop (to $0.25 USD) in the world market price and Hershey’s left Belize as it

became cheaper to buy beans on the world market (Fairtrade Foundation 2009) (Goss

2013).

The Toledo Cacao Growers’ Association (TCGA) was founded in 1984, through

funding from USAID. TCGA is a non-‐profit organization that “seeks to improve the

socioeconomic standard of its members through a diversified system of production

incorporating sound ecological practices” (TCGA 2013). After a few years of inactivity after

the market collapse, TCGA found a buyer in the United Kingdom chocolate maker, Green &

Black’s and became organic and Fairtrade certified. In 1994, TCGA made their first

shipment to Green & Black’s, which launched the Maya Gold chocolate bar (Fairtrade

Foundation 2009). TCGA still has a five-‐year rolling contract with Green & Black’s to buy as

much cacao as TCGA wants to sell to them (up to approximately 450 metric tons (MT)).


With the exception of a few unknown direct purchasers, TCGA was the sole exporter

of cacao beans for a little over fifteen years. In 2010, an American woman started Maya

Mountain Cacao (MMC), with start-‐up capital from the owner of Taza Chocolate and the

owner of Cotton Tree Lodge.

The total cacao production in Belize in 2012 was around 88MT. Total yield is

expected to increase as trees planted circa 2004-‐2006 reach bearing years. Since TCGA

played a role in planting most of the trees currently in production in Belize, TCGA believes

it has a right to the buy the production from these trees. Competition to buy and export the

limited supply of cacao produced by Belize’s small farmers has caused resentment to

develop between exporters.

Cultivation and Processing

Cacao harvest takes place during the dry season, beginning in December and

continuing through May. During the rainy season, June through November, new plants are

propagated, trees are structurally pruned, the farm is weeded, and disease control

measures are undertaken. During harvest, the pods are individually selected for ripeness

and cut from the trunk and the branches. The pods are then opened and the wet beans are

either wrapped in large leaves and placed in buckets for fermentation or put into wooden

boxes. Often the empty, split pods are discarded throughout the farm to return nutrients to

the soil and to provide breeding habitat for mosquitos, an important pollinator for cacao.

The moisture of the pulp surrounding the beans and the high temperature within the

fermentation container is all that is needed to induce fermentation. After 5-‐7 days,

fermentation is complete, and the beans are then laid in a single layer and dried slowly

under the sun for another 5-‐7 days. It is important that they do not get rained on during


this time. Most of the post-‐harvesting processing is done on or near the farm. The post-‐

harvest processing of beans has many variables that affect the quality of the dried bean; the

weather, volume of beans, temperature, aeration, and environment can all affect the quality

of post-‐processed beans.

After the harvesting and post-‐harvest processing, the beans are roasted, ground into

cacao liquor (also referred to as paste), and then pressed and converted into cocoa butter

(the fat, used in chocolate manufacturing) and cocoa powder (the solid, used for

confections and drinks). The beans, cocoa butter, cocoa powder, and chocolate can all be

stored, allowing the secondary processing activities to be completed in either the exporting

or importing country (Kaplinsky 2004).

International Market

Smallholders are responsible for approximately 86% of the worldwide cacao

production; the other 14% is produced by large-‐scale operations (Mohammed et al. 2012).

Cacao growing is currently heavily geographically concentrated; 44% of all cacao comes

from the Ivory Coast and combined with the next two largest exporters (Ghana and

Indonesia), these three countries account for 75% of total cacao exports (Kaplinsky 2004).

Thirteen percent of cacao comes from the Americas, 14% from Asia and 73% from Africa

(WCF 2012). Chocolate makers and chocolate enthusiasts hold cacao from the Caribbean in

high regard because cacao from this region is considered fine flavor aromatic. Fine flavor

cacao accounts for only 5% of the world production (Caribbean Agribusiness 2013). Belize

is a member of the Caribbean Fine Cocoa Forum, a non-‐governmental organization

established to help develop the cacao industry. Membership is open to any individual,

company, agency, or institution (Caribbean Fine Cocoa Forum 2013).


Cacao futures are traded on two world exchanges, London and New York, and are

designed to offset the risk of adverse price movements (ICCO 2012). In 2011-‐2012, total

world cacao production was 3.98 million MT (WCF 2012). In 2012, Belize’s estimated cacao

production was 88MT, or 0.002% of the world production. In 2012, 563,000 MT of cacao

was produced in the Americas, of which Belize’s 88 MT was approximately 0.02% (WCF

2012). It is projected that there will be a 50,000-‐100,000 MT deficit in cacao in 2013,

which should raise the price of cacao worldwide. This deficit is due to an increased demand

for cacao in Asia and a decreased supply from Africa after a drought in the beginning of

2012 (Agritrade 2012).

Coffee, another tropical commodity, has a highly differentiated market, as can be seen

in the table at the top of Figure 2. This table shows the daily indicator prices for coffee,

published by the International Coffee Organization (ICO). The prices for coffee can depend

on the country and the variety. This assures that higher quality coffee receives a higher

minimum price. Unfortunately, market differentiation is not the case with cacao. The table

on the bottom of Figure 2 shows the daily price of cacao, published by the International

Cocoa Organization (ICCO). As can be seen in this table, there is just one world market price

for cacao, which is based on the price of futures sold on African cacao. African cacao is not

fine flavor, and thus not as well suited for the higher price dark chocolate products. African

cacao is not shade grown and not organic; meaning the yield per acre is significantly higher.

The world market price, therefore, is not an accurate representation of the worth of

Belizean or other fine flavor cacao, nor does it reflect the additional labor required to earn

a profit producing low-‐yield cacao.


BFREE

BFREE is a U.S.-‐based non-‐profit organization started in 1995 by Jacob and Kelly

Marlin that has been working to preserve the rainforest in southern Belize. BFREE has an

office in Gainesville, Florida, which offers administrative and logistical support for its

1,153-‐acre biological field station and private reserve in the foothills of the Maya

Mountains in Toledo District, Belize. BFREE’s mission is to “conserve the biodiversity and

cultural heritage of Belize” and seeks to do so through scientific research, environmental

education, and by providing alternative livelihoods for local community members (BFREE

2013).

Figure 2: Differentiated Coffee Market (top) versus Undifferentiated Cocoa Market (bottom)


Conservation Threats

Belize theoretically protects anywhere

from 18.53% (BERDS 2009) to more than 40%

(DeVries et al. 2003) of its land and sea under

various management structures. However

many parks are considered “paper parks” as

they lack actual management and protection

(DeVries et al. 2003). BFREE is a candidate to

have its 1,153 acres officially recognized as a

private reserve (BERDS 2009). BFREE is

adjacent to the Bladen Nature Reserve, the

Deep River Forest Reserve and bordered by the Cockscomb Basin Wildlife Sanctuary and

the Maya Mountain Forest Reserve. However, in 2006, with just a stroke of a pen, 1,483

acres of the Maya Mountain Forest Reserve (BFREE’s eastern border) were de-‐reserved by

Ministerial fiat for agricultural development and the expansion of the village of Trio, the

population of which had doubled to 600 people in just five years. Subsequent to the new

development and new roads, illegal logging, fishing, hunting, and possibly looting of Maya

ruins has intensified both in the neighboring protected areas and on BFREE’s private

property. BFREE’s mission is now threatened. The organization has chosen to address

these new threats to conservation by following their vision statement; “by successfully

integrating scientific research, environmental education, and conservation initiatives in the

Maya Mountains of Belize, while also enhancing sustainable development, providing

alternative livelihoods, and ultimately improving the quality of life for Belizeans and

Figure 3: Protected Areas of Belize


visitors from abroad” (BFREE 2013). BFREE decided that the best hope for limiting natural

resource exploitation and environmental degradation would be by engaging Trio residents

in conservation and by encouraging them to embark on alternative, environmentally

friendly livelihood strategies that would help create a biodiverse buffer zone for the

protected areas surrounding Trio.

