South American cocoa farmers lead the way in ditching cash for digital payments

The world’s largest cocoa and chocolate supplier told ConfectioneryNews that as well as South America, its digital premium payment solutions across West Africa and Indonesia are also improving farmer livelihoods and sustainability, as it addresses one of their main struggles – access to investments in their farms.

In Ecuador, the practice began in 2020 and payments were made annually for the first two years. The early adopters, mostly large-scale farmers, now have more experience and are paid after each delivery, while newer members are paid quarterly. Improving the acceptance of digital premiums over cash is a work in progress, especially among small-scale farmers, but scepticism toward digital payments continues to dwindle.

In Brazil, many cocoa farmers who sell directly to Barry Callebaut have bank accounts to facilitate digital payments. Cocoa premiums are paid within a few hours of delivery. A project to make premium payments through the country’s central bank instant payment system has been initiated to make digital transfers both instant and free for Brazilian cocoa farmers.

The next step in Brazil, the world's fifth largest chocolate-producing and consuming country, is to expand digital payments to farmers and cooperatives who sell their cocoa to Barry Callebaut indirectly. The transition from cash to digital cocoa premiums is laying the groundwork for wholly digital payments to farmers. Collaboration with governments and other stakeholders will help to maximise farmer benefits from their labour and support Barry Callebaut’s efforts to make ‘sustainable chocolate the norm’.

Cocoa Horizons

During the past 12 months, thousands more cocoa farmers within Barry Callebaut’s global supply chain have begun to receive digital cash payments for their beans. Cocoa beans that are part of certified or verified cocoa programme’s such as Rainforest Alliance or Cocoa Horizons generate additional premiums, and these are now paid digitally to farmers.

In Africa, mobile payments increased 39% annually between 2010 and 2020, and the global pandemic made them an even more prominent payment option on the continent.

“Payment digitisation is a key part of Forever Chocolate, our plan to make sustainable chocolate the norm. It supports the financial inclusion of cocoa farmers and secures the traceability and reliability of most cocoa premiums currently paid by our customers. Full transition to digital payments will come in the near future,” said Nicolas Mounard, VP Sustainability and Farming.

Why are digital payments important for sustainable cocoa farming? They are more secure and provide credible records of farmer income. Until recently, cocoa farmers looked forward to their harvests with both excitement and anxiety. Exclusion from formal financial services, limited access to credit, and low financial literacy can result in unpaid bills and lack of income until a cash payment is received. In addition, transporting and delivery of bulk cash payments can be a risky business.

Farming practices

Barry Callebaut said further rolling-out of digital payments is an actionable step towards its goal to lift cocoa farmers out of poverty and supports the professionalisation of farming practices.

“Cocoa farmers have a solid understanding of sustainable agricultural practices, but their main struggle is access to investments in their farms. We focus on providing input support through subsidised soil inputs, planting material, financial support for third-party labour services and additional premiums,” it told CN.

Digital premium payments benefit cocoa farmers by establishing credible income records and accelerating financial inclusion. Such information is vital to enable access to additional finance for farm inputs and equipment

“For women farmers in particular, digital payments provide greater financial autonomy. These payments eliminate the need to spend their income on traveling to major cities for cash payments and securing childcare in their absence. Our digital payment programme has also facilitated thousands of West African farmers to obtain a national ID by working with community and government authorities,” said Barry Callebaut.

“Based on the foundation we have created and procedures we have established, we now aim to significantly scale traceable, digitized premium payments to 100,000 West African farmers within the next two years,” said Olga Gormalova, Barry Callebaut’s Head of Sustainability Africa.