Carbon offset mechanisms are increasingly being criticized in the media[1]. Some of this criticism is justified and can contribute to greater rigour in the design, implementation and verification of these projects’ impacts. However, we must ensure that we do not end up with the opposite effect: making it impossible to invest in carbon projects that generate not only climate impact, but also wider environmental and social impacts, particularly projects implemented with the most vulnerable populations in developing countries. Bernard Giraud, Co-founder and President of Livelihoods Venture shares his concerns and calls for decision at COP28.

The Livelihoods Funds have been developed to meet a dual need: on the one hand, the need of companies that have set ambitious targets to reduce the carbon impact in their value chain but also to make a positive contribution to generating social and environmental impact by financing projects beyond their businesses’ scope. On the other hand, the need of supporting rural communities whose livelihoods depend heavily on natural ecosystems and resources.

Since the Livelihoods Funds were launched in 2011, the so-called “nature-based solutions” have enabled hundreds of thousands of farmers and their families to restore degraded ecosystems, learn productive and sustainable farming practices, regenerate soils and protect forests and water resources. In doing so, the funds have made it possible to store millions of tonnes of CO₂ removed from the atmosphere or to reduce carbon emissions.

It’s not enough, but it’s not negligible either. IPCC experts (the Intergovernmental Panel on Climate Change) and the negotiators of the UN Climate Conventions have continually emphasized the importance of protecting and regenerating the ‘carbon sinks’ that are ecosystems to achieve the goals of the Paris Agreement.

Not all carbon projects are equal

Are these projects perfect? Is carbon financing the solution to every problem? Certainly not. Several recent publications have pointed to highly questionable carbon projects. Some so-called avoided deforestation (REDD+) projects[2] have not led to the expected impacts. Some players in the carbon markets, motivated mainly by financial interests, have implemented practices that are open to criticism and, in several cases, are unacceptable. These criticisms are useful if they help to clean up and regulate a market that is still young and poorly structured.  Recent initiatives such as The Integrity Council for Voluntary Carbon Markets (ICVCM)[3] can address the need to provide a much more robust framework for the production of carbon credits and the projects that generate them.

But we must be cautious. The widespread image conveyed by some external audiences is that all carbon offset projects are at best ‘greenwashing’ and at worst a way to extort money from vulnerable populations. This view is as false as asserting that all drivers are reckless or all taxpayers are fraudsters because a minority exhibit condemnable behavior. It is necessary to separate the wheat from the chaff, and not to condemn wholesale a financing model that can in fact be virtuous.

Not all carbon projects are the same in terms of aims, costs and impacts: financing the planting of single-species trees over thousands of hectares in a forest concession and helping several thousand small farmers to implement a diversified agroforestry model that will reduce erosion, restore soil organic matter and generate income are both “carbon sinks”. But their social and ecological impacts are completely different, as is the complexity of their implementation.

Carbon investments in high impact projects should be strongly encouraged   

Livelihoods funds pre-finance large-scale projects over a twenty-year period. These projects are co-designed with local partners who are firmly rooted in local realities, most frequently NGOs, and implemented by these partners with local rural communities. None of these projects have the sole aim of producing carbon credits. They all aim to generate sustainable ecological and social impacts.

The companies that have invested in our funds are taking the risk of financing these projects in contexts that are often difficult, whether due to climatic or political reasons. These risks are real and have already materialized: they range from droughts, cyclones, to civil wars, etc. In return, investors in our funds receive carbon credits at their production cost. The Livelihoods carbon finance model as practiced with our investors is not financial speculation on hypothetical future carbon market prices. It is long-term investment by companies to create “green infrastructure” that helps improve the lives of communities who most often live off a very low income.

Instead of rejecting carbon financing out of hand, we should be encouraging companies to make greater commitments to support projects with high environmental and social value by creating a framework that facilitates and secures these investments.

Growing bureaucracy is complicating action on the ground

Obviously, we can and must improve the methods and techniques for measuring carbon that were introduced a few years ago. Scientific knowledge and new technologies have come a long way and must be mobilised to improve accuracy and reduce costs. In response to the criticism they have faced, carbon standards have embarked on revising their principles and the methodologies for measuring and certifying carbon credits. This revision is necessary, but it must take into account the realities on the ground and the specific features of projects implemented with the most vulnerable populations. Like other funds or organizations implementing nature-based solutions, we are facing a trend that concerns us: an increasingly bureaucratic approach with standards being set, often with little consultation, by multiple teams with little or no practical experience of the field realities of these projects.

The increasing complexity of the rules and procedures risks making it impossible to invest in projects involving thousands of small producers, which are already complex by their very nature. The difficulty these standards face in meeting deadlines for publishing new norms increases the uncertainty. Also, some practices are particularly unacceptable, such as changing the carbon methodology for projects that have been registered for several years under the same standards. It’s like changing the rules of football in the middle of a match.

Carbon standards should take into account the field realities

The effect of these trends and changes is not only to make projects more complex, but also to sharply increase costs and the “non-productive” part of budgets. By this we mean all the expenditure that goes to consultants, verifiers and auditors as well as registration costs, and not to small producers and local communities. The budgets devoted to measurement and certification efforts are already very substantial. It is important to maintain an acceptable ratio between the proportion of the investment that finances the project itself and the proportion that finances the measurement and certification activities.

It is equally important to set the requirements at the right level for each category of project. For example, the latest version of the Verra Standard requires stakeholders to be committed to project results for a period of 40 years. This requirement can be met in the case of large-scale industrial plantation projects in concessions. But how can the same commitment be demanded of small-scale farmers, whose 40-year commitment spans up to three generations? How to ask the grandchildren of the farmer with whom the project was launched to respect, under penalty of sanction, the commitments made by their grandparents in a world that was not the same?

At Livelihoods, we believe that the bulk of carbon financing should go to on-the-ground actions, and a balance must be struck so that certification processes and costs continue to fund projects that truly contribute to transformation. If this is not the case, we will collectively need to find other means of certifying our projects.

Urgent need for clear rules at country level

Another element of uncertainty for long-term private investors in carbon funds such as the Livelihoods Funds is the difficulty in obtaining clearer rules from governments regarding carbon rights.  In application of the Paris Agreements, and in particular Article 6 (and 6.4) [4], each State is required to lay down the regulations applying to carbon projects: which projects are accepted in which activities and on which parts of the territory? Do they contribute to the country’s Nationally Determined Contributions (NDCs)[5]? What apply if carbon credits are transferred to other countries? Some countries have published their regulations, but in most of them, these rules have still not been published.

With this in mind, COP28 begins in Dubai, and we feel it is important for the monitoring body under Article 6.4 to propose concrete measures and guidelines to move forward on this issue. They have already met several times this year, but no legal framework has been adopted. As a result, high hopes have been placed on the review of policies during COP28, which could provide a platform for global carbon markets and facilitate understanding of emissions trading schemes.

Livelihoods’ call to COP28

At COP28, we believe it is important for various parties to come together to call on private and public players to take action and exchange information on the carbon market and also on sustainable policies.  In addition, the conference will serve as a driving force for the adoption of concrete measures such as:

• Clearly assert the priority of nature-based carbon projects with a high environmental and social impact. 
• create favourable conditions for investment in these projects;
• Recognise the specific nature of projects implemented with populations that are among the most vulnerable to climate change, and adapt the level of requirements for standards;
• Improve the measurement and certification processes, taking into account the complexity and constraints specific to these projects;
• Ensure a good balance between investment in the project itself and the costs of the measurement and certification processes.

In summary, carbon finance mechanisms can be useful contributors to sustainable development. They need improvement, but care must be taken not to hinder them with constraints that make investment in high-impact projects very difficult.

Bernard Giraud, Co-Founder & President of Livelihoods Venture

To date, the Livelihoods Funds have contributed to plant 148 million trees, to capture or reduce 4.3 MTCO2, restore or rehabilitate 38,000 hectares of natural ecosystems rich in biodiversity (such as mangroves or forests) and convert 50,800 hectares to sustainable agricultural practices. Overall, Livelihoods projects are contributing to improve the living conditions of 1.8 million people, worldwide.