Belize Cacao Agroforestry Restoration Project (BCARP)

The opportunity for BFREE to participate in promoting organic, shade grown cacao

production came through a unique connection with the state of Massachusetts. From 1917-‐

1978, companies that produced textile dyes and intermediates in an industrial area near

Ashland, Massachusetts, generated high volumes of industrial wastes that contaminated

the surrounding environment. The most significant impact of the chemical waste was

mercury contamination of the Sudbury River and the habitat degradation of the local fauna.

A $3.7 million dollar settlement now provides funding for restoration activities. Under The

United States’ Comprehensive Environmental Response, Compensation, and Liability Act of

1980 (CERCLA), as amended, commonly known as Superfund (42 U.S. Code § 9601 et seq.),

parties responsible for injuring natural resources controlled by the United States, may have

claims for monetary damages brought against them to restore or replace the injured

natural resources. Restoration activities typically restore the local habitat that was

damaged. However, an attorney in the Solicitor’s Office of the U.S. Department of the

Interior (DOI) proposed a project that would channel money down the migratory corridor

of the neotropical bird species that were harmed by the contamination. The superfund site

is the breeding habitat for these migratory birds, and Belize is their winter home. By

simultaneously restoring both the breeding and wintering habitat, the hope is that the bird


population will be healthier and more likely to thrive throughout its range. On a fact-‐

finding mission, the DOI identified BFREE as the recipient of the funds2 set aside to restore

bird habitat in Belize (Ankersen & Mander 2013) (DOI 2011). With the DOI, BFREE has

designed a project that it hopes will satisfy its objectives of providing opportunities for

livelihoods that work within the framework of conservation, the DOI’s objective of

neotropical migratory bird habitat restoration, as well as the interests of the people with

whom BFREE engages.

Organic cacao, especially if it is high quality, can be a lucrative ‘anchor’ cash crop. An

anchor crop is a crop for which a mature market exists. To grow sustainable cacao, a multi-‐

tiered diverse forest canopy with 40-‐70% shade is needed. Shade grown cacao does not

need to be grown in primary forest. In fact, agroforestry cacao can play a role in aiding

forest restoration for secondary growth forests. This system attracts beneficial predator

insects for pest control and provides breeding opportunities for pollinators and habitat for

flora and fauna. In comparison to conventional cacao cultivation, the inputs for organic

cultivation are minimal, which is beneficial for farmers’ incomes, their health, and the

health of the environment. A high-‐quality growing environment can also yield subsistence

products or additional cash crops. By having a sustained income through cacao, it is hoped

that the demand for other forest resources will drop (Whinney 2013). Additionally, the

creation of buffer zones and biodiversity corridors is important in maintaining the integrity

of the protected areas, and cacao agro-‐forests have been shown to provide this service in

Africa (Gockowski & Sonwa 2008). A buffer zone is an area outside of a protected area

2 Partial funding for BCARP is supported by a cooperative agreement from the DOI, Fish and Wildlife Service (FWS), on behalf of the Nyanza Natural Resource Damage Trustee Council – comprised of the FWS, Commonwealth of Massachusetts and National Oceanic and Atmospheric Administration.


where human inhabitants can derive economic benefits, but the land is still providing

habitat for wildlife and providing ecosystem services (McGray 2003). Biodiversity

corridors are pieces of the landscape that may not be suitable for permanent inhabitance,

but that provide connectivity between habitats to allow flora and fauna to move

throughout the area in order to perform their essential life functions (Silher 2012).

BFREE has been experimenting on its property with cultivating multiple varieties of

organic, shade grown cacao and monitoring the bird populations within the plantation.

They also began a small nursery, which has expanded to a second nursery within Trio.

BFREE has contracted with three Trio farmers, providing them with a stipend three times a

year for five years while they convert a portion of their property destined for clear-‐cut

agriculture to shade grown, organic cacao. BFREE provides the farmers with cacao seeds

and physical assistance in planting, as well as technical training and extension services.

BFREE will use local, trained bird researchers to monitor the avian biodiversity on the

farms. Once the trees begin producing pods, the cacao will belong to the farmers to do with

as they please. However, BFREE is seeking information to help the farmers navigate this

final step of the process as well.


Conceptual Framework

The conceptual framework in Figure 4 presents the relationship between BCARP (in

red) and the value chain analysis (in blue) of my field practicum (in yellow).

BFREE’s project aims to engage local farmers in conservation practices, while also

improving their livelihood opportunities. The framework of BCARP is in red. BFREE

provides farmers with cacao seeds and bags, technical training, and payments for agro-‐

environmental services for five years. In exchange, the farmers will plant organic, shade

grown cacao on a portion of their leased property originally slated to be clear-‐cut for

agricultural production. The hope is that cacao will be a higher value cash crop than other

common local crops that are grown in cleared fields, either in gross value or in net value

Figure 4: Conceptual Framework


when considering the labor and inputs involved in the production of various crops. If cacao

is less laborious than other crops and the value is higher, farmers’ livelihoods should

improve. If livelihoods improve, farmers may be less likely to engage in illegal logging as

part of their livelihood strategies and less likely to continue clear-‐cutting the forest for

agriculture. These agroforestry practices will lead to higher farm biodiversity and greater

forest conservation and restoration.

My role in the project (above in yellow and blue) was to conduct informal, semi-‐

structured interviews and to review secondary data in order to develop a value chain

analysis. The first component of a value chain analysis is the development of a market map

that traces the prices of the crop from seed to chocolate through the various buyers and

sellers. The next component is an analysis of the state of the enabling environment and

how it hinders or helps the cacao market. The final component is an analysis of the service

providers to identify other value chain actors and how they contribute to the functioning of

the market in Belize. If farmers can obtain a good price for their cacao from a dedicated

buyer, they will be more likely to continue engaging in environmentally friendly

agricultural practices in areas bordering protected forest reserves.

Literature Review

Cacao Agroforestry Systems in Buffer Zones for Conservation

In Trio village, where BFREE is working, farmers typically have 30-‐acre leaseholds.

Many of these leaseholds have already been fully or partially clear-‐cut for full time

agricultural production, which is unlike the traditional Maya swidden system of rotational

slash and burn and long-‐term fallow cycles. Those areas in Trio that retain their secondary


forests, will likely end up clear-‐cut once farmers have the need and means to clear

additional land for farmland. While research shows that pristine forest is preferable for

biodiversity conservation, when considered relative to the fate of clear-‐cutting, cacao-‐

based agroforestry seems the better option for biodiversity conservation in southern

Belize.

Gockowski and Sonwa (2008) surveyed the environmental and economic tradeoffs

between low productivity cacao agroforestry systems and intensive cacao production in

Africa. They found that in order for the lower yield, biodiverse cacao agroforestry systems

to be profitable, more cacao trees would need to be planted. The number of cacao trees

needed to balance out the low yield would require that most of the remaining forest in

Ghana, Nigeria and Ivory Coast be converted to cacao agroforestry systems. While these

agroforestry systems retain greater biodiversity than the intensified systems, the

biodiversity in the farms is not as great as in intact forest. However, since the cacao forests

conserve a significant part of the biodiversity and do maintain an intact ecosystem, these

agroforestry systems are of high utility when they are a large component of buffer zones

and biodiversity corridors between protected areas. The authors also noted that while

high profits and high biodiversity are not mutually exclusive, the former requires

consistent and easy access to markets. They also point out that if agroforestry buffer zones

are going to be viable, some subsidies or incentives might be necessary for farmers

(Gockowski & Sonwa 2008).

