With support from IFC, Cargill launched a project to make affordable credit available to Ivoirian farmer cooperatives. © Anna Koblanck/IFC
The cocoa that flavors chocolate bars on your local grocery store shelf traveled a long way—in many cases, around the world—before landing within our grasp. But for cocoa farmers in Cote d’Ivoire, the world’s largest cocoa producer, the most challenging part of the journey is often just getting the beans off the farm and down the road to local buyers.
That’s because Ivoirian cocoa cooperatives have long lacked the credit they need to buy new trucks to source greater volumes from farmers in more remote areas. They typically rely on dilapidated vehicles that break down frequently and are expensive to maintain. This hurts their livelihood—and the international supply chain.
But the outlook is improving, thanks to a partnership between IFC and Cargill, Inc.—one of the world’s largest traders and processors of cocoa. With support from IFC, Cargill launched a project in 2016 to make affordable credit available to local farmer cooperatives, enabling them to invest in new trucks. More than 70,000 farmer members from 56 Ivoirian cocoa co-ops, along with their families and communities, have benefitted from the Doni Doni project. (The name means “step-by-step” in the local language.)
Interest rates on the Doni Doni loans are lower than any other commercially available option. They are structured through a facility in which lending risks are jointly shared by Cargill, IFC, and the Société Ivoirienne de Banque (SIB), one of the country’s largest banks.
Doni Doni and the risk-sharing facility, which was created with guidance from IFC, have provided farmer organizations with access to over $4 million in financing, and helped them buy more than 130 new trucks. “The costs that we have saved by not having to repair old trucks will help us pay for the new trucks,” says Sawadogo Moussa of the CINPA co-op.
Prior to joining the Doni Doni program, cocoa co-ops in Cote d’Ivoire faced difficulties in sourcing cocoa from dispersed farms and often incurred high, unpredictable costs due to vehicle equipment maintenance, breakdowns, and repairs. Available funding was limited to short-term, high-interest loans since banks typically consider cocoa cooperatives—with their thin margins and the fluctuation in cocoa prices—too risky to lend to.
Even cooperatives that managed to access commercial bank loans to buy trucks and equipment struggled to cope with high interest rates. By providing them with credit at more favorable terms, Cargill, IFC, and SIB are helping them save money and become more economically viable. The savings also benefit farmers and the local community; a cooperative in eastern Cote d’Ivoire, for example, was able to construct a school for farmers’ children. In addition, the new trucks help improve the environment because they pollute less than the older models that used to be farmers’ only option.
IFC provided advice on the creation of the risk-sharing facility and evaluates its effectiveness on a regular basis. The process begins when farmer cooperatives sign up for Doni Doni, paying 10 percent of the cost of a truck upfront and authorizing Cargill to redirect part of their fee toward a savings fund to cover their monthly payments. SIB offers affordable financing through three-year loans to the cooperatives, which receive banking accounts as part of the program.
The Doni Doni program is a continuation of IFC’s partnership with Cargill. We’ve been working together with the commodities conglomerate since 2013 to introduce cooperatives to business skills programs that are uniquely tailored to the needs of local farmers.
The Cargill Coop Academy offers cooperative members and leaders a 28-day intensive training session on governance, management, and financial and auditing skills. Hands-on support is an important element of the program.
In less than five years, the program has graduated about 350 leaders from close to 80 Ivoirian cocoa cooperatives. Cargill bought 96 percent of its cocoa from participating cooperatives, and close to $16 million has been paid to farmers and farm organizations as premiums through their participation in sustainability certification programs. IFC is a co-investor in the program and has been advising on the curriculum for the Cargill Coop Academy.
A new benchmarking tool to measure and improve professionalism of the cooperatives has been developed by IFC and ScopeInsight, a Dutch agriculture rating company. Global Affairs Canada contributes to the project as a donor to IFC, as well as the Global Agriculture and Food Security Program (GAFSP). The project also receives support from IFC’s Conflict Affected States in Africa Initiative.
Success is inspiring similar ventures. Cargill is transferring the Cote d’Ivoire model to Cameroon and Ghana, where farmers face the same limiting factors. In Cameroon, Cargill and IFC are launching a local version of the Cargill Coop Academy in partnership with Telcar (Cargill’s joint venture partner). During the next four years, this program is expected to train over 50,000 farmers.
Cargill was a finalist at the 2017 IFT/IFC Transformational Business Awards, which took place earlier this year. The awards, managed by The Financial Times and IFC, showcase innovative and commercially viable private sector solutions that help address key development issues and help countries meet the UN Sustainable Development Goals.
Read more about IFC’s work to improve food security and support inclusive development in agriculture at www.ifc.org/agribusiness
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Published in December 2017.