[1] Example: https://www.theguardian.com/environment/2023/jan/18/revealed-forest-carbon-offsets-biggest-provider-worthless-verra-aoe

[2] Reducing emissions from deforestation and forest degradation in developing countries. The ‘+’ stands for additional forest-related activities that protect the climate, namely sustainable management of forests and the conservation and enhancement of forest carbon stocks. Source: https://unfccc.int/topics/land-use/workstreams/redd/what-is-redd

[3] The Integrity Council for the Voluntary Carbon Market (Integrity Council) is an independent governance body for the voluntary carbon market. Learn more: https://icvcm.org/about-the-integrity-council/ 

[4] The article 6 is the Paris Agreement’s rulebook governing carbon markets, while the article 6.4 establishes a mechanism for trading GHG emission reductions between countries under the supervision of the Conference of Parties – the decision-making body of the UN Framework Convention on Climate Change.

[5] Nationally determined contributions (NDCs) are at the heart of the Paris Agreement and the achievement of its long-term goals. NDCs embody efforts by each country to reduce national emissions and adapt to the impacts of climate change. Source: https://unfccc.int/process-and-meetings/the-paris-agreement/nationally-determined-contributions-ndcs

With the ambition to reverse this poverty cycle, the Livelihoods fund for Family Farming (L3F) has partnered with actors of the private and public sector, involved at every step of the value chain. Their joint ambition? Support 2,700 vanilla smallholders over 10 years to produce high-quality vanilla, increase farmer income and preserve the farms’ surrounding natural ecosystems. An ambition brought into action by local NGO Fanamby, an experienced organisation working in conservation with vanilla farmers. All partner investors of Livelihoods, Danone, Mars and Firmenich have committed to purchase the project’s vanilla production over 10 years.

What has changed for the farmers 6 years later? Has their income improved alongside with vanilla quality and volume? What is the impact of the project on the local natural ecosystems? Livelihoods is publishing a video of the project with testimonies from farmers showing what has changed for their livelihoods and environment to date and what are their hopes for the future (link to the video).

“We had a lot of vanilla plants, but the production was random. In fact, I used to grow vanilla, without knowing where I was going. I knew we could make money with vanilla, but I did not know how to do it”. Raphael Théogène, vanilla farmer in Madagascar

Livelihoods’ vanilla project at a glance

Increase farm productivity through efficient & improved agricultural practices

The first initiative of the project was to help farmers increase the size of their vanilla fields and yields thanks to an adapted agroforestry model. On the one hand, smallholders were provided with new vanilla vines coming from project nurseries and selected partners. On the other hand, farmers were provided with specific trainings to acquire the technical skills that producing high-quality vanilla requires. All farmers entered a training cycle based on three major steps to increase yields and quality: they were trained on pollination (they learned how to pollinate the right number of flowers to reach the longest possible pods), field management (farmers acquired the skills to maintain their fields clean as vanilla vines are highly sensitive to surrounding plants, weeds, and soil coverage) and collection process. These activities were designed so that more women and youth can be integrated in vanilla production than would have been the case in the absence of the project.

To date, all 2,700 farmers involved in the project have received trainings to adopt regenerative agricultural practices, including 550 women. Thanks to the 300,000 vanilla vines distributed to the farmers and the trainings they received, the volumes of green vanilla produced have been multiplied by 3 in average since the project launch. Volumes will continue to grow as recently planted vines are starting to produce, thus generating more income, the objective is to multiply the production by 5 from 2022 to 2027.

A farmer-owned company to create a direct link between farmers and the market

A key lever activated by the project to support farmer income was to help the farmers directly access the market (most of the Malagasy vanilla production is exported). “Tambatra”, is the farmer-owned company that has been structured by the project partners, to remove intermediaries and help farmers earn more out of their production. 20 farmer associations have been created to date: each one of the associations located in the villages Manompana, Antanifotsy, Ambodiampana and Fotsialanana is responsible to collect green vanilla beans and pay the farmers directly. A newly created preparation unit is responsible for the preparation and export of vanilla produced by the smallholders. This structure receives the green vanilla produced by the farmers and ensures the curing process (the green beans are cleaned, sorted, dried, and graded for their quality – this curing process takes up to 6 months).

Coming along with a commercial structure, Tambatra is ensuring full traceability of vanilla, from farm to industry and evaluates the quality before export. The financial margin of cured vanilla sales goes back to the farmers and the community with direct distribution, contributing to increase their revenues and indirect distribution such as extension of vines nursery, investments in the company, access to subsidized rice and agronomic support to farmers and organizational support to associations.

A 10-year purchasing commitment & a floor price to limit the impact of market collapse

The vanilla industry in Madagascar has historically been exposed to strong price fluctuations. Since the project launch in 2017, the vanilla price has dropped by 3.5, after having increased in the previous years. To protect farmers of the project, all partners involved have decided to apply a floor price for the green vanilla produced. Convinced that the structuring of the supply chain takes long-term efforts, Mars (well-known American brand for food, confectionary and pet care products), Danone (major French food brand) and Firmenich (the world’s largest privately owned perfume and flavor company) have committed to purchase 100% of the vanilla produced by the project farmers over 10 years.

To transform the project into a resilient, long-term supply chain, Tambatra, with Livelihoods support, will need to engage and re-engage buyers over the long term to purchase this high social and ecological value vanilla. This is a key element for the sustainability of this farm-owned company.

Diversifying crops to support food security

With vanilla accounting for 40% of the farmer households’ income, the project is now integrating new food crops to support farm diversification and contribute to food security. Although food security remains a challenge in the project area and Madagascar in general, women farmer groups in the project area are now managing kitchen gardens to contribute to reduce malnutrition. They grow various vegetables to feed their families or to be sold to the local markets to support household income.

Food diversification is also part of the training programme addressed to the young generation of farmers. In partnership with Maisons Familiales Rurales, a local educational NGO,  the project has opened a training centre dedicated to preparing young farmers for vanilla production but also for new farming activities such as crop diversification, clove production or poultry farming. In December 2021, the training centre celebrated its first graduates.

Within the project activities, a farming school was opened to prepare the young generation of vanilla farmers.

Politina Rasoamalala is a young graduate of the project’s training centre.

Preserving 2,700 hectares of local biodiversity in Pointe à Larrée protected area

From technical skills to produce more and better-quality vanilla, to vine distribution, crop diversification efforts and a new, committed supply chain to link the farmers directly to the market, the project has activated a range of levers to support farmer income. Alongside these efforts, comes a core initiative of the project, which is to preserve 2,700 hectares of biodiversity in Pointe à Larrée, a natural protected area located around the district of Soanierana Ivongo.

The project is putting in place a community-based governance to manage conservation activities, apply biodiversity protection laws, and plant native tree species to prevent the area from natural disasters. With smallholders earning more out of their own farms, the incentive to be involved into destructive activities in the forest is decreasing. Watch at the project’s video and have a glance at impressive Pointe à Larrée, which is also lemurs’ natural habitat.

JOIN THE WEBINAR ON APRIL 4th

On April 4^th, at 13H00-15H00 CET, we are holding an unprecedented webinar to answer the question:  “Can we improve farmer income while preserving nature?” We will share the key learnings, analyse the success factors we are observing to date (6 years after the projects’ launch), but also the challenges that come along with transforming supply chains at scale. The webinar will focus on Livelihoods’ 10-year coconut project in the Philippines, and vanilla project in Madagascar. We will give the floor to our local partners, representatives from the private and the public sector, who act daily to sustainably transform both supply chains.

[1] Madagascar produced 3,070 tons of vanilla in 2021 according to the Food & Agriculture Organization

Growing on the coconut palm tree in the tropics, coconut fruit is a consumer favourite. Eaten fresh or dried, it is also processed into coconut milk, while coconut oil is widely used in the food, cosmetics, soaps, and detergents industries. Coconut water is also enjoyed in many beverages. No wonder the coconut palm is known as the “tree of life”. Yet, in the Philippines, the second largest producer in the world, most smallholders are left out of this success. Back in 2018, around 50% of Filipino coconut farmers, lived with less than 2 USD a day. With the commitment of food brands Mars and Danone, Livelihoods launched an ambitious 10-year project to help farmers reach a decent living income. The project takes place in Mindanao Island with 6,000 independent smallholders and is implemented by local NGO IRDF (Integrated Rural Development Foundation).