Research in Indonesia found there that are three land management options to

improve income in the tropics: forest clearance, agroforestry intensification with shade

tree removal, and the thinning of high shade tree cover. All three result in biodiversity loss,


but the thinning of high shade tree cover is the most acceptable, relative to the other

options. The authors observed that while logically it would seem that high yield, shade-‐less

agriculture would minimize demand for land for agriculture, their observations showed

that only farmers with superior capital, as opposed to subsistence farmers, are likely to

follow these agricultural practices at all. Like Gockowski and Sonwa’s study, this study also

found that economic incentives or market-‐based compensation for lower yield agricultural

practices is necessary to prevent further agricultural intensification beyond the thinning of

some shade cover (Steffan-‐Dewenter 2007).

Direct Trade vs. Fair Trade

Vertical coordination is the development of long-‐term relationships between buyers

and sellers, sometimes through contracts (Mitchel et al. 2009). It is an important upgrading

strategy for value chain development as it provides greater market security to farmers, by

giving farmers a greater stake in the buyer/seller relationship. The relationship that is

developed through vertical coordination is a very important component of the success of

cacao-‐based agroforestry systems as buffer zones to protected areas, because it acts as a

guarantee; if a buyer withdraws, farmers may find it difficult to obtain another buyer and

may switch to another livelihood option that is less favorable to the environment. Fair

trade and direct trade are examples of trade models that employ vertical coordination. Fair

trade and direct trade are also third-‐party certification schemes. The trade models will be

identified by lowercase and the certification schemes will be capitalized.


Fair Trade

The goal of fair trade is to support sustainable production by providing “mutually

beneficial long-‐term trading relationships” (Fairtrade Foundation 2011). Fair trade

certification for cacao is available for farmer organizations that are governed and owned by

the farmers. Fair trade certification provides certain standards to act as a safety net, as the

cacao market is unpredictable. In Belize, Fairtrade Foundation purchasers pay a minimum

price of $2,200/MT or the market price (if higher), plus an organic premium of $300/MT, a

Fairtrade premium of $200/MT and an origin premium. The premiums are used as the

seller organization elects. Also available under the Fairtrade relationship is pre-‐financing,

which allows the cooperative to purchase the product prior to selling it to the buyer

(Fairtrade Foundation 2011).

Despite these benefits and standards, fair trade has been criticized recently. For one,

the fair trade price premiums go to the cooperative, not directly to farmers. The

cooperative buys the beans at the minimum or market price and sells the beans to the

purchaser for the price that includes the premiums. Another criticism is that the cost to be

Fairtrade certified is high and the bureaucracy sometimes burdensome. TCGA pays $3,000

per year to be Fairtrade certified; this cost pays for yearly inspections and auditing. The

chocolate makers then pay Fairtrade a licensing fee to be able to use the Fairtrade logo on

their products.

For Belize, fair trade might not be the best model. Since the fair trade price is based

on the world market price (or a price floor). In the case of cacao, the world market price is

based on African cacao futures, which means the price is based on a non-‐organic, lower

quality, higher yield variety of cacao in a region where the cost of living is lower than in


Belize. While the Fairtrade Foundation provides additional premiums that recognize the

organic nature of Belizean cacao, the Fairtrade price is not sufficient to cover the

differences in production yields or the higher costs of living. Thus, a price based on the

world market price, when considered in the context of Belize, is not fair in practice.

Direct Trade

Another vertical coordination trade model is direct trade, which is a face-‐to-‐face

relationship between the buyer and the farmer. Direct trade often offers a higher price, as

usually there is no middleman. Sometimes it includes profit sharing or other community

development funding. There is a Direct Trade third party certification scheme that pays a

25% premium above the fair trade price in exchange for a higher quality product. Since the

Direct Trade certification emphasizes relationships with farmers, companies must submit

evidence of their ongoing communication with farmers. Direct trade, either the trade

model or the certification scheme, requires a trusting relationship. The buyer benefits from

having greater control over the quality of the beans, and the farmer benefits from receiving

a greater percentage of the selling price and having a greater stake in the relationship.

Niche Marketing as Safety Nets for Boom/Bust Cycles

Cacao is prey to boom/bust cycles that could threaten the value of cacao

agroforestry as a conservation tool. As trees age and their production diminishes, farmers

may instinctually attempt to increase yield by further thinning the canopy to allow more

sunlight to penetrate into the understory. While the increased sun exposure may increase

yields in the short term, it also increases the physiological stress on the cacao trees, which

increases the trees’ susceptibility to pests and diseases. The battle against pests and


diseases could lead farmers to experiment with pesticides, potentially losing the organic

status of the farm. The decreasing yields from aging trees plagued with a variety of stresses

can ultimately cause the local market to bust. The decreased farm income makes farm and

production upgrades difficult, leading farmers to give up on their cacao agroforestry

system (Clough et al. 2009).

The excessive thinning of the canopy is also contrary to the purpose of a cacao

agroforestry system as a habitat for wildlife. These agroforestry management issues are

often exacerbated by the lack of technical training available to smallholder subsistence

farmers. In many cases, their knowledge develops over time through experience and

through their neighbors’ experiences. The issue for conservation then becomes how to

insure that environmentally friendly agroforestry practices can continue throughout the

life cycle of the cacao tree (Clough et al. 2009). Some possible solutions outlined by Clough

et al. (2009) include: “paying cacao farmers to keep, plant, and diversify their shade trees,

through premium producer prices and, in future, remuneration for carbon storage in

shaded agroforests”.

BFREE’s project in Trio village already employs the concept of giving farmers

economic incentives for conserving tropical forests. However, this does not appear to be a

sustainable method as NGOs notoriously have difficulty in procuring a continuous source of

funding. Perhaps a more sustainable method for incentivizing proper agroforestry

practices lies in premium prices for farmers. These prices would consider the various

ecosystem services cacao farms and farmers provide, especially relative to the other crop

options farmers have in that region. Ideally, the premium price would come closer to

matching the true value of organic, shade grown cacao.


Part of the contract between the cacao farmers and BFREE stipulates that the

farmers must allow BFREE access to their property for bird monitoring, which is consistent

with BFREE’s research mission. Currently, the Smithsonian Migratory Bird Center (SMBC)

Bird Friendly eco-‐label is specific to coffee (MBC 2013). However, its dedication to

encouraging shade grown, organic products could translate to cacao as well, especially in

Trio where the cacao cultivation is likely to comply with these requirements. This

certification “identifies and verifies through third-‐party, independent inspection and

certification that coffee has been grown using shade management practices that provide

good bird habitats. Shade characteristics must meet science-‐based criteria developed from

ornithological field work” (Ecolabel Index 2013).

Bacon (who studied coffee) argues that when determining the sustainability of

production, one needs to consider not just the income potential, but also the livelihood

vulnerability of farmers. This approach takes into consideration access to land, the creation

of strong farmer organizations, alternative markets, and product diversification (2005). In

Toledo, most of the cacao farmers are Maya subsistence farmers. If the demand for cacao

from Belize remains constant or continues to grow, it is important that the organizations

and exporters that work with subsistence farmers emphasize food security. There may be

a temptation to switch from subsistence crops to high value cash crop and it is important

that farmers do not fall prey. The possibility always exists that the commodity market may

fall, and farmers still need to be able to feed themselves should their cacao crop be less

valuable at any point in the future.

