Alto Beni Cacao Company
Most Recent Visit: May 2016
Number of Farmers: 69
Number of Female Farmers: 15
Numbers of Hectares Certified Organic: 620
Annual volume purchased: 15 metric tons
Price model*: Fixed
Price paid by Taza**: $5300 per metric ton
Price paid to Farmers***: $4049 per metric ton
Percent paid to Farmers: 76.4%
Additional Benefits to Farmers: Centralized cacao fermentation and drying; Price stability; Subsidized cacao seedlings
The Upside: Exceptional prices to farmers
The Challenge: Company profitability
Alto Beni Cacao operates in a highly competitive market in Bolivia’s rugged northwest. El Ceibo, a large cooperative established in the 1970’s, has for many years been the dominant buyer in the region. El Ceibo provides farmers with market access and some agricultural services. When local competition emerges, the group temporarily drives up prices to bankrupt it. As a result, farmers have traditionally had little choice to whom to sell their cacao.
In order to compete with El Ceibo, Alto Beni Cacao pays farmers a very high price for their cacao beans – $4,049 per metric ton. This is nearly double the average global price received by farmers. Farmers also benefit from subsidized cacao seedlings that the company distributes to improve farm productivity and earn producer loyalty. During my visits, farmers always express appreciation for the company’s presence in the community – it acts as a counter-balance to El Ceibo that ensures a degree of competition and fair play.
While beneficial from a farmer’s perspective, the high prices paid by Alto Beni Cacao and its low resulting margins mean that the company struggles to turn a profit. Taza does its best to support its partner by paying $5,300 per metric ton regardless of fluctuations in the world market, but this is a very high price and means we can only use the cacao in one bar – our 87% Dark Bolivia Origin Bar. We appreciate the hard work that our partners at Alto Beni Cacao do to keep the business growing despite the difficult operating environment.
*For Taza's purposes, a cacao price is fixed when the dollar amount is agreed upon and will not be affected by daily fluctuations in the world market price. In turn, it allows the partner to guarantee a fixed price to farmers at the start of the harvest season. Alternatively, Taza and a partner may negotiate a premium above the fluctuating world market price. This is a more common model in the industry and one used by Fair Trade, among others. The complexity and pros and cons of each model are outside the scope of this report.
**Price Paid by Taza is equal to the negotiated fixed price or to the negotiated premium plus the world market price on the day the contract is closed.
***Price Paid to Farmers is calculated as the average price paid by the partner to farmers between July 1, 2015 and June 30, 2016.