mini scale communities ethical chocolate factory

This Entry has been submitted.

mini scale communities ethical chocolate factory

Vanuatu
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

The solution is to create a mini scale chocolate factory owned by the producers/communities through the ACTIV Association, which is the national Fair Trade union of rural producers and communities of the archipelago of Vanuatu. The chocolate factory can purchased the raw materials from the producers and/or be a service provider for the producers. The benefits will fund the "Community Fund".

About Project

Solution: What is the proposed solution? Please be specific!

We will really link producers to the consumers with a fair and transparent trading system, which will allow them fully owning the complete supply chain from bean to bar. The producers will own the mini chocolate factory through ACTIV Association. ACTIV Association owns ACTIV Ltd the commercial branch of the organisation, which makes ACTIV an hybrid organisation. ACTIV Ltd will operate and manage the mini chocolate factory and the benefit generated by the trading will fund the Community Fund, which will be to support with the producers and the communities economical (rural value-adding development, quality and infrastructure improvement...), social (sanitization..) and environmental (renewable energies development, emergency management with natural hazards mitigation...) projects. The mini factory will be the communities/producers factory (the informal sector) and ACTIV can either buy the raw materials (cocoa beans, nuts, fruits, spices, handicrafts for packaging..) to the communities/producers and the chocolate created will be an ACTIV chocolate or rent the equipments to produce the chocolate for bigger producers groups with more cashflow or their own market and acts as a service provider. ACTIV will develop a transparent trading system with the financial and the commodity tracabilities. The mini chocolate factory will be based in Port Vila, the capital of the archipelago and also turned as a touristic attraction; around 190,000 people visit Vanuatu annually. Cocoa beans from other Melanesian countries (Solomons Is., PNG, Bougainville, Fiji) from the South West Pacific can be processed in this mini chocolate factory, which can be the South West Pacific mini chocolate factory with products from different origins. This infrastructure will be fully integrated within the Melanesian cultural way of living with the community approach.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

Local social impact of the business’s products or services - Increased access to education (knowledge & skills) - A healthier environment - Improved quality of living standards (access to food, health, and housing) (example: mosquito nets, which have a clear positive effect on the health of the local population). The long term impacts of this program are aimed to economically, socially and environmentally empower the rural communities of Vanuatu, particularly those in the remote areas who are the most disadvantaged by decentralizing the production with mobile units. Other value-added products will be developed with the oil production, recycled paper and plastic and an information centre on the natural disasters and their mitigation. The trading of the cocoa in 2008-2009 brought back over USD 590,000 in the rural communities and USD 50,000 for the trading of the handicrafts. This source of income is sustainable for it uses local natural resources and builds upon traditional skills and cultural heritage. It promotes self-reliance and sustainable development. Within the community, these funds can be used to improve the community’s livelihoods and access to health care as seen through the North Ambae pilot project. In 2006 the women’s group made around US$ 2,270 which was enough to pay for school fees, kerosene and staples such as sugar, oil and flour. In 2007 their income increased substantially to US$ 3,810 which is significantly higher than the average rural earnings. The target groups for this project are the rural communities (men, women and youths), minority producers, which are the most disadvantaged in Vanuatu economically and socially with fewest employment opportunities, lack of qualifications and access to urban and international markets.
About You
Organization:
ACTIV Association
Visit website
About You
First Name

Sandrine

Last Name

Wallez

Website
Your Organization

ACTIV Association

Country

, SH

About Your Organization
Organization Name

ACTIV Association

Organization Phone

(678) 22554

Organization Address

Po. Box 698, Port Vila

Organization Country

, SH

Organization Type

Non-profit/NGO/Citizen-sector Organization

The information you provide here will be used to fill in any parts of your profile that have been left blank, such as interests, organization information, and website. No contact information will be made public. Please uncheck here if you do not want this to happen..

Your solution
Country your work focuses on
If multiple countries, please list them here. If your solution targets an entire region, please select it below

can be extend to the South West Pacific area with the other melanesian countries.

Region(s) your solution focuses on:

East Asia and the Pacific.