Pristine forest is best for biodiversity conservation. However, cacao agroforestry

systems are preferable to clear-‐cut monoculture production, since agroforestry at the very


least keeps the forest cover intact, an important element of biodiversity corridors. Typically

these agroforestry systems attain lower yields, and therefore are less profitable. Gockowski

and Sonwa (2008) pointed out that consistent and easy access to markets, and potentially

subsidies or incentives, are key to insuring that agroforestry systems persist for the sake of

biodiversity conservation. These factors are also key to insuring the sustainability of the

alternative livelihood of cacao cultivation. Accordingly, assessing the value chain and

market access, risks and potentials for organic, shade grown cacao in rural Belize were

significant components of this study.


Methods & Analysis

Value Chain Analysis

A ‘value chain’ is the “full range of activities which are required to bring a product or

service from conception, through the different phases of production (involving a

combination of physical transformation and the input of various producer services),

delivery to final consumers, and final disposal after use” (Kaplinsky & Morris 2001, 4). New

producers, who may be poor and from poor countries, can find value in a value chain

analysis as it provides important insights into how “rural poor can participate gainfully in

local, regional and global trade” (Mitchel et al. 2009, 1). Value chain analysis can be used as

a tool to understand the policy environment, which influences resource allocation and

access within the domestic market (Kaplinsky & Morris 2011).

The creation of a simple value chain is the first step in a value chain analysis. This

step identifies the main actors and activities in the production and commercialization

phase (Hellin & Meijer 2006). Next is the development of a market map that traces the flow

and prices of the product; and then identification of the enabling environment and service

providers. These components of the value chain analysis are used to identify policy issues

that may hinder or enhance functioning of the chain. The enabling environment

encompasses the critical factors that shape the value chain. These factors are generated by

structures (national and local authorities, research agencies) and institutions (policies,

regulations and practices) that are beyond the direct control of actors. The service

providers are business and extension services that support the value chain operation.

These services may include: input supplies, technical assistance, market information,

financial services, transport services, and quality assurance (Hellin & Meijer 2006).


Although there are no set rules for conducting a value chain analysis, it typically

includes qualitative and quantitative evaluation tools. The qualitative approach, using

semi-‐structured interviews and focus groups, is employed first. Should time and resources

permit, a quantitative study (survey or questionnaire) can follow. In the case that a

quantitative study is prohibitive, much of this information can often be found through

secondary sources (Hellin & Meijer 2006).

Design, Implementation & Analysis

The initial set of questions set forth in the proposal was provided by BFREE and was

adapted from “Guidelines for value chain analysis” (Hellin & Meijer 2006). Further

questions were derived from “Participatory Market Chain Analysis for Smallholder

Producers” (Lundy et al. 2007), from the annex of a consultancy report for TCGA called

“Characteristics of the Cocoa Supply Chain in Belize and Diagnosis of Cooperation Among

Stakeholders” (Dubon 2007), and from “Assessing the impact of value chain approaches on

rural poverty” (Donovan & Stoian 2009). Typically the questions then evolved as I sought

to fill in gaps in my understanding or sought to limit the imposition on people’s time. In

many cases, farmers seemed to be interview-‐fatigued from other organizations and

students interviewing them in the recent past. Interviews with subsequent key actors

changed based on the extent of information I had already obtained and based on what

information needed clarification, confirmation, or was still lacking altogether.

I interviewed one farmer who has contracted to participate in BFREE’s cacao

initiative, and fourteen Maya farmers or a family member, who are currently growing

organic cacao. The goal was to understand their current practices, where and from whom

they receive assistance, how much they spend and earn in cacao cultivation, and their


motivations for and hindrances to growing cacao. These interviews were informal and

were conducted with the assistance of my guide and translator, Elmer Tzalam. Elmer and I

walked from house to house, asking if they grew cacao and if so, were they willing to speak

with us briefly. In about half of the interviews, the husbands were in the fields and we

spoke to their wives or in one case, a daughter. Generally, the wives either knew very basic

information about their husband’s cacao cultivation or nothing at all. Sometimes I was not

certain if they were unknowledgeable or rather did not feel it was their place to share the

information with me without their husbands’ approval. Since some women were

comfortable opting not to answer certain questions, I felt as though the responses to the

questions they were willing to answer were credible. The daughter with whom I spoke was

approximately 20 years old and was very knowledgeable of her father’s occupation,

including his relationship and grievances with the various export organizations. The

interviews typically lasted 10 to 20 minutes, although occasionally they lasted 30 minutes

to an hour. Once I completed my list of questions, I let the interviewee continue speaking

as long as they had experiences or knowledge they wanted to share.

I also conducted interviews with other actors along the value chain, including

representatives from an array of organizations in Belize. I spoke with representatives from

various NGOs, TCGA, MMC, the MNRA, protected areas management, and several chocolate

makers. These interviews were conducted in English. The interviewees were selected

based on their involvement in the cacao chain and based on recommendations garnered

from prior interviews when I inquired with whom I should speak for further information.

I chose not to audio record my interviews. I felt the farmers might be intimidated or

irritated at my intrusion. Competition in the Belizean cacao market is currently very


sensitive and I felt interviews with key actors would be uneasy and less candid if every

word and insinuation was recorded. Therefore, I took notes by hand and later typed them,

along with other impressions and information I had received that might not have been

clear based on the notes alone. I used a word processor called Scrivener that is designed for

research projects, screenplays, and novels. I devoted a “chapter” to each interview, which

could then be organized.

Value Chain Upgrading

Through online research, I was able to generate a simple value chain. After

completing the initial interviews, I was able to create the market map, which traced the

prices and flow of cacao through Belize and abroad. Once the market map was completed, I

was then able to focus the subsequent interviews on the provisions of the service providers

and on the extent and efficiency of the enabling environment related to the cultivation and

exportation of cacao in Belize.

I analyzed the information from the interviews and secondary data in order to

determine the relationships between value chain actors and the opportunities and

hindrances in cacao production as perceived by farmers, intermediaries, and buyers. The

value chain analysis aided me in identifying areas in the value chain where upgrades might

yield promising results for greater small farmer integration with the market.

There are seven types of recognized value chain upgrades, which include: horizontal

coordination (collective production and processing), vertical coordination (contract

farming with processors or exporters), functional upgrade (increasing or decreasing the

number of activities performed by farmers), process upgrading (improving efficiencies),

product upgrading (labeling, such as organic and fair trade), inter-‐chain upgrading (using


agricultural skills to grow something else as well), and enabling environment upgrading

(improvements to support, services, institutional, legal, and policy frameworks) (Mitchell

et al. 2009). I considered each of these recognized upgrades when using the value chain

analysis to make recommendations for the cacao sector in Belize.


Results and Discussion

Key Actors

Maya Mountain Cacao Ltd.