Planting new trees in ageing plots, adopting regenerative agricultural practices to increase productivity on the whole farm (enhancing and diversifying farm production), valorising the coconut husks, creating cooperatives to access markets at better price, are the key levers activated by the project to address improved farmer income with nature preservation.

5 years later, where is the transition to resilient coconut farming at? Do smallholders earn enough to meet their families’ needs? Have they managed to increase farm productivity while preserving soil health? Here are the main levers activated by the project to improve farmer income and their main results to date.

Livelihoods’ coconut project in a nutshell

At farm level: increase land productivity & restore soil health

In the rural provinces of Davao del Sur and North Cotabato in Mindanao Island, where Livelihoods project is being implemented, 80% of coconut farmers are smallholders with less than  2 hectares of land. Decades of monocropping and intense farming (food and cash crops) had led to degraded soil fertility. The farm’s productivity was further affected by ageing coconut trees which bear less fruit: 30% of project’s area trees were over 50 years old and thus entering a declining phase.

The first lever activated by Livelihoods coconut project, was to help farmers increase their coconut farms’ productivity. For this, replanting activities were led in the necessary areas, as well as mulching activities (for which coconut farmers received specific technical skills) to help boost soil fertility and keep organic matter in the soil, especially during the dry season.

Farmer households involved in the project received specific coaching, trainings, and access to affordable labour (via farmer groups) to reinvest in their coconut farms. They were trained on regenerative agricultural practices to boost the soil’s natural fertility and therefore their farms’ productivity. 5 years after the project launch, productivity has increased by 50% in farms that have adopted mulching and regenerative agricultural practices.

Improve market connexion to increase coconut farmer income

At market level, coconut smallholders in Mindanao suffered from a scattered supply chain with many intermediaries and low farmer gate prices. With poor visibility on market’s demand and end users, farmers were highly dependent on cash advances and traders, thus discouraging them from investing in their coconut production which they perceived as a secondary source of income. Livelihoods’ project made it a priority to structure a transparent supply chain with direct sourcing from committed factories to help the farmers make the most out of their coconut farms. This required for the Livelihoods Fund for Family Farming (L3F) to structure a new supply chain involving private and public actors at every step of the value chain. L3F is financing the project activities on the one hand (farmer technical assistance on regenerative agriculture practices, replanting…), local project implementer IRDF leverages its expertise and experience working locally with coconut smallholders, while Mars and Danone, both Livelihoods’ partner investors have committed to source coconut from the project for 10 years.

Within the villages, farmer associations were first created to organise the harvest campaigns, anticipate volumes, and prepare the logistics for delivery. These units are also in charge of transporting the coconuts from the farms to specific collection points in the villages. Farmer-owned cooperatives were also structured to ensure the link between the village collection points and delivery of the volumes to a committed supplier – Franklin Baker in turn sells the processed coconut to Mars and Danone via its local factories.

A transparent price mechanism has also been defined to give more visibility to farmers and Franklin Baker and thus ensure the long-term stability of the supply chain. By selling their coconuts directly to Franklin Baker, farmers gain a better share of the product’s market value. Further commitment from Mars and Danone on supported coconut price, helped secure a more comfortable income to the project farmer beneficiaries, who are therefore protected from market price fluctuations.

Today, the project has created 15 farmer associations who deliver high quality coconuts directly to Franklin Baker and with a transparent price formula. More than 34,000 tons of coconuts have already been delivered and farmers sell at a higher price (10% more, compared to traditional local traders).

Integrating new crops and farm activities to diversify the sources of income

With coconut accounting for 20% of farmer income in the project area and being harvested every two to three months, another lever activated by Livelihoods and its partners was to diversify farmers’ sources of income. Thanks to the close coordination of local NGO IRDF who supports the farmers to better manage their whole farm, smallholders were trained to integrate crops between the coconut trees on their farm and sell them to local & international markets. Smaller trees that thrive under the shade of coconut trees were planted: bananas, cocoa, fruit trees and even ornamental flowers. At ground level: short-term food or cash crops like sweet potatoes, vegetables as both food and cash, were also integrated via specific women empowerment programs. These are being used to increase the households’ food security but also to be sold at the local village sale points for cash crop.

Today, one farm out of three, involved in the project, is now harvesting, and selling intercrops. These new crops are also contributing to increasing soil fertility and therefore the overall farm’s productivity.  Some farmers have also integrated livestock and poultry in their coconut farms.

Listen to the testimony below of a coconut woman farmer who has succeeded to diversify her sources of income thanks to cocoa and banana:

On farm diversification, the project is going one step further with valorising via village units the coconut husks to create new by-products. While coconut husks were previously considered as farm waste and burned or left rotten in the plots, today, in parts of the project area, coconut husks are transformed into coconut coir, which is later used as basic material to design twines, nets, rolls or mats for horticulture and construction sites for international markets. To date, one husk valorisation training centre linked to an international operator is in place in the project area. In this activity, women and the youth from coconut villages are particularly involved, thus boosting their entrepreneurial skills.

Preserving soil and natural resources thanks to regenerative agricultural practices

All farmers involved in the project are trained to apply regenerative agricultural practices on their coconut farms to boost organic matter in the soil and avoid further nature degradation. To date, 4,500 farmers including 2,000 women have been trained on regenerative agriculture.

What is more, the smallholders are trained to apply organic compost by using animal manure and other farm residues. Overall, the mulching activities applied on the farms is helping maintain the soils organic matter. The coconut trees generate great quantities of residues (leaves and husks): the farmers have been trained to use these residues and mulch the soil around the coconut palms and thus help maintain soil humidity around the roots.

In 2022, the project reached a turning point: organic coconuts processed for Danone are now 100% sourced by certified farmers involved in the project with traced commercial flows. More 4,000 metric tons of organic coconuts have now been produced.

Join our webinar on April 4th!

Do you want to learn more about farmer income? Join our webinar on April 4^th, 13H00-15H00 CET during which we will tackle the topic “Can we improve farmer income while preserving nature?”

We will share the key learnings, analyse the success factors and challenges that come along with transforming supply chains at scale. The webinar will focus on Livelihoods’ 10-year coconut project in the Philippines, and 10-year vanilla project in Madagascar. We will give the floor to our local partners who, are acting daily on the ground to support smallholders and nature resilience.

A decade. That is how long all of humanity has, to find solutions that will avoid the devastating impacts of a climate breakdown. Recent debates in the voluntary carbon market which set carbon emissions removal (taking Greenhouse Gas emissions out of the atmosphere thanks to trees for example) as more efficient than avoidance (reducing emissions from a business-as-usual scenario), are now evolving. In the urge to combat the climate crisis, the Science Based Targets initiative (SBTi) [1] which accompanies more than 4,000 businesses and financial institutions to reduce their emissions in line with climate science, is now encouraging all corporates for immediate action, beyond reduction efforts made within their value chains. Efficient cookstoves projects that contribute to fight deforestation are one of many concrete contributions to limit global warming to 1.5°C.

At Livelihoods, in addition to many removal reforestation, agroforestry or regenerative agriculture projects, we have invested in equipping rural households with efficient stoves that improve health and reduce deforestation and forest degradation for the past 10 years.  Because the reality is that people in rural areas of emerging economies depend on wood or charcoal to cook their food. And that noxious smokes from traditional, inefficient stoves kill close to 4 million people [2] each year.

Is it more impactful to provide access to higher tech cookstoves such as gas or electricity to 10% of rural families who can afford it? Or to equip 90% of them with clean stoves that reduce wood consumption by up to 60%? Is it more sustainable to plant a new tree or to avoid cutting one? With reality certainly lying somewhere in between, we have one conviction: clean stoves technologies must be adapted to the local contexts and provide local communities with new economic opportunities in addition to preserving health & forests.

