Despite its "forest-friendly" reputation, cacao farming is actually causing deforestation in some parts of the world. Fortunately, there's a way to reverse that trend. This is what we've been working on in Ecuador.
We’re using cacao trees to help restore forest on degraded agricultural land. It’s one element of a holistic regenerative agroforestry project that combines cacao trees with a diversity of tall native shade trees, fruit trees, and other food crops like bananas and plantains.
This approach gives a boost to farmer incomes and local food security, removes CO2 from the atmosphere, and improves the overall health of the ecosystem. It’s an example of how businesses, conservationists, and local farmers can join forces to help regenerate the forest rather than cut it down.
We call it Regenerative Cacao.
This project is in partnership with TMA (Third Millennium Alliance), a nonprofit rainforest conservation organization that has been protecting and restoring forest in Ecuador since 2007. Additional funding was provided by MOCCA (Maximizando Oportunidades en Café y Cacao en las Américas).
How Eco-Friendly is Cacao Farming?
The eco-friendliness of cacao farming entirely depends on where and how the cacao trees are planted. In the worst of cases, people cut down a native forest to make way for a monoculture plantation of cacao. In the context of both biodiversity and climate change, this is a bad outcome. Native forests store 4x as much carbon and 35x more species than cacao monocultures.
And yet, clearing native forests to plant monocultures is how most new cacao plantations are created throughout the tropics. A lot of trees are being cut down in the name of chocolate.
Regenerative agroforestry, on the other hand, is a different story. That's what this article is about to explore.
For a deeper dive into the ecological pros and cons of cacao farming, check out "How Eco-Friendly is Chocolate and Cacao Farming?"
Cacao Monoculture (left) vs Cacao Agroforestry (right)
Cacao & Agroforestry
Cacao trees are naturally adapted to survive and thrive in the understory of the tropical forest. In other words, they grow well in the shade of bigger trees. Therein lies the advantage of cacao farming in the realm of tropical forest restoration.
It bears mentioning that some high-yield/low-quality cacao cultivars (namely, CCN-51) have been bred to prefer full sunlight. Most heirloom varieties, however, actually need to grow in the shade, especially when they’re young.
Cacao trees can be planted in combination with a diverse array of other food-producing trees and native trees. That’s what agroforestry is—it’s an agricultural method that grows crops in the form of a forest.
Regenerative agroforestry uses this principle as a mechanism for forest restoration. One of the benefits of this approach is a net removal of CO2 from the atmosphere. Other happy byproducts include soil conservation, watershed protection, and biodiversity preservation.
The cacao that is harvested from a regenerative agroforestry system is called Regenerative Cacao.
Agroforestry: Cultivating crops in the form of a forest.
Cacao Agroforestry: Agroforestry that includes cacao trees grown in the shade of taller trees.
Regenerative Agroforestry: Using agroforestry as a mechanism to restore forest on degraded land.
Regenerative Cacao: Cacao that is harvested from a regenerative agroforestry system.
To’ak and TMA
Regenerative agroforestry is a strategy we've been experimenting with for over a decade and a half. At this point, I should explain that when I say “we,” I mean both TMA and To’ak. I co-founded TMA in 2007 with a few like-minded conservationists. Five years later, I co-founded To’ak with a few like-minded entrepreneurs.
Both organizations have been working together on cacao genetics and agroforestry dating back to 2018, when TMA and To’ak jointly created a genetic bank of 100% pure Ancient Nacional cacao trees in the Jama-Coaque Reserve. The genetic bank is our collective effort to prevent the extinction of one of the most legendary heirloom cacao varieties on earth, and to nurse it back to health.
Our regenerative cacao project is the next step in that process: it’s the part where we distribute the seedlings of this historic cacao variety to local farmers as a mechanism for forest restoration.
But this story has its roots in earlier efforts—some of which didn’t work well.
The Failures Before We Got It Right
Coastal Ecuador, which is part of a global biodiversity hotspot, is also one of the most deforested ecosystems in South America. Much of the forest has been converted to cattle pasture and slash-and-burn corn plantations.