Emily Stone started Maya Mountain Cacao in 2010 as Moho River Cacao, with start-‐up

capital from Alex Whitmore of Taza Chocolate and Jeff Pzena of Cotton Tree Lodge, Cotton

Tree Chocolate, and Moho Chocolate. Whitmore founded Taza Chocolate in 2005 after

forming a relationship with a cacao cooperative in the Dominican Republic. As Taza grew,

Whitmore looked to Belize as an attractive potential supplier of trinitario and criollo fine

flavor cacao beans that also carried the marketable story of historic cultivation by the

Maya. Whitmore met Pzena in 2006 and in 2007 they proposed to purchase beans from

TCGA. Whitmore is an opponent of fair trade and made an offer to TCGA to engage in a

direct trade model. Whitmore’s opposition to the fair trade model stems from its expensive

bureaucracy, the lack of incentives for quality products, and the lack of evidence that fair

trade has had positive impacts on farmers. The proposition for direct trade with TCGA

included paying the world market price, plus a $1000/MT premium. This offer also

included no certification fees, a requirement to receive only the best quality of beans, and

the understanding that Whitmore would pay for the container once it was shipped. TCGA

did not feel comfortable giving up their long-‐term relationship with Green & Black’s and

the Fairtrade Foundation. At that time Green & Black’s was buying all of TCGA’s beans

despite the quality, was paying a higher price than they currently do, and they were willing

to give pre-‐financing, which is crucial for TCGA’s operation. After some debate amongst the

TCGA board and the TCGA farmers, TCGA opted not to change their trade model.


In 2010, Stone arrived in Belize, met Gabriel Pop and started Moho River Cacao. Stone

is the majority owner, Pop is a co-‐owner, and Pzena, Whitmore, and MMC’s import broker,

are all small equity partners. Besides a second investment from Taza, MMC has not

received financial assistance since the initial start-‐up funding from Whitmore and Pzena.

MMC buys wet beans directly from the farmers’ fields or homes a couple of times a

week. MMC transports the beans to their central processing facility where they are

fermented in 450 pound batches for 5-‐7 days at 113-‐120 degrees and stirred daily. After

fermentation the beans are dried in solar dryers and raked several times a day. Each batch

is tracked throughout the process and has a flavor analysis completed on it. MMC’s product

is very consistent and high quality.

MMC has 10 employees, which includes their field team that provides technical

assistance and is on call for helping farmers. MMC buys from 200-‐300 farmers who

cultivate a total of 534 acres of cacao. It is uncertain whether the farmers sell exclusively to

MMC. MMC first began purchasing beans in 2011. In 2012, MMC sold 20 MT of cacao beans

and expects to sell 35 MT in 2013. As of July 2013, it had already sold 24 MT. MMC

estimates that it will be profitable at 70 MT, which was almost all of Belize’s yearly

production in 2012. Farmers who sell to MMC sign a contract which says that the farmer

will produce organic cacao and MMC will buy up to 100% of the farmers’ product. Once a

member of MMC, farmers are also eligible for loans through KIVA, help from the technical

field team, and invitations to MMC events and meetings. MMC pays for the organic

certification, which is to the United States Department of Agriculture organic standard.


Toledo Cacao Growers’ Association

TCGA still has a five-‐year rolling contract with Green & Black’s. Green & Black’s agrees

to buy as much cacao as TCGA wants to sell to them. This gives TCGA the option to sell

small amounts to local chocolate makers. The association currently has 1,100 members,

although not all are actively engaged in cacao cultivation. These farmers produced 57 MT of

cacao beans in 2012.

TCGA is struggling with becoming self-‐sufficient; the board estimates that TCGA needs

to sell 300 MT a year to be self-‐sufficient. Keep in mind that Belize as a whole only

produced 88 MT last year. Currently, only 5-‐8% of TCGA’s operating costs are covered by

their sales to Green & Black’s and the local chocolate makers. In the past, when the price

paid by Green & Black’s was higher, sales covered approximately 25-‐30% of operating

costs. Everything else is currently funded through projects of the Inter-‐American

Development Bank and the European Union. TCGA appears to recognize that their product

is not as consistent as MMC, since each TCGA farmer ferments and dries their own beans.

However, TCGA is not interested in changing their model, which emphasizes building

capacity in the farmers to process their own beans. TCGA hopes that eventually farmers

will have enough cacao beans produced on their own farms and expertise in post-‐harvest

processing to be able to ferment their own beans to the highest standard. Without

changing TCGA’s operating model, TCGA is starting to build satellite-‐processing facilities so

communities can combine yield to obtain the critical mass for proper fermentation.

Value Chain of Cacao in Belize

Just six years ago, a consultancy report for TCGA found that the cacao value chain in

Belize was non-‐existent (Dubon 2007). While I found this is no longer the case, it is


certainly short and simple, and characterized by a very limited enabling environment and

few active service providers.

Market Map

Below is the Belize cacao market map (Figure 5). The market map demonstrates how

and at what price cacao travels through the market. The first column indicates the price for

purchasing cacao seeds. The second inclusive column, or light blue box, indicates the

second step in the chain and the prices cacao obtains in the Belizean market. Since in Belize

beans are purchased either immediately post-‐harvest or after post-‐harvest processing, this

box shows the differences in prices garnered for wet and dry beans. On the left hand side,

the price that MMC pays for wet beans is shown. On the right hand side, the price for dried

cacao beans is indicated, depending on the purchaser. The third column shows the prices

that TCGA and MMC obtain for their cacao from domestic chocolate makers (left hand side)

and international chocolate makers (right hand side). The final column shows the prices

chocolate makers set for a pound of dark chocolate produced from Belizean cacao beans,

separated by the seller (MMC in red, TCGA in blue). A pound of dark chocolate is not

precisely equal to a pound of dried cacao, and the ratio differs based on the chocolate

maker’s recipe. However, the ratio of one pound of cacao beans to one pound of dark

chocolate is close enough to make a comparison. The chocolate makers located in Belize are

identified by italics.


The market for cacao seeds (inputs) is very informal. Since the seeds need to be wet

and fresh, they are unable to be stored in a dormant state before germinating. Occasionally,

Ya’xache Conservation Trust (YCT) will sell seeds or plants out of their nursery, although

more often, these resources are reserved for their organization’s development and

conservation projects. The price from YCT is currently $0.05 per seed. Most farmers seem

to have received their seeds in the past either for free from YCT through a development

project or through soft loans from TCGA. Other farmers stated that they bought pods from

their neighbors. The prices ranged from $0.50/pod to $1.50/pod. Buying seeds from

neighbors and selling pods to neighbors obtains a higher price than buying from or selling

Figure 5: Market Map


to any other organization. However, it is unlikely that farmers can buy and sell at a high

enough volume to eliminate the need for other outlets.

Currently there are only two known purchasers of cacao beans for export: MMC and

TCGA. It is assumed that some beans make their way to Guatemala and that there are a few

private individuals who buy small amounts of beans directly from farmers; however their

identity is not known, nor seems of importance to the key informants. MMC picks up wet

beans from the farms several times a week and pays the farmer $0.40-‐$0.50 per pound. If

the farmer is known for producing high quality and consistent dried cacao, MMC will buy

dry beans for $1.25 per pound from these select farmers. Farmers that opt to sell to TCGA

must first ferment and dry their beans then transport their product to TCGA where they

undergo a cut test for quality. If the beans were properly processed post-‐harvest, farmers

can expect to receive from $1.10-‐$1.25 a pound. TCGA will turn away beans that are not

satisfactorily processed. In the fermenting and drying process the beans lose

approximately 35-‐37% of their weight. Thus the price per pound offered by MMC for wet

beans is essentially equal to the price per pound MMC offers for dry beans (not including

the value of the labor required to ferment and dry the beans). High water content due to

increased rain can be a factor when processors decide on the price to offer for wet beans

since their dried bean yield would ultimately be lower. Normally the wet-‐to-‐dry bean yield

is around 33 percent, but in times of increased rain the ratio can drop, prompting buyers to

offer a lower price for wet beans (Vinayak 2012).

The average world market price in 2012 was $2,391.87/MT or $1.09/lb for dry beans.