Many rural families still depend on forests to feed their families

In rural areas in most developing countries, people still strongly depend on solid fuels such as wood and charcoal, to cook their food. A total of 2.6 billion of them depend on food that is cooked over open “three stones” fires, or inefficient stoves that put a growing pressure on remaining forests and woodlots. In rural Kenya for example, a household consumes in average between 5 and 12 kg of wood per day [1], which is a large but necessary quantity when using traditional cooking methods. Women spend several hard-working hours a day to fetch wood in the surrounding environments which might be natural reserves, forests, or parks, and which are at several kilometers of walking distance. They come back to their village carrying around 20 kilos of wood, when and if wood is available. In other areas, such as in the northern villages of Senegal, at times women come back with no wood at all, due to a strong level of deforestation.

Inefficient cooking damages forests & the climate…

It is an illusion to believe that alternative solutions such as gas or electricity will be accessible to most rural families anytime soon. In many African countries where cities are growing fast due to strong demographic pressure, wood remains an essential source of energy and its demand has increased steadily over the past 30 years. Firewood represents the bulk of household energy consumption. With gas or electricity being accessible only when subsidized by the government, wood remains by far the most widely used source of energy in most sub-Saharan African countries. In fact, the demand for wood as fuel accounts for nearly half the trees removed from the world’s forests [4] and more than three quarters in Africa and Asia.

Beyond putting pressure on forests, traditional, open fires are inefficient, because the wood or other solid fuels such as charcoal, crop residue or dung, does not burn efficiently, and toxic smokes are emitted. These toxic smokes include greenhouse gases such as carbon dioxide (CO₂),and other air pollutants such as black carbon. Commonly known as soot, black carbon is the second largest contributor to climate change after CO₂.

… and cause 4 million premature deaths, yearly

Inefficient stoves also expose the whole household to air pollution, as the thin particles of the black carbon and other toxic gases can easily find their way deep into lungs and the bloodstream. The inhalation of such particles causes diseases such as childhood pneumonia, chronic obstructive pulmonary disorder, heart disease, stroke, and lung cancer. And the numbers are alarming: every year, up to 4 million premature deaths worldwide are caused by household air pollution from inefficient cooking, lighting, and heating.

Exposure to household air pollution also directly affects pregnant women and their infants. According to the Clean Cooking Alliance [5] when pregnant women are exposed to household toxic smokes, their infants are at increased risk for stillbirth, low birth weight and decreased lung function. In sub-Saharan Africa and Asia, 450,000 children under 5 years old die prematurely, each year.

Clean stoves can save lives & trees

In the past few decades, it has been proven that clean stoves have a direct positive impact on women’s and their households’ health, as they reduce the emission of toxic smokes significantly. The Clean Cooking Alliance mentions proven health improvements such as: reduced severe pneumonia cases in young children, reduced duration of respiratory infections in children, lower blood pressure in pregnant women, increased weights, and gestational age at birth [6].

Livelihoods’ experience on the ground shows that efficient stoves help reduce firewood consumption for domestical use by up to 60%, a critical point especially in areas which are suffering from desertification. One of Livelihoods projects implemented in Kenya is located around Mount Kenya, Africa’s second highest peak which culminates at 5,200 meters. This mountainous region is a key watershed not only for the population living around it, but for the whole country and East Africa. Thanks to the project’s efficient cookstoves, there is less pressure on the national park protecting the highest area of the mountains, farmers harvest and collect less trees in their farm or the environment, and this contributes to reduced soil erosion.

Implemented across Embu County since 2014 and Tharaka Nithi County since 2019, Livelihoods-Hifadhi project in Kenya is meeting great success as rural families have embraced clean stoves. 120,000 households have been equipped so far, which impacts positively over 500,000 people. To date, the efficient stoves distributed have helped save more than the equivalent of 60,000 trees per year [7].

When a family registers to the project, not only do they receive a clean stove, but they are trained on its use and maintenance, as well as on cooking practices and basic nutrition aspects. In addition, all families are provided with tree seedlings to plant in their farm or close by. A total of 360, 000 trees have been planted thanks to the project to date, the equivalent to 450 hectares of forest.

In the very dry area of North Burkina Faso where wood is scarce, the efficient stoves distributed within Livelihoods-Tiipaalga project to 30,000 households are saving more than 45,000 trees per year and reduce wood consumption for domestic use by 60% as well.

There is no “one-size-fits-all” technology: the type of clean stoves must be adapted to the local contexts

Equipping rural families with clean stoves is one thing. But adapting the right type of technology and/or material to the local realities, such as family level of income is a whole different one. Livelihoods is supporting more than 300,000 households across Peru, Burkina Faso, Kenya, Malawi, and Nepal. But the clean stoves are always produced locally in these countries and generate jobs for the communities who benefit from them.

In Burkina Faso, a model adapted to strong poverty levels

In 2014, together with local NGO Tiipaalga, Livelihoods launched a 10-year initiative in Burkina Faso to equip 30,000 rural families with efficient stoves. In this part of the world which highly suffers from poverty especially during the dry season, the stoves are made from locally sourced ingredients such as manure, straw, water, and clay. These are easily accessible to rural households and for free. Thanks to Tiipaalga NGO’s field teams, the stoves are perfectly adapted to the local context: they reduce wood consumption by 60% in this arid region where desertification is accelerating and reduce toxic smokes emissions.

In the provinces of Bam and Loroum, where Livelihoods project is located, women often cook for an extended family of 10-15 people. Therefore, several cookstoves have been built, one close to another and painted by their own hands. The stoves are set outside their homes which are therefore protected from smokes.

What is more, rural families are trained to build their own stoves and distribute them in the villages, thus contributing to job creation. As the cookstoves consume less wood, families spend less money to buy fuelwood and can therefore use this money to sustain other household needs. Households save from 50 to 100 euros per year, which they used to purchase fuelwood in the past.

Villagers building an efficient stove with local material in Burkina Faso

In Kenya, Nepal, and Malawi, stoves create jobs

Across Kenya, Nepal and Malawi, the clean stoves selected by Livelihoods to be distributed to the rural families are all built by local small enterprises and/or craftsmen. Over the past 10 years, in Embu County, Kenya, Livelihoods has been supporting 120,000 families with efficient stoves which are mostly made from locally sourced metal and ceramic materials. The project and the stoves themselves are called “Hifadhi”, which means “to preserve” in local language Swahili. They are highly energy-efficient because of a ceramic liner that improves combustion and retains heat longer while cooking. The use of efficient stoves has a positive impact on beneficiaries’ health as they are less exposed to toxic smokes. The stoves also generate jobs related to stoves distribution and maintenance or replacement when they need to be renewed.

Local stoves ambassadors are in charge of promoting and selling the stoves. They are responsible for the training of the users and to make sure stoves remain functional. A total of around 150 direct and indirect jobs have therefore been created and 150 more shall be generated for the 10 coming years of the project. Plus, a recent field audit conducted in the project area highlighted that 80% of the ambassadors and 72% of the artisans are female.

In Malawi, 270 jobs will also be directly created or sustained for the distribution of a total of 60,000 efficient cookstoves in the villages. Whereas in Nepal, a recently launched project with local NGO Practical Action, will generate more than 450 direct and indirect jobs for the distribution of 75,000 efficient stoves.

Overall, in all geographies where Livelihoods operates with local partners, women’s everyday life is significantly improved. As less wood is needed for cooking, women save around 2 to 3 hours per day on wood collecting activities and/or save money on purchasing firewood. They can therefore spend more time on other activities while their children (often their daughters) have more time to go to school.

What does it take to implement clean stoves projects?

3. Strong commitment from our local partners, despite complex political contexts

At times, these last mile distribution activities come with tremendous efforts in complex political times. In the terrible context of jihadist attacks which have been terrorising the country since 2015 and the north of Burkina Faso (where the project is being implemented) since 2018, Tiipaalga teams have been acting with courage and tenacity to pursue project activities. Avoiding zones at too much risk, keeping contact with the locals in Bam and Loroum and supporting their teams, they made the best efforts to keep the project going.

