PERU CACAO ALLIANCE PHASE II

Disclaimer: The opinions expressed in this publication do not necessarily reflect the opinions of the United States Agency for International Development (USAID) or the Government of the United States of America.

PERU CACAO ALLIANCE

PHASE II WORK PLAN, YEAR 4 COOPERATIVE AGREEMENT NO: AID-527-A-16-00002

TOCACHE, 2019. COMMITMENT AND ENTREPRENEURIAL VISION IS WHAT DEFINES A FARMER LEADER WHO

HARVESTS APPROXIMATELY 2,000 KG PER HECTARE.

TABLE OF CONTENTS

ACRONYMS .......................................................................................................................................... 3

EXECUTIVE SUMMARY ....................................................................................................................... 4

RESULT 1: FACILITATE MARKET ACCESS ....................................................................................... 6

RESULT 2: INCREASE CACAO FARMER PRODUCTIVITY AND CACAO QUALITY ...................... 16

RESULT 3: INCREASE ACCESS TO FINANCE ................................................................................ 22

RESULT 4: ENCOURAGE PRIVATE INVESTMENT ......................................................................... 27

COMMUNICATIONS ........................................................................................................................... 30

GENDER .............................................................................................................................................. 33

MONITORING AND EVALUATION ..................................................................................................... 38

FINANCE AND ADMINISTRATION ..................................................................................................... 40

LEVERAGE .......................................................................................................................................... 43

ENVIRONMENTAL COMPLIANCE ..................................................................................................... 44

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ACRONYMS ADEX Exporters Association

AFS Agroforestry System

AMF Arbuscular Mycorrhizal Fungi

APPCACAO Peruvian Association of Cacao Producers

DCA Development Credit Authority

EBP Environmental Best Practice

ECR Environmental Compliance Report

EMMP Environmental Monitoring and Mitigation Plan

EU European Union

FEPCMAC Peruvian Federation of Municipal Savings and Loan Banks

FI Financial Institution

FODESAM Environmental Defense Fund

GHG Greenhouse Gas

IEE Initial Environmental Examination

INDECOPI Peruvian National Institute for the Protection of Competition and Intellectual Property

INTP Integrated Nutrition and Timely Pruning

IPM Integrated Pest Management

M&E Monitoring and Evaluation

MINCETUR Ministry of Foreign Trade and Tourism

MOU Memorandum of Understanding

MSME Micro, Small, and Medium Enterprises

MT Metric Tons

PCA Peru Cacao Alliance

PDP Pagos Digitales Peruanos

PPF Permanent Production Forest

SCM Supply Chain Manager

SENASA National Agricultural Health Service

TABSAC Técnicas Agrobiológicas

WTO World Trade Organization

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EXECUTIVE SUMMARY In its nearly three years of project implementation, the Peru Cacao Alliance (PCA) Phase II has successfully catalyzed a broad base of private sector partners—consisting of approximately 40 companies and cooperatives—to improve the competitiveness of the cacao and chocolate value chains in Peru. As of March 2019, PCA has facilitated US$31.9 million in investments and helped its partners achieve 110,000 metric tons (MT) in cacao production and 85,000 MT in exports. Approximately 40% of PCA’s smallholder farmer partners have successfully accessed credit—a figure four times the national average. From 2016 to 2018, families working with PCA have increased their incomes by nearly 20%; in fact, 60% of partner families now have incomes that are 70% above the poverty line.

Our primary objective during Year 4 is to ensure that the collaborative ecosystem PCA has helped create will continue even after the project has ended, specifically focusing on expanding sustainable private sector provision of services for small-scale farmers so they can continue to access conventional and organic fertilizers, tools, and equipment, credit, capacity building, and technical assistance services. As part of our efforts to transfer responsibilities and strengthen the PCA model, we will work with our private sector partners to improve their market access, productivity, and quality.

To enhance commercial connections, we will continue to connect Supply Chain Managers (SCMs) with both Peruvian and international chocolate companies and seek to expand each SCMs’ cacao bean offerings by helping them establish relationships with independent farmers to increase their member base.

