Sustainability creates value and transforms the reality of cocoa producers in Bahia, Brazil
When well executed, corporate sustainability is one of the pieces to solve the global warming puzzle.
The aroma of fermented cocoa is extraordinary as soon as I enter the Dengo Chocolates support center at the district of Travessão, in Bahia, a north eastern state of Brazil. The region is called “cocoa coast” as it has cocoa trees that flourishes under the local environment. Cocoa bags permeate the ambience with citric and nutty notes. It is in this place that I met Fernando Bomfim de Santana, local leader and coordinator.
On that day, Fernando Bomfim de Santana and his wife Lucileide Amparo are taking care of administrative tasks. They are family farmers born in the region and have a small property. Fernando is relaxed, it’s off-season and Bahia’s hot and humid climate is inviting, but the apparent tranquility hides the Brazilian cocoa industry’s history.
Brazil was world’s largest producer and exporter of cocoa until the mid-1920s, but currently ranks seventh. During last century, the cocoa industry at Bahia was one of the most important across all Brazilian economy, generating thousands of jobs. Some cocoa farms were very large, comprised of schools, supermarkets, housing, and full employment. The “cocoa Colonels”, land owners immortalised in several Brazilian romances, had so much wealth that could bring luxury, culture, and people from Europe straight to Ilhéus, the most important city in the region. The theatre, the port and several imposing constructions came from this period, sponsored almost exclusively by the cocoa economy.
How did the cocoa industry implode in Brazil?
Today, the colonels are gone and many of their farms are abandoned due to the end of the cocoa cycle, causing economic and social impact. But how to explain the structural decay of an industry whose commodity has a growing global demand year after year? Three factors explain the collapse:
First, every monoculture plantation is subject to market fluctuations and cocoa was no different, the crash of the New York Stock Exchange in the 1930s led several producers to bankruptcy.
At the same time, Britain began to plant cocoa at the Gold Coast in West Africa, that adapted really well and resulted in an immense production. The African plantation output surpassed Brazil in a short time, and took the world's producer and export leadership position that is kept up to these days. International competition and an ever growing world production outcome brought down the price, causing several Brazilian farms to run a deficit and find it difficult to invest in increasing production.
Finally, the region was impacted by the “witches’ broom” in the 90s, a fungus that attacks cocoa plantations, infecting not only the tree, but also the fruits, that may not develop or cause damage to the husks.
It was the melancholy end of a golden age. To make matters worse, the Brazilian government at the time created an entity to study the witches’ broom and refinance production. One of the requirements for full funding was the attempt to eradicate the fungus through deforestation and reforestation of affected regions. The result was devastating, witches’ broom; besides not eliminating the fungi, it ended up expanding and becoming an endemic problem.
Desolation and discouragement took over the region and thousands of farmers went bankrupt by adhering to the government’s plan. With a huge loan, they cut their cocoa plantations and were left without a source of income and, consequently, ended up going into large debt. Some went insane, others committed suicide, and to this day, the Brazilian government has not refunded the loss of crops to almost any farmer. Social problems began to emerge with the economic deterioration and people emigrated to other regions, making specialized labor scarce.
In 2023 some producers are still there though, with an ecosystem ranging from family farmers with a few hectares of plantations to medium and large farms. The infrastructure created in the last century makes Ilhéus a logistical and processing center for both the internal and imported cocoa.
And the witch’s broom? Fernando answers: “We learned to live with the witch’s broom, nowadays, we all produce with it. We manage and have several controls to minimize the impact. Half of the cocoa is still affected, but with the sale of fine cocoa we get a better price and thus maintain our production”. Fine cocoa is a premium product used only in the best chocolates in the world.
What catapulted the high quality cocoa sales was the creation of Dengo Chocolates. Dengo was born with a different purpose in the conception of bean-to-bar chocolate as a product that can have a great economic, social and environmental impact. Humberto Matos, a producer from the Itacaré region, says:
“We are very grateful to Dengo Chocolates. They are changing the perception of high quality cocoa and giving us better conditions for growing it”
The preservation system that creates opportunities
By investing in quality, not just quantity, producers are able to differentiate themselves in the market and get much better prices. But there are requirements, mainly related to cocoa quality and ESG-governance, social and environmental issues.