[1] The Science Based Targets initiative was launched in 2015 by the CDP (Carbon Disclosure Project), the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF). Its goal is to help companies set carbon emissions reduction targets in line with evidence brought by climate science. After focusing on “Corporate Net-Zero” initiatives (within each company’s value chain), in September 2022 the Standard urged companies to take immediate action beyond their value chains and support activities that avoid/reduce or remove carbon emissions. More about the SBTi which has established itself as an authoritative voice and a reference in the climate sector: https://sciencebasedtargets.org/

[2] Source: World Health Organization, 2018: https://www.who.int/news-room/fact-sheets/detail/household-air-pollution-and-health

[3] Climate Pal (EcoAct): https://forestindustries.eu/content/clean-cook-stoves-promote-sustainability-local-resources

[4] Source: https://europa.eu/capacity4dev/articles/replacing-traditional-cooking-stoves-gas-stoves-transforming-lives

|5] The Clean Cooking Alliance is a non-profit organization which operates with the support of the United Nations to promote clean cooking technologies in lower and middle-income countries: https://cleancooking.org/

[6] Source, the Clean Cooking Alliance health fact sheet: https://cleancooking.org/wp-content/uploads/2022/05/CCA-Health-Factsheet-ENGLISH.pdf

|7] Estimations calculated based on trees of around 10m height and 30cm diameter.

Here are 10 key learnings from our experience with these local communities, about implementing high-value transformation projects. This transformation is about:

1. Rebuilding the foundations of our home, the Earth

An archipelago of islands located in the Ganges Delta, the Sundarbans form the largest estuarine mangrove ecosystem in the world. The Sundarbans forest, which is home to 4.5 million people, is a fragile ecosystem threatened by climate change, fast sea-level rise and cyclones. Together with the Indian local NGO NEWS (Nature Environment and Wildlife Society), Livelihoods initiated in 2009 a 20-year mangrove restoration project to restore biodiversity, protect coastal communities from flooding and create new economic opportunities for them. With more than 16 million mangroves restored, the project has helped recreate a rich local biodiversity: fish, birds, shrimps, and other crustaceans are back. Today, we count 500 crab collectors instead of 50 before the project was launched, providing food and income to the local communities.

Read more about the project

2. Diversifying and increasing the income and food security of local populations

Home to indigenous tribes, the valley of Araku located in Eastern India, is an isolated area which had been highly deforested during the British settlements. The forest on which Adivasis’ livelihoods depended on, had disappeared, thus increasing farmer poverty. In 2010, Livelihoods together with the Naandi Foundation helped tribal inhabitants regenerate their forest through sustainable land practices. Through this 20-year large-scale agroforestry project, farmers learned how to make their own compost, increase soil fertility, and even produce their own high quality and organic “araku coffee” that is now sold internationally. They learned how to regenerate their forest, but also how to sustainable cut firewood and warm their houses, nurture land and manage natural resources and cattle sustainably.

Learn more about the project through our interview with Manoj Kumar, CEO of the Naandi Foundation

3. Preserving and restoring biodiversity

For decades, millions of smallholder farmers in emerging economies have relied on palm oil to make a living. And today, the challenges they need to face are many: from competition with large plantations to declining productivity or lack of financial means to regenerate their ageing trees, smallholders are mainly left aside of the transition to sustainability. Livelihoods launched in 2021 an unprecedented 10-year project to help 2,500 smallholder palm oil farmers achieve a sustainable shift of the supply chain in Sumatra Island, Indonesia. The project is building a transparent and deforestation-free supply chain thanks to locally adapted agroforestry models, regenerative agriculture, and biodiversity enhancement. A total of 8,000 hectares of palm farms will be regenerated in degrading land areas, while additional 3,500 hectares of local biodiversity will be restored.

Read more about the project

4. Transforming our agricultural models in a systemic approach

As the leading agricultural region in France and the third largest in Europe, Brittany has put agroecology at the heart of its economic, social, and environmental strategy. About 20 years ago, a handful of farmers in Finistère department, motivated to restore soil health, embarked on a new approach: regenerative agriculture. With the main objective to conserve the organic properties of the soil, regenerative agriculture is an agroecological production model based on agricultural practices whose primary objective is to increase its organic content to improve its fertility. In 2021, Livelihoods launched its very first project in Europe, in Brittany region, to accompany 100 farmers in their transition to regenerative agriculture. The project is helping shift to an agricultural model based on healthier soils, more biodiversity, less production costs and more attractive conditions for the young generation of farmers.

Read more about the project

5. Local communities taking ownership of the projects

Launched in 2009, Livelihoods’ mangrove restoration project in Senegal aimed at restoring a fragile ecosystem that protects arable land from salinization and produces fish resources (fish, shellfish, crustaceans) and wood. Implemented with Senegalese NGO OCEANIUM, this large-scale project involved more than 200,000 inhabitants in 450 villages, who planted 10,000 hectares of mangroves with their own hands. 12 years later, a social impact study measured the social and economic impacts of this project and the results are encouraging: thanks to the restored mangroves, fish is back (counting more than 4,200 tons of fish catch per year) as well as shrimps, crabs, shells, mangrove salad, honey, and fodder. Today, local villagers still act daily on the ground in Casamance estuary to protect “their” mangrove and this restoration programme remains one of the actions they are the proudest of.

Read the impact study results

6. Women farmers being actors of change

In northern Ghana, the fourth largest shea kernel producing country in the world, shea is an economic activity exclusively led by women. But the challenges they need to face are many: in this poorest region of the country, scarce rainfall has led to poor land, unpredictable yields, and food insecurity. From shea kernels collecting to drying, de-husking, selling to local buyers…shea is a hard but necessary work to step out of poverty. Livelihoods’ shea project in Ghana aims at building a responsible shea supply chain by providing 13,000 women farmers with sustainable income, diversified agricultural production and preservation of the shea natural ecosystem in a particularly arid area. The project aims to help the women of shea gain more from the kernels they harvest and boost new sources of income to help them get out of the poverty trap.

Read more about the women in shea.

7. Operational solutions for sustainable rural energy

In Latin America, Africa, and Asia, noxious smokes from traditional and inefficient cookstoves kill close to 4 million people every year. According to the Clean Cooking Alliance, cooking over polluting open fires or unsustainable stoves emits over one quarter of global black carbon emissions: the second largest contributor to climate change after carbon dioxide. Made from local raw material, efficient stoves directly improve the beneficiary families’ health as they are less exposed to toxic smokes.

In Embu County, Kenya, Livelihoods has equipped 120,000 families with efficient cookstoves that help reduce wood consumption by 60% thus helping preserve forests and protect the watershed of Mount Kenya which brings water to surrounding villages. To date, thanks to the project, an equivalent of 1 200 hectares of forest is being saved and 1 million trees planted.

Read more about the project

8. Investing in the long run

The mountain range of Cerro San Gil, bordering Guatemala, Honduras, and Belize is a major water source and one of the most beautiful biodiversity treasures on the Caribbean coast. It is classified as a nature reserve. But this region has been severely threatened by the impact of human activities as rural communities are continually pushed further upslope and forced to search for arable land.

Implemented by local NGO Fundaeco, Livelihoods agroforestry project in Cerro San Gil is a large-scale reforestation and agroecology project implemented with Q’eqchi’ communities, to couple natural resources preservation and improved livelihoods. Launched in 2014, the project has helped plant 4 million trees and plants of various species (citrus, coffee, cardamom, cocoa, mahogany, laurel, cedar…), including rubber plantations with cardamom: Guatemala’s tropical forests are ideal for growing cardamom whose expensive oil is used in cooking, aromatherapy and even in perfume. Close to 2, 000 hectares of land have already been restored.

Read more about the project

9. Contributing to resilience

Born in the aftermath of Aila Cyclone that hit the Sundarbans region in 2009, Livelihoods’ mangrove restoration project helped restore more than 16 million trees to form a natural barrier against flooding. Sadly enough, the Sundarbans were once again hit by natural disasters, this time by Amphan cyclone that hit Bengal, Eastern India, on May 20^th 2020. Amphan is reported to be the most devastating tropical storm in the region since 1999. With speed winds reaching up to 265 kilometres per hour and heavy rainfall, the cyclone had particularly impacted Kolkata and the Sundarbans. But the 4, 000 hectares of mangroves restored tewithin Livelihoods’ project with the local communities stood still. Almost ten years later, the restored mangroves acted as a natural barrier to Amphan cyclone, thus preserving the embankments from flooding and salination. All local populations were evacuated in shelters, thus highly protected from the cyclone.