(ICCO 2012). MMC sells to a variety of chocolate makers in the United States and to Moho

Chocolate in Belize. The price floor set by MMC for international chocolate makers for


MMC’s fermented and dry beans is $4,500/MT or approximately $2.04/lb. MMC expects to

be able to raise the price, but has not yet attempted to do so. MMC sells beans to Moho

Chocolate for $1.98. TCGA sells to Belizean chocolate makers for $1.60/lb. and says they

sell to Green and Black’s for $1.73/lb. However, when I do the calculations for the price

received by TCGA from Green and Black’s I find the price per pound ranges from $1.45 -‐

$1.59. Green & Black’s pays TCGA the world market price (approximately $2,200), plus a

Fairtrade premium ($200), plus an organic premium ($300), plus an origin premium that

fluctuates based on demand ($500-‐800). This total, at the high end of $3,500/MT only

comes out to $1.59/lb. and at the low end of $3,200/MT comes to $1.45/lb. The prices

received by TCGA seem to fluctuate fairly significantly. In the past, Green and Black’s paid

TCGA upwards of $2.13/lb. and at times the Fairtrade additional premium for organic

cacao was as high as $1,500/MT. MMC and TCGA only mark the price up $0.35 to $0.79 per

pound. MMC marks up the price slightly more than TCGA. However, MMC has expenses that

TCGA does not have, such as gas, time, and labor in collecting the beans and time and labor

involved in processing.

The chocolate makers based out of Belize, the United States, and the United Kingdom

are the final step in the Belizean cacao chain. Dark chocolate bars range in size from 0.5

ounces (Tejas Chocolate) to 4 ounces (Ixcacao). Chocolate makers owned by the equity

partners of MMC (Roni Sue’s Chocolate, Moho Chocolate and Taza Chocolate) sell their dark

chocolate bars for $32 to $35/lb. MMC’s other buyers (Dick Taylor Chocolate, Mast

Brothers Chocolate and Tejas Chocolate) sell their bars for $54 to $64/lb. The Green and

Black’s Maya Gold chocolate bar, only contains 2% Belizean chocolate and sells for $14/lb.

Belizean chocolate makers sell their product for $20 to $55/lb. The Belizean chocolate


maker that sells for $55/lb. is located on Ambergris Caye, a popular vacation destination

where there is a strong tourist market to which to sell its chocolate. Since there are

unknown buyers of dried cacao beans in Belize, there must also be unknown chocolate

makers also using Belizean cacao.

Enabling Environment

The explanation of the market map is fairly simple and straightforward, despite the

inconsistencies and a few missing pieces. A complete value chain analysis also requires

consideration of the enabling environment and the service providers. The enabling

environment includes the critical factors that shape the value chain. These factors are

generated by structures (national and local authorities, research agencies) and institutions

(policies, regulations and practices) that are beyond the direct control of key value chain

actors (Hellin & Meijer 2006).

The enabling environment in Belize does not seem very “enabling.” Prior to the Cacao

Forum on “Opportunities and Global Perspective of Cocoa in Belize” organized by the

MNRA in June 2013, the government seemed to pay little to no attention to cacao

production in southern Belize. Historically, Toledo district was home to many rice growers

who received government subsidies for this crop. However, rice production has moved

northward and the government has not yet turned its attention to cacao. The outcome of

the forum was the development of a National Cacao Platform to discuss strategies for

creating a more enabling environment for cacao.

While I was unable to meet with the district supervisor of the MNRA in Toledo, it was

my impression that generally there are no hindering or helpful policies or regulations

surrounding cacao production. It is illegal to remove, injure, or burn mahogany and cedar


trees, common over-‐story hardwoods, without a permit (Private Forest (Conservation) Act

2000). This may be helpful for farmers if it could provide some redress if their cacao farm,

and the legally protected over-‐story, is burned maliciously or negligently. Besides the

presence of non-‐profit organizations such as Sustainable Harvest International (SHI), YCT

and PLENTY, which focus on farming and environmental practices generally, there are no

research agencies or branches of these organizations dedicated to the cacao industry in

Belize.

Service Providers

The service providers are business and extension services that support the value

chain operation. These services may include: input supplies, market information, financial

services, transport services, quality assurance, and support for product development and

Figure 6: Service Providers


diversification (Hellin & Meijer 2006). Figure 6 above demonstrates the services provided

by various value chain actors.

The service providers tend to be actors already present in the value chain. Both MMC

and TCGA are the major service providers and currently provide, or in the past have

provided, input supplies such as bags and dirt, market information, quality assurance,

important extension services, and financial services through third party loan providers or

soft loans through the cooperative. The MNRA provides extension services, but from the

interviews with farmers and other actors, it does not seem that they often service small

farmers. Instead the MNRA focuses mostly on large agribusiness operations such as citrus

and bananas, which are more concentrated in northern Belize. YCT and SHI have also been

active in implementing cacao-‐focused projects that provide supplies and some extension

services. The Toledo Teachers Credit Union (TTCU) does provide loan services. However,

the terms are not favorable as they carry 12% interest and a loan recipient must have $50

in savings before being eligible for a loan. The TTCU’s Rural Finance Program is a good

opportunity for small farmers, but cacao is not an ideal crop for the loan program due to its

long maturation period and hence the inability of farmers to repay the loan from the crop

earnings within a year. TCGA’s various funders could be considered a part of the service

providers as they make many of TCGA’s services possible, but they have varied throughout

the years and their continued support is not guaranteed. The bus companies used by

farmers bringing their product to TCGA provide transport services for a fee. MMC indirectly

provides transport services as they pick up wet cacao beans at each community multiple

times a week. Transportation and the lack of farm roads are common complaints and

concerns of farmers, service providers, MMC, and TCGA.


Constraints & Opportunities

Enabling Environment

The enabling environment in Belize is almost non-‐existent, and in some

characteristics more hindering than enabling. This makes it difficult for small farmers,

exporters, and chocolate makers to access a market, whether local, regional, or global. Until

the summer of 2013, the government of Belize paid no attention to the burgeoning cacao

sector in southern Belize. While this lack of attention does not directly hinder the market, it

also does not aid the market through favorable national policies. The MNRA does have an

office in Toledo, but it does not often service small farmers who need its assistance. Belize

also does not currently have certification standards of its own, requiring exporters to pay

for organic certifications from foreign institutions. Belize’s duties on imported supplies are

also a hindrance to the market. Exporters and chocolate makers have difficulty in obtaining

packaging from abroad and then must also pay duties up to 100%. Land tenure in Toledo is

uncertain and the de facto communal system of the Maya does not favor long-‐term crops

such as cacao.

Internationally, the cacao industry is also disabling to a small producer nation such

as Belize. The undifferentiated market favors the high yield, non-‐organic, bitter chocolate

grown in Africa and purchased by Hershey’s and Cadbury. The world market price is based

on a product that turns into a $1.00 candy bar. The base price for Belizean cacao is the

same, despite the fact that a Belizean dark chocolate bar is worth $5.00-‐$8.00. Purchasers

of Belizean cacao beans like to tout that they are paying almost 100% above world market

price for Belizean beans, but this is misleading since the Belizean beans are worth

significantly more than 100% above the world market price.


Of the farmers I spoke to, the majority of them cited fire as the greatest challenge to

growing cacao. Whether fire by neighborly negligence or neighborly malice, farmers have

too much time invested in their cacao crop to see it literally go up in flames. Many farmers

lose interest in the crop after a fire and may not have the desire or capital to replace the

trees that were lost. Perhaps if there were a type of crop insurance available for farmers, or

legal policies that protected farmers, this concern could be abated.

