Cocoa Production in the Dominican Republic: Sustainability, Challenges and Opportunities Dr Amanda Berlan & Dr Ame Bergés Report of findings commissioned by Green & Black’s October 2013 1 Cocoa Production in the Dominican Republic Cocoa Production in the Dominican Republic: Sustainability, Challenges and Opportunities Dr Amanda Berlan & Dr Ame Bergés Report of findings commissioned by Green & Black’s October 2013 2 3 Cocoa Production in the Dominican Republic Contents Introduction Acknowledgements 6 List of terms 7 Weights and measures – conversions 7 Foreword 8 Executive Summary 10 Chapter 1: Project overview Chapter 5: Incomes 1.1 Background 15 5.1 Background on the National Cocoa Commission 67 1.2 Multidisciplinary approach 16 5.2 Price setting 67 1.3 Representativeness of the study 16 5.3 Producer and export prices 68 1.4 Methodology 17 5.4 Units of measurement used in DR cocoa 73 1.5 Questionnaire sampling procedure 18 5.5 Producer incomes 74 5.6 Cocoa bonuses 76 Chapter 2: The cocoa value chain 5.7 Costs of production 78 2.1 Agriculture in the DR economy 20 5.8 Poverty levels 80 2.2 Organic production in the DR 21 5.9 Debt and cocoa production 81 2.3 Organic cocoa 21 5.10 Agricultural banks 82 2.4 Background on cocoa in the DR 23 5.11 Level of household reliance on cocoa 82 2.5 Cocoa in the DR economy 23 5.12 Income diversification initiatives 84 2.6 Key developments in the DR cocoa industry 24 5.13 Impact of Fairtrade on incomes 85 2.7 Volume and value of DR cocoa exports 26 5.14 Worker incomes 86 2.8 The DR cocoa value chain 28 5.15 Concluding remarks 86 2.9 Rizek Cacao CXA company profile 29 2.10 Conacado company profile 30 Chapter 6: Children and young people in cocoa 2.11 Green & Black’s company profile 31 6.1 Young people and cocoa 88 2.12 Concluding remarks 32 6.2 Impact of producer organisations 90 6.3 Negative associations with cocoa 91 Chapter 3: Producer and worker profiles 6.4 Child labour: background 92 3.1 Age 33 6.5 Child labour in the DR 92 3.2 Gender 33 6.6 Child labour legislative framework 93 3.3 Educational levels 35 6.7 Family labour in cocoa 94 3.4 Household profile 36 6.8 Use of cutting tools 96 3.5 Land tenure 37 6.9 Luis – life story 97 3.6 Hired labour profile 38 6.10 Producer perspectives on child labour 99 3.7 Background on Haitian labour 39 6.11 Child labour and social change 99 3.8 Haitian labour in DR cocoa 40 6.12 Underage hired labour 100 3.9 Labour and human smuggling in DR cocoa 41 6.13 Child trafficking 101 3.10 Tasks performed by workers surveyed 44 6.14 Concluding remarks 101 3.11 Health and safety 45 3.12 Housing 45 Chapter 7: Community needs 3.13 Concluding remarks 46 7.1 Environmental adversity 103 7.2 Roads and flooding 104 Chapter 4: Cocoa production in the DR 7.3 Access to basic services 105 4.1 Background 48 7.4 Needs of young people 105 4.2 Transparency and data collection 50 7.5 School facilities 106 4.3 Traditional and hybrid trees 51 7.6 Concluding remarks 107 4.4 Units of measurement 52 4.5 Production figures for producers sampled 52 Bibliography 112 4.6 Links between productivity and experience, age and education 55 Appendix 114 4.7 Causes of low productivity 57 4.8 Other factors affecting productivity 62 4.9 Natural disasters 63 4.10 Impact of other activities on productivity 64 4.11 Concluding remarks 65 Cocoa pods (Clara Molden/Telegraph) 4 5 Cocoa Production in the Dominican Republic Professionalizing Cocoa Growing in the Dominican Republic The Cocoa Life investment in the Dominican Republic This report presents the findings of a study of cocoa production in the Dominican Republic. The research led by Dr Amanda Berlan on the Dominican Republic cocoa value chain has It expands the body of literature on cocoa production, which is often focused on larger had a significant influence on the strategic direction of the global cocoa sourcing and producing countries in West Africa, and is the result of a successful long-term collaboration sustainability strategies of Mondelez International. It has also formed the basis for the between academia and the private sector. business investment in the Dominican Republic as part of the Cocoa Life program. In the global map of cocoa production, the Dominican Republic has consolidated its The Cocoa Life investment is based on the realization that Mondelez International needs to position as a leading exporter in recent years. It is now increasingly recognized as a producer embed supply chain stewardship as part of our business operations. It involves recognizing of quality, organic and Fairtrade-certified cocoa. This report documents these achievements that the business relies on smallholder farmers who often live a precarious existence and and helps to develop a better understanding of some of the challenges it faces going who operate at the beginning of a long supply chain. forward. This will help enhance the