Read more about mangroves acting as bio-shields

10. A new generation of farmers

The second most expensive spice in the world after saffron, vanilla is a consumer favourite. But also a very complex and fragile industry due to strong speculation, lack of transparency and strong exposure to weather events. In Madagascar, where most of the global supply comes from, rural poverty is reaching up to 81%. In 2015, Livelihoods and a coalition of partners acting at every step of the value chain, launched an ambitious 10-year project to build a sustainable vanilla supply chain with 3,000 smallholder farmers. The project helped create a cooperative to better connect the farmers with the market, while preserving 4,500 hectares within a unique tropical forest rich in biodiversity: Pointe à Larrée. Plus, the project has allowed to open an agricultural school to train the young generation of farmers.

In December 2021, the school celebrated its first graduates. Five years after its launch, a social audit showed the project’s promising results, demonstrating that the transition towards a resilient and high-quality vanilla is certainly underway.

Read the social audit’s main results

There are countless initiatives, ranging from start-ups which offer to plant trees, buy, or sell carbon credits, to a growing number of companies who seek to offset their carbon emissions, and many investors who promise ambitious financial returns. Attracted by the prospect or hope of a strong growth in carbon prices promised by many experts, financial investors are now interested in activities that they had previously neglected because they were considered not very profitable and too risky.

In this maelstrom, there is a growing interest in “nature-based solutions” as they are called: the fight against deforestation, restoration of natural ecosystems, low-carbon agriculture, oceans, etc. We can be happy to see new players arrive and to see this sector finally taking off and mobilizing private capital to complement public investments. The stakes and needs are such on a global scale that this movement must be strongly supported and encouraged. However, to ensure that this craze for carbon finance contributes to truly sustainable solutions and does not end dramatically with the bursting of a speculative bubble, a certain number of rules must be established and respected. In the approach of COP 27, Bernard Giraud shares some thoughts inspired by his experience with the Livelihoods Funds. 

Reducing versus compensating for carbon emissions? That is not the debate

The first of these rules is that carbon offsetting should not be a substitute for reduction efforts. The priority for each actor, whether private or public, is to engage in a profound transformation towards low-carbon practices. However, no actor can reach the “net zero” objective through reduction alone. Offsetting has therefore an important role to play and it makes no sense to oppose reducing and offsetting. But let’s not fight the wrong battle. The Livelihoods Funds have been investing in large-scale programs since 2009 and deliver significant volumes of certified carbon credits each year to companies that have invested in our funds to offset their unavoidable carbon emissions. Most importantly, the investments made have very significant social and environmental impacts for the local populations. What have we learned over the past decade?

Not all carbon projects are equal

First, not all “carbon projects” are equal. For example, investing in tree planting of a single species over hundreds of hectares certainly allows for the creation of a “carbon sink” and therefore for the acquisition of certified carbon credits. But does such a plantation have the same impact on biodiversity or the living conditions of local populations as an agroforestry project that helps hundreds of producers adopt sustainable agricultural practices? Is it enough to “plant trees” or, more broadly, to create the conditions for these trees to flourish? Does an industrial monoculture plantation have the same value as an investment in the preservation or restoration of a forest that is a living ecosystem rich in biodiversity? From a purely economic or carbon storage point of view, these projects can compete. Yet their impacts are very different. Looking at a project solely from the point of view of carbon yield or financial profitability can lead to dramatic errors. Because we are faced with the need to deeply transform our current production systems. This transformation must consider the diversity of environmental and social issues.

The projects supported by the Livelihoods funds succeed because they are based on the aspirations of the local rural communities. They contribute to environmentally sustainable solutions but also to improving the living conditions of farmers and their families. These systemic transformation projects are obviously more complex to design and implement. They require quite a specific know-how, a long preparation with competent teams and high-quality partners. They require time and finding the means to accompany this transformation over time. They require the courage to invest and take certain risks to provide the financial resources that poor rural communities often lack.

A systemic transformation of farming models

A major challenge for carbon finance is how it can contribute to the transformation of agriculture to meet both food and environmental needs. In the North, how can we support modern farms in their transformation to low-carbon agriculture, which restores soil fertility and biodiversity while maintaining a good level of production per hectare? In the South, how to support the hundreds of millions of smallholder family farms to ensure a decent income through agricultural practices that do not lead to the destruction of the still available natural resources?

The Livelihoods Funds work with companies that process agricultural raw materials for food or other products. These companies have recognized the need to support these transformations upstream of their industrial and commercial activities. More and more of them are setting targets for tonnages and hectares converted to regenerative agriculture practices. This necessary shift is complex and fraught with challenges. No single category of actor can make this shift successfully, on their own. We need operational coalitions that allow actors in the food chain to work together on concrete projects in each territory: farmers and their organizations, companies, NGOs, research, public authorities, etc. It is by combining the financial resources and skills of all these actors together that the transition becomes accessible to everyone.

A role assigned to the Governments: defining clear rules and finding the right balance

Since the Paris Agreements, several countries have made commitments to reduce their carbon footprint and most of them are in the process of defining the rules that will apply in their own country for the allocation and transfer of carbon rights under Article 6. The crucial question of solidarity and justice between formerly or recently developed countries with high emissions and developing countries with low emissions and high exposure to the effects of climate change has been at the heart of international negotiations for too many years.

The private funding provided through “voluntary carbon” projects can only be a contribution in addition to state agreements of a completely different scale. But this contribution can be significant for many states by focusing on nature-based solutions projects that are difficult to finance. The efforts of states and private investors in “carbon finance” should not be pitted against each other in sterile debates about “double accounting”. The carbon impacts generated by these projects benefit the territories and populations as much as the investors who took the risk of financing them. It is not a question of opposing approaches but rather of seeking synergies: it is in the interest of governments to attract financing that will enable them to move towards their climate objectives, and investors need a defined framework and clear rules to secure their rights.   

Separate the wheat from the chaff

But which type of investments? If we look at the mainly financial motivations of some “carbon finance” players and their desire to simplify and focus solely on obtaining carbon credits, we can fear that the cure is sometimes worse than the disease. With the risk of discrediting carbon projects altogether. Therefore, we believe it is essential to encourage a segmentation of this market so that buyers of carbon credits can identify the real value of what they are buying. The Livelihoods Funds therefore support the efforts of standards and all stakeholders who are committed to carbon projects with high environmental and social value. It remains to succeed in this effort of differentiation without falling into the trap of multiplying complex standards and heavy bureaucratic processes that would weigh down projects, mobilize the energy of actors on the ground and increase costs to the detriment of action.     

We are convinced that carbon finance can be a factor for progress if it supports projects that are truly transformative. It can help mobilize financial, technical, and human resources for large-scale projects over long periods. Let’s make sure that the “good wheat” does not get mixed up with the “bad wheat”.

Cocoa is a popular and versatile fruit

Together with sugar, coffee and cotton, cocoa is one of the top four most traded soft commodities in the world. It represents a market value of over 12 billion dollars per year. The global demand for cocoa beans has risen from 2.5 million tons produced in 1990 to 5.6 million tons in 2019.

For the past few decades, Ivory Coast and Ghana have been the 2 largest producers of cocoa beans in the world. There are about 2 million cocoa farmers in both countries cumulated, who provide for more than 60% of the world’s cocoa production.

Processed into cocoa powder, cocoa butter and cocoa liquor, the beloved fruit can be found in consumers’ favorite confectionery treats, functional food, but also in cosmetics and pharmaceutical products.

From cocoa pods to chocolate, how does it work?

Cocoa beans come from a tree called Theobroma Cacao: it grows in humid, tropical climates around the equator. Newly planted trees begin to bear fruit after 3 to 4 years. This fruit, is the cocoa pod which contains the precious cocoa beans.

Unlike most crops, cocoa is entirely grown and harvested by hand. The farmers cut the outer peel of the cocoa pods open with long knives (machetes) to collect the fruit pulp inside. This pulp contains around 40 to 50 seeds; the cocoa beans. The beans are then left to ferment for five to seven days, a natural process which helps remove any of the remaining fruit pulp around the beans. During fermentation, the beans change from gray to brown and to purple. It is during this phase that beans develop their aroma. After fermenting, the cocoa beans are spread out and left to dry in the sun for about six days.