The best opportunity for Belizean chocolate is the favorable supply and demand

curve. There is projected to be a 50,000-‐100,000 MT deficit in cacao in 2013, and the

demand from China for chocolate is increasing. The potential health benefits of dark

chocolate and cacao are also increasing the profile of fine flavor cacao, especially in the

West.

Service Providers

One of the largest constraints for Belizean cacao is the low yield and low quality of

farmer-‐processed beans. The best way to address these issues is through technical training.

MMC is trying to address the quality aspect by purchasing wet beans and conducting the

fermenting and drying at their facilities. Belize’s farmers would benefit from increasing the

production of cacao. While there seems to be plenty of focus on planting new cacao trees,

there also needs to be an emphasis on improving the yield of existing trees. In order to

increase the yield without fertilizers, shade trees need to be managed very carefully. Too

much shade or too little shade causes low yields and the proliferation of pests and disease.

In order to help farmers improve the yield and their processing skills, more focus should be

placed on providing technical training. While both TCGA and MMC try to provide this

service to their members, the number of extension staff is low compared to the number of


cacao farmers in Toledo. The industry as a whole could benefit from additional technical

training as organic, shade grown production is new to many farmers who are accustomed

to modern agricultural practices.

There is only one main highway in Toledo, and very few farm roads. In contrast,

farm roads developed by the government crisscross northern Belize. Difficulty in

transporting cacao beans to the market was a common concern voiced by farmers I

interviewed. In many cases, the farms are located 1-‐5 miles away from the farmers’ homes.

This makes it challenging for farmers to access their farms and to transport their harvest to

the market. MMC addresses the transport obstacle by providing regular pick up services.

However, farmers that choose to sell to TCGA must haul their bags of beans to Punta Gorda.

As most farmers do not own vehicles, these farmers must travel by private bus and pay for

a roundtrip bus fare plus a cargo fee for their beans.

There seems to be substantial interest in beginning cacao cultivation or expanding

existing cultivation, but the funds for input supplies often are not available. The limited

availability or lack of financial services goes hand in hand with the inability of farmers to

purchase seeds and bags and to pay for assistance in the initial planting stages. The

difficulty in funding cacao is likely due to the long maturation period in which the farmers

would not have income from the crop to begin paying back any loans. However, the return

on investment should be a good opportunity for someone willing to make a long-‐term loan.

Exporting

For farmers located near the services of MMC and TCGA, price-‐wise, MMC offers a

better deal for farmers than does TCGA. For an equal or slightly better price than TCGA

offers, MMC farmers can have their wet beans picked up by MMC at their farm or in their


community (saving them the cost and time of a round trip bus ride) and they do not need to

invest an additional two weeks in risky post-‐harvest processing. Farmers that sell to MMC

seem generally satisfied with the pick up service, but do not feel like MMC provides enough

technical assistance. MMC would argue that as a for-‐profit startup, they are at a

disadvantage to TCGA as they are not eligible for funding to help them provide better

technical training. From the perspective of TCGA, MMC’s model does not build capacity in

the farmers as it removes their involvement from a significant portion of the process,

reducing the opportunity for the farmers to add value to the crop. On the other hand, even

if farmers retain the post-‐harvest processing responsibilities, they are not able to get a

higher price from any of the current buyers, despite the value they added to the product.

With the exception of the Moho Chocolate, the in-‐country chocolate makers do not buy

from MMC and seem to have an unstated aversion to doing so. While MMC is adamant that

it will continue to exist into the future, in order to be profitable, MMC needs to double its

production and obtain almost all of the cacao beans currently produced in Belize. While

MMC continues to increase the volume of bean purchased, they are in competition with

TCGA, which has been in existence for a long time and has a lot of local and national

support.

Farmer frustration with the buyers in Belize seems to be a common thread. Farmers

are unsatisfied with the price, the extension services, and the lack of transparency

regarding the premium funds received by TCGA through Fairtrade. One benefit to working

with TCGA is its long history in Toledo, even in spite of the current concerns of

sustainability. TCGA has the favor of the government and the government’s recognition that

TCGA’s collapse would be detrimental to farmers despite the presence of MMC. TCGA has


consistently carried the Fairtrade label, the greatest value of which exists in the consumer

awareness of Fairtrade and its basic principles. Unfortunately, the fair trade model might

not be ideal within the context of Belize because its price standards are based on the world

market price of cacao, which is based on futures of the non-‐organic, high-‐yield, lower favor

quality variety of cacao grown in Africa, where the cost of living is lower.


Conclusions

There is little doubt that internationally there is a strong market for cacao,

especially the fine flavor variety produced in Belize. Domestically, there are already two

outlets seeking to purchase more cacao beans. However, the mechanisms for accessing this

market as a small farmer, especially a farmer located in Trio, farther from the services of

both MMC and TGCA, are insufficient. The list of constraints is significant. The enabling

environment in Belize is arguably “disabling.” The service providers, despite attempts to

assist in the market, fall short of satisfying farmers’ needs in order to make cacao

cultivation as profitable as possible. Farmers have difficulty getting their product to the

market, the yield is significantly lower than it could be, and the quality of farmer-‐dried

beans is inadequate to obtain a higher price.

In spite of the seemingly debilitating constraints, the market also offers incredible

opportunities, especially in terms of niche marketing and the highly favorable supply and

demand curve. A chance exists that by addressing some of these market constraints, the

farmers could benefit from the opportunity to improve their livelihoods. Given the

significantly high price that Belizean cacao attains in the form of dark chocolate, it would

suggest that the market is willing to bear this cost. It seems that a market-‐educated farmer

should be able to negotiate a higher price, which would be absorbed either by the

consumer or the chocolate maker, to the benefit of the small farmers. As for the

conservation goals behind the project, unless the farmers can obtain a better outlet for

their cacao, these goals likely will not be met. If cacao does not earn more than other cash

crops, land-‐poor farmers may not allow their land to remain tied up in cacao and may

switch to something more economically favorable.


Elsewhere in the world, cacao agroforestry has been shown to be an excellent

method for reconciling agriculture and conservation. While cacao has been grown in Belize

for many years, there has not previously been a focus on making cacao agroforestry work

for conserving Belize’s biodiversity and tropical rainforests. I found that the potential for

cacao agroforestry to be successful in Belize in terms of conservation and livelihood

development is very high, but many changes need to be implemented in order to facilitate

the reconciliation of these competing interests. Some changes are simpler than others and

should probably be addressed first.

The greatest limitation to my field practicum was the inconsistent and sometimes

unavailable numbers required to get a full picture of the value chain. Often, yield and

acreage numbers were unavailable simply because farmers did not keep records of their

cacao yield and farm expenses and income. As for the organizations and companies I

interviewed, numbers were sometimes inconsistent, which in part is because some

quantification I received were actually estimations. Without these comprehensive

numbers, it is difficult to do more than make generalizations for the market map. Despite

this significant limitation, generalizations seem to provide sufficient data to analyze the

situation and make recommendations for upgrading the value chain to benefit both small

farmers and conservation.

Another limitation was the incomplete amount of interviews I was able to conduct;

there were several important actors with whom I was unable to meet. My data was also

limited by my uncertainty in whether the interviewees were being entirely honest or

upfront. Since there are just a few actors in the value chain of Belize, I was prevented from

triangulating information from multiple sources.