long-term sustainability of the Dominican cocoa sector and has already has paved the way for several important policy interventions. Our work takes a holistic view. Our programs are farmer centered and identify the need to not only improve the productivity of the key crop but also the need improve livelihoods Owing to institutional delays and to my maternity leave in 2011-2012, the time period through knowledge transfer systems, and community development. We also know that we from the inception of the study to the publication of this report has spanned a number of can’t tackle these problems alone and working in partnership with government and non- years during which considerable changes have taken place in the chocolate industry. One government experts is core to our approach. of the most significant of these has been the acquisition of Green & Black’s (already owned by Cadbury) by Kraft Foods, and their subsequent creation of Mondelez International, its Our aim is to professionalize cocoa growing and to demonstrate that cocoa farming can global confectionery arm. However, amid all the changes, it remains clear that sustainability be a profitable business for the next generation of cocoa farmers. must remain an imperative of future policy in the cocoa industry not only in the Dominican Republic but globally. We are actively addressing the key areas raised within the report: It has been a privilege for me to lead this study and I hope that readers from commercial, – For example there are 1,200 one hectare demonstration plots that show farmers the academic and policy backgrounds alike will find this report useful in their work and in benefits of tree management techniques in improving their cocoa productivity. These shaping their thinking on sustainability. are key in our farmer training approach to develop improved livelihoods from cocoa. – On a broader basis we are developing a number of community development It is with great sadness that I learnt in November 2012 that José Ricardo Roques Ortiz, my projects which include water provision; community access to computer technology collaborator in the Dominican Republic, had passed away so this report is dedicated to him. and information. – We are also looking to the future. We are developing an innovative approach to Amanda Berlan respecting and caring for the environment, which includes the involvement of Senior Lecturer in Ethical Business cocoa farmers in a Payment for Ecosystem Services Review. We hope this will Coventry University lead to new income streams for farmers. Our goal is to provide a sustainable legacy for future cocoa growing communities. I would like to thank Amanda Berlan and her team for providing these forward looking insights which are driving the future investment in cocoa sustainability in the Dominican Republic. Neil la Croix Director of Sustainable Supply Chains Mondelez International 6 7 Cocoa Production in the Dominican Republic Introduction Acknowledgements List of terms This project would not have been possible without the support, advice, cooperation Please note: For simplicity and readability, names/acronyms in capital letters such as FUPAROCA and and expertise of many individuals and organisations. We would like to thank all of CONACADO, have been changed to lower case with a capital first letter. Throughout the English version these for their contribution. In no particular order, special thanks go to: of the report the names of regions have also been anglicised (e.g. North-East for Nordeste). List of abbreviations and acronyms – all the farmers, their wives, workers, children and communities – Gilles Roche from La Cherelle for kindly agreeing to share who took part in the research, including the teachers and and discuss his work on cocoa CP Cocoa Partnership members of different voluntary associations – the research team led by José Ricardo Roques Ortiz, which CEDAF Centro Para el Desarrollo Agropecuario y Forestal – Conacado, and especially Miguel Mendoza, Isidoro de la included José Eligio Peralta, Pauline Kulstad, Myledis Restituyo CEI-RD Centre for Exports and Investment in the DR Rosa, Abel Fernández, Basilio Almonte and all the cocoa and Franklyn Ortega. Special thanks go to Pauline Kulstad for technicians in different regions who all provided much also providing first-rate support and translation assistance COE Centro de Operaciones de Emergencia de la República Dominicana valued assistance throughout the research. Special thanks during follow-up research (Centre of Emergency Operations of the Dominican Republic) are also extended to Isidoro de la Rosa and Abel Fernández CONACADO Confederación Nacional de Cacaocultores Dominicanos for reviewing the final draft of the report and offering many – Jo Saunders for assistance with translation in the UK FLO Fairtrade Labelling Organizations insightful and useful comments.