Reserved Amount = € 610,00
Reserved Amount = € 610,00
Promotion of an inclusive value chain by joining 5.000 local producers who have access to an international export value chain.
Better working and financial conditions for small producers, who own less than 10 hectares of land.
Rural poverty reduction: smallholders will receive a higher profit margin for their produce, which can be allocated to more than pure subsistence. They will also have access to larger national and international markets.
Contribution to the Company’s social mission, by ensuring cash and premium payments at the “farm gate” to the farmers and early payments at a premium to the Company. The company can then reinvest the money in training, education, social support to the farmers and their families, health support and help with organic and fair-trade certifications.
Gender quality promotion: the company is fully owned by its female CEO, who runs a senior and experienced team.
Contribution to environmental protection: the Ecuatorian focus on pruning cacao trees, aims to help farmers make the most of what they already had, so they wouldn’t need to press further into the Amazon. Among other sustainable techniques are shade-growing and multi cropping, as well as the correct use of fertilizer and pesticides, including natural pest control and compost.
The goal of this campaign is to fund a family-owned company based in the coastal area of the Guayas Province (Ecuador), active in the aggregation, processing, and sale of cocoa products to Europe, North America, and Asia. The Company sources its produce from 2.500 cocoa farmers in the 4 provinces of Los Ríos (the area with the highest production of the world-renown ‘Cacao Nacional’, also named as “Cacao Arriba”), Sucumbios and Orellana (where cocoa produce is differentiated by the area of influence of the Yasuni Biosphere Reserve), and El Oro.
When European traders found Cacao Nacional in the Gulf of Guayaquil, with floral aroma profiles, they asked the merchants where these amazing beans came from. The locals answered “Arriba” – “up-river”, meaning further up the watersheds of the rivers that reach the gulf. The name stuck, and to this day, this cacao is known in Ecuador as “Cacao Arriba”.
The Company is focused on shortening the long supply chains that hinder farmers' market access and on improving their productivity and quality controls through two “capacity-building” programs, which benefit 5.000 families. Its mission is to export the best fine Ecuadorian cocoa beans and its derivatives to the world, promoting fair trade with small producers and traders, while integrating the whole value chain and guaranteeing high-quality standards and responsibility for its human resources and care for the environment.
The Company believes to be one of the leading national companies exporting Ecuador's finest cocoa aroma, special semi, and premium gourmet chocolates - with an industrial process "bean to bar".
On top of this, the Company has established a sustainability program that offers farming communities the following services: technical assistance and training to improve productivity; advice and support to improve the quality of post-harvest; training to develop management, financial, and trading capacities in communities; fair trade practices to improve life quality in the communities. The goal is to maintain a record of the cocoa until its final delivery to the consumer, guaranteeing traceability on each of its processes from the production, postharvest handling, and cocoa distribution.
The Company has also established a second sustainable project whose main goal is to improve the productivity of small producers of cocoa and enhance their quality of life, by using tools such as technical trainings and delivery of agricultural inputs.
The Company established the first “ECA” (Field Schools for Cocoa) in coordination with the main small farmers associations. As of today, 680 cocoa producers enrolled in the Company’s ECAs.
Overall, Ecuador is the 2nd producer of cocoa in Latin American after Brazil, and for many years, it has been recognized as the largest fine or flavored cacao producer in the world.
There are two general categories of cocoa beans in the world: “fine or flavor” and “bulk or ordinary”. Fine cocoa production represents less than 5% per year of the world’s cocoa bean production and Ecuador is the largest producer of “fine or flavor” beans, producing over half of the world’s production – the raw material that is required in the European and American industries for fine chocolate production. Evidence from Ecuador suggests that the cocoa premium over the New York Stock Exchange price of fine or flavour cocoa beans is 20% to 30%.
Cocoa production in Ecuador has experienced an overall upward trend in recent years, reaching an estimated 328,000 tons in crop year 2019/2020, for a value of c. USD700m worth of exports. Production in Ecuador is forecast to continue growing, reaching 340,000 tons in the 2020/21 season.
In Ecuador, approximately 360,000 hectares of cocoa are cultivated by approximately 90,000 farmers. Most of these farmers are relatively poor and operate on less than 10 hectares of land (according to representatives from non-governmental organizations in Ecuador). Their incomes are largely dependent on agricultural production with almost half generated by the sale of cocoa beans. 85% of cocoa production occurs in the coastal plain region of Ecuador.
The funds raised through this campaign will be used as Transactional Working Capital to provide liquidity to the Company from its procurement and processing stage, all the way through its exports. This is the fifth campaign promoted by WCA with GoParity.
Transactional Working Capital is a short-term debt financing asset that allows the seller to receive advance/early payments and the buyers to delay their payments. In commercial sales, standard market practice for payments is between 30 to 90 days from the time when the seller issues its invoice – such payment terms usually strain the cash availability of the seller for its own procurement, while allowing the buyer to hold on to their cash for longer. Often, the seller’s working capital gap is resolved by accessing traditional bank financing, which usually requires to be over-collateralized over hard assets (i.e. factories, buildings, machinery). However, due to the elevated requirements demanded by banks as guarantees for the loans, impossible to meet for smallholders, such bank loans seldom resolve any working capital gap.
Transactional Working Capital fills this gap without the need for collateral. That, in turns, obtains the following results for both the smallholders and the aggregator:
Liquidity to procure raw produce: the aggregator/processor is able to grow its business by increasing the level of raw material procurement to fulfill new orders for its international buyers, without waiting for payment from existing buyers.
Premium Prices: the producers receive a premium price that reflects the certified and fair trade value of the cocoa, resolving the cash pressure and eliminating the need to provide discounts to the buyer, in return for early payment.
A higher profit margin that can be reinvested not only to pure subsistence but also in capacity building of technical agricultural skills and technologies, improving production standards, and yield investments in organic, fair trade, and quality certifications.
WCA maintains a Trade Credit Insurance Policy with a global insurance company providing worldwide trade credit insurance, surety, and collections services, with a strategic presence in 50 countries. The Project repayment will be guaranteed under such Trade Credit Insurance Policy, which effectively protects GoParity lenders from default in a credit-related event (e.g. insolvency, bankruptcy). The policy covers losses from Insolvency, Protracted Default, and Political Risk and covers up to 90% of the value of the underlying commercial transaction financed by WCA. As WCA provides up to 80% financing to any underlying commercial transaction, the policy in essence covers more than WCA’s entire financing.