The beans are then sold to local traders or processing plants. The journey continues as the cocoa beans are then shipped to chocolate producers where they are roasted: the beans are cleansed of stones, dirt, sand and dried under heaters. This helps break the beans and remove the shell around them. The cocoa nibs obtained are then roasted and grounded into cocoa mass.

Eventually, this mass is mixed with sugar and other ingredients and further refined to develop the aromas enjoyed by consumers in all four continents.

Meet the partners of the project and their roles:

The Livelihoods fund for Family Farming (L3F) is a private investment vehicle which brings together world-known private actors Mars, Danone, Firmenich and Veolia. It was designed in 2015 to improve the livelihoods of smallholder farmers together with entrusted partners to help them transform their supply chains. L3F has previously launched long-term projects in the coconut, vanilla, palm, shea sectors but also in watershed preservation.

More about L3F

Mars is a global business that produces some of the world’s most famous brands of confectionery, food, and pet care products and services. The company is a business partner and historic investor in the Livelihoods fund for Family Farming. It has been very active in the cocoa sector (one of Mars’ core business ingredients) and has focused for the past years on supporting farmers improve their income with dedicated programs such as “Mars Cocoa for Generations program” (2018) which led to an intensification of supply chain efforts to improve farmer income and resilience.

About Mars

Mars’ Cocoa for Generations program

Touton S.A. delivers quality, responsibly sourced cocoa, coffee, vanilla, and natural ingredient products to its customers around the globe. Touton has been a major player in global cocoa trade for decades and in addition to sourcing cocoa beans and cocoa derivatives, now also processes cocoa liquor in Ghana. Touton’s cocoa beans are now traceable all along the supply chain, from the origin to the consumer allowing segregation of conventional and certified beans as well as better monitoring and understanding of the communities of farmers they work with.

More about Touton

Solidaridad West Africa, is a leading civil society organization with extensive experience providing technical assistance to cocoa farmers in West Africa. Solidaridad will provide intensive coaching on good agricultural practices in cocoa farm maintenance and replanting. In addition, the organization will strengthen farmer groups and link them to entrusted service providers to access inputs and labor under the project. Further, Solidaridad will provide technical support in soil health, agroforestry and income diversification to participating farmers.

More about Solidaridad Network

The Institute for Development Impact (I4DI) is a think plus do tank, and the project’s learning partner dedicated to advancing a data-driven, systems approach to global sustainability, by integrating strategic consulting, applied research, capacity building, and technology innovation to catalyse positive social and environmental impact in many supply chains.  I4DI oversees the assessment and evaluation of the project’s impact and learning by asking strategic questions about whether a certain intervention has had its intended result on improving farmer income. If not, then unearthing what could have been done differently.

More about I4DI

Rabo Foundation (RF) is Rabobank’s impact fund. RF invests in the self-sufficiency of farmer organizations in Africa, Asia, and Latin America, by providing finance and by sharing the cooperative, banking, and agricultural expertise that the Rabobank has built up over the years. This helps organizations achieve their goals of offering smallholder farmers access to financing, knowledge, and new markets.

More about Rabo Foundation

Cocoa, the main ingredient of chocolate, is enjoyed by consumers all over the world. The global demand for cocoa beans has skyrocketed since the 1990s, reaching 5.6 million tons of world production in 2019 [1]. Grown on land located around the equator, the fruit is produced by close to 6 million smallholders, whose livelihoods depend on it. Yet paradoxically, most cocoa farmers are stuck in a poverty trap, especially in West Africa which accounts for over 70% of the global harvest.

Ageing trees, lack of access to quality technical skills and sustainable financial means to regenerate the soil and boost productivity, are among the key reasons. In Ghana, the second largest cocoa producer, the private and the public sector have made significant efforts in the past few decades to source cocoa sustainably. But these initiatives have shown limited improvement on cocoa smallholders’ income, particularly in the context of earning a living income. Which practical solutions could help farmers sustain their families’ needs out of cocoa? Can farmers couple land restoration with increased income?

After shea, Livelihoods is launching a new initiative in Ghana (check out our sustainable shea sourcing project) to uncover and address the social, economic and environmental problems faced by cocoa smallholders. The project has one specific goal: identify which levers can help cocoa smallholder farmers sustainably restore their farms and improve their income. This 3-year initiative is launched by the Livelihoods Fund for Family Farming (L3F) which has brought together: Mars Incorporated (global business that produces some of the world’s most famous brands of confectionery, food, and pet care products), Touton (a decade-long major player in global cocoa trade and Mars’ main cocoa supplier), Solidaridad West Africa (a civil society organization with extensive experience working with cocoa smallholder farmers in West Africa) and Institute for Development Impact (I4DI) (entrusted monitoring, evaluation, and learning partner to evaluate the project’s impacts).

The project is implemented in three cocoa districts namely Nkrankwanta, Kasapin and Sunyani located in the Bono and Ahafo regions of Ghana. The overarching goal of the project is to find a sustainable sourcing model that will accelerate farmers’ transition to a decent living income [2] in a test & learn approach, with the possibility of replicating the good results in the Ghanaian cocoa sector after the current phase.

In Ghana, cocoa is the main source of income to independent smallholder farmers

In Ghana, the world’s second largest producer after Ivory Coast, cocoa is the main source of income to 800,000 cocoa farm families in the country. But the challenges they face at farm level are many, and the income they get from cocoa harvest is not high enough for a vast majority of them to meet their families’ basic needs such as: food, clothing,  decent shelter, healthcare, and education. This deprives them of the income needed to invest in sustainable production on their cocoa farms.

Indeed, in the regions of Bono and Ahafo where Livelihoods’ project is being implemented, close to 80% out of the 1,000 farmers identified for the project, do not reach a decent living income that would help them meet their basic  needs and to invest in their cocoa farms. In other words, smallholder cocoa farmers are caught in a poverty trap despite decades-long efforts made by  key stakeholders (private and public) of the cocoa sector to transition smallholder farmers out of poverty in a sustainable and responsible manner.

Poor soils after decades of monocropping

In Ghana, farmers grow cocoa trees on farms of 1 to 4 hectares on average, which they have inherited from their families. Beyond cocoa, smallholder families usually grow staple food crops like maize, plantain, and cassava, but cocoa remains the major economic activity to feed families of 5 members on average (the parents and 3 siblings & or children). With cocoa farmers being 55 years of age on average, the sector needs to take up the challenge of designing attractive conditions for the new generation of farmers who will inherit the cocoa farms.

The first major challenge independent smallholders face is soil fertility, which has declined in the past years because of permanent land use that leaves no time for the soil to regenerate. Decades of deforestation and cocoa monocropping to answer a fast-growing global demand, without compensation of soil nutrition, have affected soil health. In time, cocoa trees have been taken out of their natural conditions and ecosystem (cocoa is a shade-loving crop): today, the lack of adequate shade trees on cocoa farms makes way for direct sunshine which contributes to soil infertility. The over-use of herbicides and the effects of climate change have further aggravated soil fertility.

Lack of labour force at the farm level

At the farm level, cocoa smallholders are also confronted to a lack of skilled labour force which affects their production capacity. A husband and wife can efficiently look after a cocoa farm of 2 hectares, but anything beyond that will require additional skilled labour which they usually cannot find nor afford. Today, cocoa farms’ productivity has stagnated at less than half their potential: the average cocoa yield in Ghana is currently 450 kilograms per hectare, whereas a well-managed cocoa farm could produce between 1 and 1.5 tons per hectare [3]. Cocoa is a labour-intensive crop during the harvest and post-harvest activities (mainly from September to February), and for the plots’ maintenance (January to July) in which farmers are directly involved. It is one of the few crops in Ghana that is still grown and harvested purely by hand.

Farmers must protect their cocoa trees from wind and sun. Pruning, which is essential to increase yields and reduce pests & diseases pressure, is an arduous and technical practice. Smallholders also need to invest time to eliminate weeds, fertilize the soil and prevent the cocoa beans from pests and diseases. During harvest season, cocoa pods are hacked open using machetes to extract the beans, before they are allowed to ferment, dried, bagged, weighed and sold to licenced buying companies through their purchasing clerks.