Recommendations

Geographic Indication As I have mentioned, Belize’s estimated cacao production was 88MT, or 0.002% of

the world production. While this is a minute portion of the world market, limiting Belize’s

marketing power, Belize does boast the fine flavor variety of cacao and a unique wild

variety of criollo that has white beans rather than dark purple beans. Belize would benefit

from a branding initiative that unites the Belizean market (product upgrading). A

recommended method for doing so involves applying for a geographic indication for the

variety of cacao that has developed in southern Belize. This type of indication would be

similar to “Florida oranges,” or “Idaho potatoes.” This indication could be used by anyone

cultivating the particular variety of cacao to the qualifications set by a Toledo-‐based

standards board, thus the value added would benefit everyone participating in the value

chain in Belize.

Enabling Environment Upgrade The enabling environment will likely be a difficult area to make improvements since

it entails changing policies and regulations and influencing national and local government

structures. With the establishment of the National Cacao Platform in June 2013, the

opportunity may now exist to give cacao farmers the opportunity to voice their concerns

with cacao production that the government has the ability to address.

Should the opportunity for change arise, the first place changes should be made is in

regards to fire. Fire is the number one threat to cacao cultivation. Many acres are lost

annually due to accidents (out of control slash-‐and-‐burn practices) or malice (arson). Cacao

should be a protected tree under national regulations so that at least on paper, farmers


have the potential to receive damages for any casualties to their cacao crop. This is

especially important since farmers have invested many years in the crop before the trees

even begin to bear fruit. Fire could also cause farmers to lose valuable timber products,

other agricultural crops, or non-‐timber forest products. While crop insurance would be a

great opportunity for farmers, it is unlikely that many could afford it, were it to exist. The

MNRA should also encourage the creation of fire breaks or fences made of the madre de

cacao tree to help keep out pesticides from neighboring farms that may drift and could

harm the cacao farm biodiversity and threaten the organic nature of the cacao cultivation.

The development of a research organization that manages the geographic indication

and works to develop high yield, high quality cacao varieties unique to Belize would also be

a beneficial addition to the enabling environment. This organization could also work to

educate chocolate consumers and to interest the youth in becoming cacao farmers and

environmental stewards.

Capacity Building Although several organizations provide technical training, many farmers

complained that the training was lacking; the yield and quality of dried beans seems to

reflect this. With proper pruning and shade management, farmers can increase their yield

significantly. With training, equipment, and sufficient bean mass, farmers can improve the

quality of the post-‐harvest processing that takes place on their farms. The service providers

in Toledo must determine a better method to build capacity in their farmers. After nearly

30 years of existence, TCGA still turns away poor quality beans and only attains average

prices for their exports. TCGA emphasizes building capacity by leaving the post-‐harvest

processing in the hands of farmers, instead of controlling the post-‐harvest processing as


does MMC. This model would be great if the additional responsibility and value added by

the farmers was reflected in the price they received for their beans. Unfortunately, the

price farmers receive from TCGA is often lower than that paid by MMC, even though the

farmers are the party adding the value to the beans when they sell to TCGA. Since the

farmers often do not post-‐harvest process as well as MMC can with their bulk of beans, the

price the farmers’ beans can garner collectively on the world market through TCGA is

lower than what MMC can garner from its buyers.

Small business management is another important area for capacity building. Of the

farmers with whom I spoke, many did not know how many cacao trees or acres of cacao

they had. Most did not know how many pounds of cacao they sold last year or how much

time they spent working on the farm. Some were able to tell me how much they spent on

outside laborers, but these were farmers that were beyond subsistence, and grew several

cash crops besides cacao. It is difficult to measure improvement when farmers do not have

record keeping skills. One potential method for encouraging productivity and record

keeping is to implement ladder pricing where the price per pound increases as the number

of beans produced per acre increases. Should farmers be interested in running their farms

as a small business, they need training in business management that includes keeping track

of their time spent on each crop, as well as the time spent by their wives and/or children.

Fine flavor, organic, shade grown cacao has the potential to contribute to the

reconciliation of conservation and development in southern Belize. The cultivation of cacao

in this manner and in this region of Belize can develop buffer zones to the biodiversity-‐rich

forest preserves and provide an income to small farmers as a lucrative cash crop. The

international market for Belizean cacao is strong. Despite the fact that the mechanisms for


accessing the market are insufficient, farmers in Belize do have access to the market.

Developing the enabling environment and providing more services to small farmers can

improve access, and the improvements are already underway.


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Appendices

Appendix 1: Sample Cacao Farmer Questions

• Who do you sell your beans to? Why do you sell to TCGA? Or MMC? • How much do you sell your beans for? Does everyone sell for the same price? • Do you know the world market price? • Do you sell to your neighbors? • Do you consume any cacao at home? • How many pounds do you sell a year? • Are you satisfied with your buyer? • How many acres of cacao do you have? Are you planting more trees? Why or why

not? • Do you lease your land? • How old are your trees? • Where did you get your seeds? How much did you pay for your seeds? • What else do you grow? • Why wouldn’t someone want to grow cacao? • Are you a member of TCGA or MMC? • How much does it cost to be a member of TCGA? Or MMC? • Do you go to TCGA meetings? Or MMC meetings? • Have you received any loans from TCGA? Or MMC? • Has TCGA or MMC ever denied your beans? • Have you received any training? Where have you received training? • Do you prefer to sell your beans wet or dry? • Did you sign a contract with TCGA or MMC? What does this require? • How often do you see the buyer? • Can you sell to someone else? • Do you have to sell a certain amount? • How do you transport your beans to Punta Gorda? • How far away is cacao field? How do you reach the cacao field? • Do you have a vehicle? • How much time do you spend in the cacao field? • Does your family help with the cacao? • Do you pay for workers to help you in your cacao field? • How much do you produce per acre? • Do you use fertilizers? Do you use pesticides? • What is your biggest challenge with growing cacao? • What is your biggest challenge with selling cacao?


Appendix 2: Sample Chocolate Maker Questions

• How many pounds of beans do you buy in a year? • Who do you buy beans from? • Why do you buy beans from x? • Why do you not buy beans from y? • How do you select beans? • How much chocolate do you produce in a year? • How much time to make a batch of chocolate? • What are your other inputs? How much do they cost? • How much do you spend on marketing? • How much do you spend on packaging? • Are all the beans high enough quality to use? • Are there any hindrances to trade? • Where do you get your packaging? • How much does the packaging cost? • What are the duties on the packaging? • Do you export? • Why do you not export? • How much do you sell your chocolate for? • Do you communicate with the farmers? • Do you purchase beans directly? Have you ever purchased directly? • Why do you? Or why do you not? • Do you have any certifications on your product? • What are your greatest challenges?


Appendix 3: Sample Exporter Questions

• What is the history of your organization? • How many beans do you buy a year? • How many employees do you have? • How much do you need to export to be sustainable/profitable? • What is your organizational structure? • How much do you sell beans for? • How could you work with another exporting organization/company? • Why do you buy beans wet/dry? • Do you have any farmers employed? • What services do you provide farmers? • How many members do you have? • Does the government help or hinder your exporting? • Do you contract with the farmers? What does the contract say? • What type of certification does your product carry? How do you become certified?

What does it cost? • Where do/did you get funding? • Do you provide loans for farmers? • How do you determine your price? • How does Fair Trade/Direct Trade work? • How has the market changed? • How long can your store beans? • How many farmers do you have? • How often do you collect beans? • How do you add value to the beans? • Is your supply reliable? • Are you supplying the demand? • Is there a price gradient for quality? • How do you export? Who pays exporting costs? • Does Belize have a competitive advantage? • Are there trade restrictions? • What is the exporting process? • Do you have a contract with the buyer? • What are your greatest challenges? • What chocolate makers do you sell to?

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