TMA has been experimenting with different ways to encourage reforestation among local landholders for over fifteen years, with mixed results. We ultimately learned that it’s very difficult to convince people to plant trees unless those trees will provide them with food, income, or both.
Simply handing out cacao seedlings to farmers, with a vague promise to help them find a good buyer, also does not work well. (We tried it. Doesn’t really work.) Directly planting cacao trees on people’s properties (with their help) doesn’t work either; once the trees are planted, landholders may not nurture them to maturity unless there is a strong incentive to do so. That's why simply "planting trees" is usually not an effective way to truly reforest land.
Eventually, we learned our lesson. We identified four main obstacles that were impeding farmers from reforesting their own land:
- Lack of seedlings and other basic equipment, like fencing (easy to solve)
- Lack of water access (more difficult to solve, but surmountable)
- Lack of market access for tree crops (much more difficult than most people think)
- The opportunity cost of other activities like cattle ranching (this is where most projects fail)
Our approach with this project was to systematically overcome each of these obstacles.
Making Agroforestry the Path of Least Resistance
The first obstacle—lack of seedlings and equipment—was the easiest to overcome. We supply every farmer with all the seedlings and equipment that he or she will need to reforest their land. Some of the seedlings are sourced from the genetic bank of pure Ancient Nacional cacao, spearheaded by To’ak and implemented by TMA. MOCCA also provided key funding for creating and maintaining a local nursery and clonal garden of high-quality cacao trees. TMA also supply farmers with fencing, access to mechanical weed-whackers (a massive boon to labor efficiency), and organic fertilizer.
Overcoming the second obstacle—water access—was critical. A reforestation project is worthless if the trees don’t survive the dry season. In most parts of the tropics, where the year is divided into wet and dry seasons, some level of irrigation is usually necessary for agriculture to be productive. So we built irrigation systems for every single farmer, each of whom helped with the installation and shared 50% of the costs.
The third and fourth obstacles—market access and opportunity cost—are the most difficult to overcome. This is where most well-intentioned NGOs, government institutions, and chocolate companies fail in their effort to promote sustainable cacao farming.
“Show Me the Money!”
As many cacao farmers will readily admit, planting cacao trees is the easy part. The hard part is finding a buyer willing to pay fair prices. This is where To’ak’s role becomes indispensable.
Standard farmgate prices for wet cacao are punishingly low throughout the tropics, including in Ecuador—where prices usually hover in the range of $0.20 to $0.30 per pound for wet cacao. At those prices, the rate of return for most farmers—on both investment and effort—is negative.
Most farmers are rational economic actors. If there is no economic benefit to planting trees—be it cacao or any other species—why do it? For beauty and the good of nature? For anyone who is struggling to feed their family, those lofty reasons usually aren’t enough. The rational economic response to this conundrum is best captured by that famous line from the movie Jerry McGuire: “Show me the money!”
To’ak has long taken pride in paying cacao farmers the highest prices in the continent—ranging from $0.80 to $2.00 per pound, depending on the Cru. This is 200% to 800% above the standard farmgate price. Check out To’ak’s Transparency Report for more details.
This same pay scale was offered to farmers in TMA’s regenerative agroforestry program, and it immediately captured the interest of nearly every farmer in the area. But here’s the catch: these prices are only paid to farmers who plant cacao trees in combination with a specific and diverse array of other trees.
The price premium is explicitly structured as an incentive to restore forest on degraded land. Monocultures don't count!
Winning the Battle of Opportunity Costs
Another classic pitfall in many regenerative agroforestry projects is the failure to account for opportunity costs. It’s not enough for agroforestry to generate a positive return for farmers. The revenue stream from agroforestry needs to exceed the revenue stream from whichever activity the farmer is currently performing on his or her land. Otherwise, “business as usual” will likely continue.