Range of turnover in your target firms, in USD

$1-5 Million.

Average turnover in USD of your target firm

USD 1,4 Million within 3 years

Number of employees in your target firms

5-24.

Average number of employees of your target firm

7

Specify the size, average and range of expected loans or investments in each target firm

We can start with smaller scale factory equipments. This will start with a small
roaster, a winnower (15kgs/hour), a nib grinder for liquor, ball mill and simple
tempering unit. The estimated cost for such equipments is:Mini scale cocoa bean winnower: $21,135
Variable speed bean breaker: $2,375
Cocoa Bean Roaster w/ Bean Cooling: $30,835
Nib Grinder:$16,610
Hydraulic Cocoa press: $ 10,000
50 lb. (22.7kg) Ball Mill: $42,695
Tempering Unit:$42,695
Molding and packaging: $ 20,000
Sub-Total: $ 186,345
Shipping (25%): $46586
Total: $232,931
Rounding: $ 235,000

The rent of the land with facilities for 3 years is estimated to cost US$ 250,000.
We will need another US$ 72,600 for the factory setup for the first year.
Total project: USD 561,200

What stage is your solution in?

Idea phase

Innovation
How does your proposed innovation leverage public intervention in catalyzing private SME finance?

The mini chocolate factory will develop the rural economy with the trading of the raw materials and the processed products. It will also stimulate the development of value-adding products development and be an incentive for the producers and communities, who can concentrate on the improvement of quality of their products and the increase a production. Micro finance institutions and banks can also assist the producers in these matters.
The information provided by ACTIV on the trading and financial history of each producers group/communities can assist them to access investments or funding to develop the rural economy.

What barriers does your proposed solution address?

Lack of financial capacity, Lack of SME access to skills / knowledge / markets, General barriers to SME development related to investment climate, Lack of financing to women entrepreneurs.

If you checked any of these barriers, describe how your solution addresses them

The informal sector in Vanuatu , which represents 80% of the national population (ie 190,000 people) is not taken into consideration for the national economic development. The producers group/communities do not have access to the business environment with the infrastructures, capital, market information...They also deal with small commodity volumes, which are individually irrelevant for business and trading.
ACTIV by linking the producers groups and the communities can assist them to access markets and acts as a trade facilitator for the informal sector. ACTIV assist them with prefinance arrangements to allow them to continue the production of their products.
As a national union of producers/communities, ACTIV also developed a national Internal Control System, which will assist for the group certifications for organic and Fairtrade. ACTIV also seek to support the producers group/communities with the training on the best agricultural practices and the investments/funding opportunities.
With the trading and products information available on each producers group/communities, it will facilitate the investment climate and reduce the risk of investing in the rural areas.
ACTIV works also with the most disadvantaged people (disabled people, women, isolated producers groups/communities..) from the society and try to assist them with pre financing and products development with appropriated training.

Impact
Provide empirical evidence of your proposed solution's success/impact at present. If your project is in the idea phase, please provide evidence that speaks to its potential impact

ACTIV has acted as a trade facilitator for the cocoa producers groups and succeed to assist the export in 2008-2009 of 294 t of cocoa, which represent almost one third of the national production. ACTIV now is improving its logistics and seeking other markets internationally. The analyze of the trading has shown that the higher expenditure for the producers is the international shipping, which represent 10% of the CIF contract. This expenditure can be reduced by developing value-adding products such as the cocoa powder and butter and the chocolate.
The development of chocolate is also very valuable as it can also assist the producers of nuts, fruits, spices and handicrafts for the packaging with the various recipes.
ACTIV has already a letter of intent from Trade Aid, the New Zealand Fair Trade organisation, which has 37 shops nationally to distribute cocoa value-added products developed through ACTIV.

The Secretariat for the Pacific Community (SPC) is now interested in ACTIV as a national union for the research on the cocoa diseases and pests mitigation and the Fair Trade Association of Australia and New Zealand (FTAANZ) is also interested in working with ACTIV to develop a Fairtrade certification (FLO) adapted to the Pacific with the traditional community structures with traditional gardens.