Environmental preservation is one of the main areas of opportunities. In order to have a fine cocoa, the plantations are made in "cabruca", an agroforestry system in which native trees are used to create shade across the planted area. The cabruca helps to improve ecosystem resilience by avoiding monoculture farms and strengthens local biodiversity with non-invasive animals and plants. In addition, many of these areas are rewilding and reforesting, which help to absorb and store carbon.
“We are unconscious ecologists. The cabruca are preserved areas that absorb a lot of carbon, but we are not included in the global carbon market”. (Humberto Matos)
Carbon credits have been in increasing international demand in recent years and could help sustain properties. The challenges are not few though: approval to sell carbon credits requires investment and evaluation time, resources that are not always available. The trade-off risk is that preserved cabruca areas that are economically unsustainable may become pasture for cattle.
For family farming, cabruca has another meaning in addition to environmental preservation. There is an ancestral connection. Manoel Francisco de Santana’s family arrived in Bahia around 1949 and established themselves as a cocoa producer. The matriarch of the family, Ozana Maria Bomfim de Santana, still lives on the property and demonstrates an impressive vitality for the tasks of the property. “My whole family was born here and my grandmother was my midwife. It’s not just a plantation, it’s the story of my family,” explains Manoel.
They went through all the cacao decadence and felt abandoned, but they didn’t leave the region and try their luck elsewhere as many did. They decided to stay and plant in cabruca. Not only cocoa, but also other species that could be used in the cosmetics industry.
“Family farming that survived the cocoa’s downfall, learned to diversify its production, thus the cabruca is more than an agroforestry system exclusively to the cocoa, it is also a way to cultivate other native species that have economic value”. (Fernando Bomfim de Santana)
Despite not being original indigenous people, Manoel and his family are what the UN calls “guardians of the forest”. People who have a connection with the land and who are very important for the knowledge they have to collaborate in several of the Sustainable Development Goals, such as eliminating hunger and poverty, preserving land animals, among others.
Due to its individual size, family farming is not always visible, but it accounts for almost 23% of land in Brazil. It has also suffered from constant declines in land occupation, almost 10% between 2006 and 2017, inlcuding an increasingly ageing profile. Part of the problem is the low price paid for commodities leaving producers with a very small profit margin and no possibility to expand or even maintain their production. Another problem is that cocoa has a single price, regardless of its quality, there was no product differentiation.
Dengo chocolates came to change the situation: to meet the demand for fine chocolate, it requires the best cocoa. The best fruit selection takes place already at harvest and continues throughout a careful process across the supply chain. The result is that Dengo is able to pay a much better price.
It’s not just paying more, it’s respecting those who produce
Getting a decent living by selling at premium price point has other benefits. Unlike the low quality commodity levelled at the lowest price and which does not give any importance to who produces, the high quality cocoa rescues the farmers’ self-esteem and pride over their work.
“Dengo made me visible again. I know that my cocoa is special and will be used in the best chocolates” (Manoel Francisco de Santana)
The ancestral connection comes back in the conversation, “I wish my father were alive to see what we are doing today”, Manoel Francisco’s father went through all the cocoa’s decadence and found himself impoverished at the end of his life.
The connection between product and producer is exalted by Dengo: to bring consumers a little closer to cocoa plantation, Dengo places farmer’s pictures in its stores. In addition, they bring farmers to give lectures to consumers at their stores in large urban centres, there is always an interesting exchange of experiences.
In order to bring a cabruca experience to consumers, they created “Dengo Origin”, a model farm where consumers can visit and follow up the entire cocoa cycle, from the cabruca, through fermentation, drying, and chocolate tasting at the end.
The respect for farmers and their work is not random. Holistic sustainability is a fundamental part of Dengo’s strategy. There is the belief that it is possible to achieve economic growth and be profitable, bringing together producers, employees, consumers and the environment by offering a tasty experience.
The author was not paid to write this case and has no benefit at the time of the writing.
Acknowledgment: Dengo chocolates for giving unrestricted access to producers without any interference