In this part of Ecuador, the two most common land uses are cattle ranching and slash-and-burn corn cultivation—both of which are also the two primary drivers of deforestation. We calculated the net revenue stream for both of these “business as usual” activities and then compared this to the revenue stream for regenerative agroforestry.
As you will see, the benefit of a “direct trade” relationship with a premium cacao buyer like To’ak is a critical piece of the economic puzzle.
A comparison of net revenue streams for "business as usual" activities versus regenerative agroforestry
As the table shows, regenerative agroforestry does ultimately win out against both cattle ranching and corn cultivation, as well as coffee cultivation. But there’s another problem: it takes four or five years before cacao trees begin generating revenue, whereas cattle and corn can generate returns in the first year.
One solution to this problem is to intercrop cacao trees with banana and plantain crops, which produce food and income within twelve months. But this still doesn’t entirely erase the short-term deficit. Considering most families in this region live month-to-month, short-term revenue takes precedence over long-term revenue.
This is where the mechanism known as “payments for ecosystem services” (PES) comes into play.
The Clincher: PES Payments
Payments for Ecosystem Services (PES) are financial incentives offered to landowners in exchange for managing their land to provide some sort of ecological service—for example, planting trees that remove carbon from the atmosphere.
To learn more, check out TMA's article that explains the concept of Payments for Ecosystem Services, which we believe to be a veritable game-changer in the realm of tropical forest restoration.
In the context of this specific PES project, TMA pays farmers $4,500 per hectare over five years to convert their own deforested land into a regenerative forest that features shade-grown cacao trees. This payment immediately increases farmers’ earnings by 44% relative to slash-and-burn corn cultivation and over 300% relative to cattle ranching. This is enough to convince farmers to shift their activities away from degenerative agriculture and toward regenerative agroforestry.
In addition to the $4,500 in direct payments to farmers, an additional $2,900 is invested in each hectare, including all equipment and seedlings, site visits, technical assistance, and monitoring. The total investment is $7,400/hectare ($3,000/acre).
A comparison of annual earnings per hectare for farmers at To'ak farmgate prices versus standard farmgate prices with and without PES income
This payment is not a subsidy or a welfare payment. It’s a payment in exchange for the service of removing carbon from the atmosphere and preserving biodiversity in a global conservation hotspot.
It also bears mentioning that the PES payments only last for five years. It is a short-term measure designed to bridge the gap until farmers begin to generate an independent revenue stream through the sale of cacao, banana, and other tree crops that their regenerative agroforestry parcels produce. You can learn more by checking out our other article “Why Paying Farmers for Reforestation is a Game-Changer.”
Planting Design & Ecological Impact
The species mix and planting densities for our regenerative agroforestry program are quite specific. We created this design ourselves, informed by fifteen years of agroforestry trial and error in this particular ecosystem and in these same communities.
Here’s the breakdown of trees and crops, per hectare:
- 80 native shade trees, across 11+ species
- 40 large fruit trees, across 5+ species
- 600+ cacao trees, using 12 different cultivars (including 100% pure Ancient Nacional cacao)
- 300+ banana and plantain plants
This means that each hectare contains a minimum of 720 trees across at least 17 different species, in addition to a healthy dose of the region’s most important staples: banana and plantain. We estimate that each hectare planted according to this design, on land that was previously deforested, removes 191 tons of CO2 over the 30-year project life, net.
Human & Economic Impact
The first round of farmers started planting in January of 2021 and the second round put their seedlings into the ground in January of 2022. This is still a relatively small-scale project. We hope to keep scaling it up. Thus far, here’s the impact:
- 77 acres (31 hectares) of land is being restored to forest
- 37 families are participating
- 16,320 trees have been planted across 20 species
- On average, this project boosts overall family income by 50%
Once these cacao trees reach maturity, starting in 2024-2025, the farmers currently enrolled in this program will likely produce about 40 tons of wet cacao per year. This equates to roughly 13 metric tons of high-quality dark chocolate each year. In the process, it helps restore the forest in one of the most deforested ecosystems in South America.