Organic chocolate for the Swiss market : contract farming in the cocoa sector in Honduras

When small-scale farmers in developing countries secure contracts with large
international buyers, they are protecting themselves against certain risks such as
short-term price fluctuations and other market uncertainties. However, there are
certain conditions that must be met to keep all parties satisfied with the commercial
relationship that has been established. There are several agricultural sectors where
contract farming (CF) is less common, including the coffee and cocoa sector. Coffee and cocoa producers in developing countries have arms-length contact with
intermediaries and there are few cases of CF for cocoa. This chapter presents the
case of small-scale cocoa farmers in Honduras, who have been able to establish CF
agreements and a solid commercial relationship with a Swiss buyer.
This example from the field gives a different view as to how farmers can secure
a sustainable income from the relationship established between an international
buyer, which procures directly from them, and other local actors. Partnerships
between the cocoa producers, the private firm and Non-governmental Organizations (NGOs) go beyond a contract; it is in the mutual interest of all parties to
achieve a common goal that keeps all stakeholders committed to the relationship.
A decade ago, most cocoa producers were abandoning their plantations because the
prospects of a sustainable income from cocoa production were so grim. It has since
become a reality for farmers to generate a reasonable livelihood from the income
associated with cocoa production. The interaction among so many different actors
in the sector, because of CF, was crucial in linking these farmers to a Swiss buyer.