ACTIV is also part of a pilot project starting in August 2010 to develop a Pacific brand to access niche markets in New Zealand. And ACTIV is on the way to be registered to the World Fair Trade organisation as a Fair Trade organisation.

ACTIV as a national union of producers/communities and acting as a trade facilitator for its members has already shown that the informal sector is a powerful sector when united. It gives also the opportunities to every people from the society to access an income generation activities whatever the volume of their products. The success of ACTIV also stands on the transparency of its trading system with the information of the producers/communities on the full supply chain.

How many firms do you expect to reach?

Locally we expect to reach around 20 different firms mainly in touristic industry with the hotels-resorts and the national airline company.
Internationally we will target regional and international niche markets (organic and Fairtrade). We already have interest from Trade Aid in New Zealand and 5 companies from Australia and New Caledonia and SERRV International from USA.

What is the volume of private SME finance you aim to catalyze?

We hope we can catalyze up to USD 2 Million annually through the different supply chains and the trading. The development of the rural economy is essential for its sustainability.

What time frame will be required to reach these targets?

These targets can be reached quickly as the producers/communities are already producing their products and we have confirmed potential markets locally and internationally.

Does your solution seek to have an impact on public policy?

Yes

What would prevent your solution from being a success?

We can face a shortage of the local raw materials due to natural disasters and cocoa from other countries of Melanesia area (PNG, Bougainville, Solomons and Fiji) can be purchased to supply the markets.

We can face an economic recession so that there is difficulties in finding regular markets to sustain supply. We have to develop strong local market to minimize effects of an economic recession.

We can face a risk of maintaining quality control and thus certification suspension. Strict guidelines will need to be implemented in line with the objectives of the organisation to return maximum benefit to small producers.

The price of imported chocolate can be lower. The chocolate has to be marketed as the only organic and Fairtrade Vanuatu/Pacific chocolate, which support the local producers/communities.

Sustainability
List all the funding sources that are required for the sustainability of this solution

At the beginning, we need for the sustainability of the project access to minimum advanced payments from our trading partners or local donors institutions to be able to support the producers/communities.

With the support to develop the mini chocolate factory (purchase of equipments and facilities), the project can be sustainable with the local and international markets.

Demonstrate how your proposed solution has the capacity to graduate from dependence on public finance. What is the time frame?

To be able to be independent, a part of the benefits will be re-invested in the structure to increase the capital to purchase the raw materials and to increase the production capacity with the upgraded equipments.
The cashflow analysis shown that the system can work with a reinvestment of 20% of the profits share for the first year, 15% for the second year and 12.5% for the third year.

Demonstrate how your proposed solution will survive a potential loss of its largest private funding source

If we have the initial support of the mini chocolate equipments and facilities, we can easily survive a potential loss of the largest private funding source. The production of 300,000 bars of chocolate (target within three years with 100,000 bars locally and 200,000 bars internationally) demand 18 t of cocoa beans. ACTIV has a necessary cash flow to purchase the raw materials for such a volume.

The working capital can also be covered; such a structure does not need more than 5 people to work properly.

Please tell us what kind of partnerships, if any, could be critical to the greater success and sustainability of your innovation

The partnership with research organisations can be a significant assistance for the greater success and sustainability of the innovation with the improvement of the quality and productivity of the raw materials.

A good trading partnership network is also essential for the sustainability of the innovation.

Are there non-financial issues that could threaten the sustainability of your proposed solution?

Not really as the volume of raw materials needed is quite small and can easily be sourced and the processing demands qualified people, that can be training easily at the regional level.

Please tell us if your proposed solution aims to scale up through a high growth sector, expand immediately to multiple sectors, and/or scale up geographically

The proposed solution can be scaled up at the national level with development of other mini chocolate processing units or value-adding units (cocoa butter and powder) in other islands of the archipelago according to the local economy and duplicated regionally within the Melanesian countries with similar traditional societies structures. This solution aims to develop the main primary sector from this nation and thus region,which is the agriculture.