How a Cacao Resurgence is Revitalizing Degraded Land and the Agricultural Economy in El Salvador

This article is cross-posted from Agrilinks.

Is it possible to reintroduce a crop with a compelling global value in a nation with substantial land degradation and little institutional crop memory? Yes, it’s possible. But only with a strategic approach to market systems development (MSD). 

With local partners CLUSA El Salvador, Acugolfo and Caritas, Catholic Relief Services (CRS) has been working since 2014 to resuscitate El Salvador’s cacao sector through the Alianza Cacao project. Alianza Cacao aims to turn El Salvador into a key exporter and place of origin for high-quality, aromatic, fine-flavor cacao by stimulating production of an estimated 4,500 metric tons of Salvadoran cacao worth approximately $20,000,000 over the life of the project. Additionally, by supporting farmers to implement water-smart agroforestry practices that restore soil and water resources, Alianza Cacao is helping to repair the environmental degradation that threatens the long-term health and resilience of the land and economy in El Salvador. 

The opportunity

Cacao production in El Salvador goes back over 3,000 years. In recent decades, production decreased dramatically in favor of crops like sugar cane and coffee, even though Salvadoran cacao is among the best in the world. El Salvador produces just 1,500 metric tons of cacao per year, only 5% of the worldwide production of almost 5 million metric tons. There is a huge opportunity for El Salvador to reclaim its rich cacao history and establish a place among the world’s finest cacao producers. 

And this tremendous economic opportunity can also contribute to resolving El Salvador’s big environmental problems. Widespread deforestation, along with soil and water resource degradation, have left El Salvador with little protection from the increasingly erratic rainfall and drought, extreme storms and higher temperatures brought by climate change. El Salvador is one of the most vulnerable countries to climate risk in the world and is already facing water scarcity. Cacao agroforestry systems managed to restore soil and water resources are an economically viable land restoration strategy that benefits smallholder farmers, climate-vulnerable communities, and El Salvador’s economy.

Viable solution

The two-phase Alianza Cacao project began in October 2014. Funding for phase one came from the Howard G. Buffett Foundation, USAID, and the United States Department of Agriculture (USDA). Phase two is funded by the Howard G. Buffett Foundation. Alianza Cacao’s goal is to increase the production and processing of cacao in El Salvador and establish the country as a global source of fine chocolate by creating a viable, environmentally sustainable and high-revenue-generating livelihood for vulnerable farmers.

CRS used an MSD approach to make Alianza Cacao sustainable at scale. The program analyzed the cacao market system, identified key market issues and bottlenecks, created a vision for a better functioning market system and then partnered with a diverse group of government and private sector entities to design and implement the interventions. Alianza Cacao works with universities to improve the agriculture extension curriculum, lab testing and research. They work with the government to pass and implement policy that prioritizes the cacao value chain. They work with small- and medium-scale cacao producers, processors and others in the value chain to improve the quality and quantity of cacao. They strengthen small and medium enterprises (SMEs) with business planning and commercial, financial and administrative management tools to strengthen local markets for local cacao. They connect farmers to financing, and Alianza Cacao has raised the international profile of Salvadoran cacao by helping producers and processors share their products at international competitions, thus creating demand from international chocolatiers. As a result of this work, in 2023, the International Cocoa Organization (ICCO) recognized El Salvador as an exclusive exporter of fine or flavor cocoa beans and noted efforts made over the last decade to develop the sector.

Notable progress

Alianza Cacao has successfully partnered with small-, medium-, and large-scale farmers to plant thousands of new cacao trees, effectively reintroducing cacao to El Salvador, and the efforts are paying off! 

In 2017, Alianza Cacao reached a major milestone when Jose Eduardo Zacapa, a project participant, became one of the 18 “International Cacao of Excellence” award winners, and the first-ever Salvadoran to win the event. The award put El Salvador on the global map as an important source of fine and aromatic cacao, and soon the international orders for Salvadoran cacao rolled in. 

Cacao processers supported by Alianza Cacao are also sending samples to fancy food shows around the world, and Salvadoran participation and representation at fancy food shows have already led Czech, Taiwanese and American buyers to contact the Ministry of External Affairs about sourcing cacao from El Salvador.

Holistic market systems process

Alianza Cacao’s work in the value chain and market system is establishing cacao as a nationally prioritized crop:

Universities/education

In phase one, the project signed agreements with local universities to provide small grants for research, technical workshops and advisory services for students studying cacao production and processing. The project supported digital tools and manuals to ensure the curriculum was technically sound and the use of modern testing protocols by university laboratories. These testing protocols enabled El Salvador to participate in the Cacao of Excellence competition in Paris, France.  

Public sector

The first phase of Alianza Cacao developed policy and proposed a legal framework to revitalize the cacao value chain. Despite a temporary stall in legislative work after the presidential elections and the change in administration in 2019, thousands of new cacao trees grew in the first years, and other aspects of the value chain moved forward. 

With the international demand for Salvadoran cacao continuing to grow, the public sector is again taking notice. In phase two, the project is fostering the government’s renewed interest and is continuing to advocate for policy and legislation, including incentives for the cacao sector at scale. This will reinforce the vision to establish an international market for Salvadoran cacao, supported by national policy.  

Private sector

Alianza Cacao helped to establish a National Cacao Roundtable consisting of producers, processors, exporters, industry, academia and the public sector. The Alianza then worked to strengthen the platform with annual strategic plans, management structures and capacity for advocacy. The National Cacao Roundtable then took over and supported the participation of farmers in the Cacao of Excellence competition in Paris. In the second phase of the project, the National Cacao Roundtable is still active, serving as a forum for partnerships among producers, processors, exporters and academia, while coordinating with Alianza Cacao.  

In phase 2, Alianza Cacao is applying a set of business-strengthening tools specifically for SMEs, which helps companies identify their competitive advantage, develop strategies for market opportunities and implement the value-adding interventions and techniques necessary to ensure a steady supply of quality raw material. The process also provides SMEs with new insights regarding end markets, how or where to obtain current market information, strategic and financial planning, and general capacity building in internal operational systems and protocols. 

Financial sector

Although Alianza Cacao engaged two public banks to establish lines of credit for cacao farmers, the smallholder producers were not able to meet the bank’s conditions. Instead, the Alianza joined forces with several farmers’ cooperatives that produce beans and maize as well as cacao. The banks were willing to make the loans with the other crops as security, and cacao producers then gained access to lines of credit.

Investing in climate change resilience

More than 80% of Salvadoran cacao farms rely on rainfall to water their crops. While the overall amount of rainfall in El Salvador is more than adequate for cacao production, the increasingly erratic distribution of the rainfall, fewer heavier rainfall events and a long dry season from December to May challenge farmers to keep their trees healthy and well-watered. Alianza Cacao is innovating with farmers to build rainwater reservoirs to harvest and store rain when it falls for supplemental irrigation when the climate gets too dry for too long. Combined with agroforestry practices that protect the soil with ground cover and leaf litter and reduce unproductive evaporation of moisture from the soil surface, El Salvador’s cacao producers are making the most of their rainfall and producing more cacao.

The global market demand for unique and high-quality Salvadoran chocolate is growing. With smart investments in agricultural practices that will regenerate the land while revitalizing economic opportunities, the future of chocolate in El Salvador is rich.