In the project area, 30% of cocoa trees are above 35 years old: replantation of the oldest plots is critical for traditional farms whose productivity cannot be restored with sustainable agricultural practices alone. An increasing quantity of trees could further be affected by diseases, in particular a virus called “CSSV” (Cocoa Swollen-Shoot Virus) which primarily infects cocoa trees and decreases yields within the first year of infection. The virus, transmitted from tree to tree by mealybugs, can spread even more rapidly in a monocropped farm and usually kills the trees within a few years. More sustainable agroforestry models, relying on diversified plots, but also with healthier soils rich in micro-organisms could help the trees resist better pests and diseases.

The cocoa paradox: why are smallholders stuck in a poverty trap?

Farmers are stuck in a vicious circle where, on the one hand, unsustainable production models based on monocropping focusing on productivity only have led to depleting soil fertility. On the other hand, farmers lack the technical skills, financial means, access to labor, or basic infrastructure to move to sustainable diversified models where they would earn more out of the land they cultivate. In this context, it remains complex for them to make the decision to invest in the adoption of sustainable agricultural practices and/or the necessary replanting activities on their plots.

In the past few decades, the cocoa sector has defined techniques known as “Good Agricultural Practices” that aim to maximize farm productivity and resilience. These practices, (as defined by the Food and Agriculture Organization – FAO) answer to a set of principles which aim to ensure a safe, sustainable production of crops (and livestock), while maximizing yields potential. Good Agricultural Practices are thought to minimize production costs for the farmer and the environmental impact of farming activities. Applying these practices on farm reinforce responsible farming models which result in safe, healthy soils and quality crops. With the overall intention of respecting the crops’ natural cycle and surrounding environment, GAP includes techniques such as tree pruning, soil fertilization, treating and managing potential diseases and ensuring soil health by supporting living organisms in the soil. In addition, restoring degraded land, preserving surrounding natural resources, minimizing waste, using water sustainably are areas of further action. Once adopted on-farm, these practices can ensure healthy fertile soils, which in turn can also double productivity. Learn more about the principles and examples of Good Agricultural Practices.

Yet it seems that over the last two decades, many farmers were trained on the above-mentioned practices, but the observation in the field is that only 30% of farmers currently adopt them. Adopting the Good Agricultural Practices on their plots requires intensive labor and financial investment over time, which often requires bank loans, which aren’t accessible to many smallholders, especially female farmers. Plus, with current interest rates which are as high as 50%, low harvests due to diseases, and declining weather conditions might leave farmers with debts they cannot repay. So, they don’t take the risk. Plus, long-term loans for replanting are not available to them.

“Several programs have asked me in the past to plan and manage my farm better. I know what I need to do but I cannot afford the quality inputs and labor force to make it happen. It is too risky for me now to borrow money and prices keep increasing!”

Overall, farmers would need to, at least, triple their production costs to apply these practices compared to their current low base. This involves hiring additional labor, purchasing inputs and equipment, accessing quality fertilizers and organizing their transportation. But to date, the access to quality seedlings and fertilizers remains complex. Seedlings are not always available, transportation costs are high, access to labor is disorganized and expensive. What is more, when smallholders invest into replanting activities, they must get through the first 3 to 4 years with even lower income, before the newly planted trees start producing cocoa beans in commercial quantities.

In a general context where the cocoa price is fixed by the Government yearly and productivity is declining, most farmers’ income remains low discouraging the next generation The buying price for cocoa in Ghana is defined yearly by the Ghana Cocoa Board (COCOBOD) which controls all exports and protects the farmers from volatile prices. In 2021, the price for 1 kilogram of cocoa beans was fixed at an equivalent of 1 dollar. In the project area, the average annual income from cocoa production is around 1,275 dollars equivalent, which is far below the decent living income calculated at around 2,200 dollars per year, making smallholders unable to invest in the development of their farms.

“It is difficult for a young woman to generate sufficient income and become financially independent in the couple as they do not often have access to the land. And when they have, and especially for female headed households the challenges we face is to find workers in the neighborhood that are qualified and know how to restore soils and take care of new plantings”.

How can the private sector contribute to improving farmer income? Should it pay bonuses for the adoption of good agricultural practices? Should it help improve farm productivity to address quality and increasing market demand? How can the private sector aid farmers to couple productivity and sustainability by shifting to a model where farms become more resilient?

Is there a way out of this vicious circle?

Livelihoods and its partners are raising these crucial questions: which sustainable model can contribute to lift cocoa farmers out of poverty? And how can we help the transition to more sustainable agroforestry models where farmers can earn more from a thriving land? Livelihoods, Mars, Touton, Solidaridad West Africa and I4DI are launching an unprecedented 3-year initiative to identify which levers could help achieve this transition to a more resilient, prosperous cocoa farming in Ghana. The project is addressing the overall farmers’ needs (including farming skills, financial means, and external labor) to boost the adoption of Good Agricultural Practices and invest in the necessary replanting activities. This is an agile approach that will allow the coalition of partners to test out different parameters in independent clusters of farmers and adapt or tweak them if necessary. Their common goal is to help farmers gradually reach a decent living income.

The test and learn approach will help answer some key questions such as:

To what extent does intensive coaching affect Good Agricultural Practices adoption rates?

One thousand independent farmers within Mars-Touton supply chain will participate in this initiative and will benefit from a package of interventions to achieve this transition. They will benefit from technical training and individual coaching to boost the adoption of enhanced agricultural practices which will help restore degraded soils (pruning, techniques to put carbon back in the soil, adapted fertilizers etc.). The project will provide intensive on-farm coaching to support farmers with long-term adoption of agricultural practices adapted to their plots. With healthier, fertile soils, farmers could double their productivity and ultimately their income.

Are farmers willing to pay for farming services (labor, inputs)? Is there an attractive model to set up more Service Providers?

All farmers will benefit from the organization of reinforced cocoa farmer groups that will help them assess their needs, be it training, farming inputs, financial mechanisms,  but also reinforce peer-to-peer learning. The project will assess these farmer needs, and in the long run, potentially facilitate access to government programs that will support them with technical skills, farm regeneration etc. The project will also test whether farmers benefit from facilitated access to service providers who will deliver specific services to them (inputs and labour) to support the management of their farms.

Which short-term financing solutions would boost the adoption of sustainable agricultural practices? Would long-term loans make a difference in engaging replanting activities? Which type of compensation would boost replanting?

The project will facilitateaccess to affordable short-term loans for participating cocoa farmers at an annual interest rates of 24% and 12% instead of the current 50% on the market. This is to ensure that the farmers have adequate financial resources to invest in  sustainable cocoa production. Where replanting is needed, smallholder cocoa farmers will benefit from access to long-term loans (which today are not available to them) at an annual interest rate of 12% on the local currency. Farmers who will invest in replanting will also benefit from financial compensation to help them get through the initial 4 to 5 years when the newly planted trees don’t produce beans in commercial quantities.

The initiative will roll out a methodology in which different variables will be tested into small clusters of farmers (groups of 100 farmers). The results will be measured regarding the adoption of agricultural practices and replanting, before being replicated into a bigger group within project farmers if proven fruitful. Short and frequent feedback from the farmers will be gathered by field coaches to adjust efforts accordingly.

A special attention to women in cocoa

The project will adapt interventions to enable women, who make up 30% of the project farmers (a number that is higher than the national average), to participate fully and benefit from all the activities. The analysis of results will be also performed in a gender sensitive way to identify specific obstacles for women, and structure solutions for them, especially as they manage their households’ needs.

At the end of the project, the goal is to come up with the most efficient selection of interventions that have indeed helped farmers improve their income. This unprecedented Test and Learn project, will help clarify realistic pathways towards decent farming income for farmers, and eventually farms that are resilient, diversified, profitable, and that do not contribute to deforestation or unsustainable crop production practices. If proven effective, this blueprint would be rolled out to cocoa supply chains across West Africa in collaboration with a coalition of key cocoa suppliers (private sector, non-governmental organizations, financial institutions…)

[1] According to the Food and Agriculture Organization (FAO) – a specialized agency of the United Nations that leads international efforts to defeat hunger.

[2] 332 dollars per month for a family of five people in 2018

[3] Source: Farmgrow, 2020: https://www.farmgrow.org/. Living Income is the net annual income required for a household in a particular place to afford a decent standard of living for all members of that household.