To improve cacao production, we plan to implement an intensive campaign on the use of integrated nutrition and timely pruning (INTP) and integrated pest management (IPM) technologies during the first three months of Year 4 (a critical period based on cacao’s growing cycle). For the remainder of the year, technical support activities will focus on supporting farmers as they continue to apply the PCA technology package on their plots in addition to implementing environmental best practices (EBPs).

Beginning in January 2020, PCA will shift from providing direct support to farmers in San Martín (including Tocache Province) to strengthening the capacity of local partners providing technical assistance via consortiums. We will work closely with each organization to design impact strategies and trainings and continue to develop the quality program and access to finance components. We will take a similar approach in some corridors in Ucayali beginning in June 2020.

PCA remains focused on offering a differentiated cacao product. During Year 4, we will continue to train post-harvest cacao specialists and develop cacao flavor profiles that highlight the quality of Peruvian cacao. We will also introduce environmentally friendly cacao as a new point of differentiation, working with 10 cooperatives in the San Martín region to calculate their carbon footprint and develop and implement plans to monitor and mitigate greenhouse gas (GHG) production.

Technology adoption by PCA farmers and SCMs requires significant capital investments. During the first three years of project implementation, PCA successfully connected microfinance organizations with member farmers to provide them with the financial means to implement the appropriate technology packages. However, agricultural lending is still quite limited compared to other sectors in Peru due in part to a lack of financial institution (FI) personnel trained in this area. As part of our

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Year 4 sustainability plan, we will work with our partner FIs to develop the first school for agricultural credit analysts to increase their capacity for agricultural lending.

To promote our various streams of work, PCA has developed a corresponding communications plan for each of the technical strategies detailed above to disseminate key messages and facilitate social and behavior change. Effective communications between PCA and our many diverse partners will be critical to the program’s success, especially as we begin to execute our sustainability plan in San Martín and Ucayali.

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RESULT 1: FACILITATE MARKET

ACCESS

A.1 Connect rural households in alternative development areas directly with end buyers in high value markets via SCMs.

A.1.1. Facilitate intermediation between SCMs and end buyers

One of the primary challenges for SCMs supplying cacao bean products to end buyers has been the presence of traces of pesticides in the cacao batches, which has led to new clauses in purchasing agreements that give the end buyer the right to test samples from each batch and set prices and delivery dates depending on the outcomes of the tests. As a result, organizations are now storing batches of cacao for up to 45 days in their warehouses, which generates additional operating costs that decrease profits. Furthermore, the reduced quality of the dried cacao limits the organizations’ ability to offer a higher priced differentiated product. PCA plans the following activities for Year 4 to address these issues:

FINE FLAVORED CACAO IN TINGO MARÍA, 2019. DIFFERENTIATION IS A KEY ELEMENT FOR ACCESSING NEW, HIGH

VALUE MARKETS.

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Table N° 1. Intermediary Activities between SCMs and End Buyers REGIONAL

OFFICE SCM BUYER ACTIVITY EXPECTED RESULTS1

Ucayali

CAC "Huipoca" (ASCAH)

COPASA Strengthen the organic program through farmer trainings on IPM, with an emphasis on cultural, physical, chemical, and biological control. Offer training on post-harvest processes to obtain Grade 1 cacao.

Increase the sales volume of organic cacao by 10% year-over-year (2020 vs. 2019). Ensure that each organization has at least one quality control manager.

CAC "Colpa de Loros"

KAOKA

Comité Central de Curimaná (CCC)

ICAM, SUMAQAO

Huánuco

CAC "La Divisoria" LTDA

PRONATEC AG Strengthen the organic program through farmer trainings on IPM, with an emphasis on cultural, physical, chemical, and biological control. Offer training on post-harvest processes to obtain Grade 1 cacao.

Increase the sales volume of organic cacao by 10% year-over-year (2020 vs. 2019). Ensure that each organization has at least one quality control manager.

APCCA PRONATEC AG, ICAM

CAICAH "Alto Huallaga"

WINTER

San Martín

CAC "Acopagro"

TCHO, ICAM, PRONATEC, Machu Picchu Foods, MINKA SCS AG, Trading Organic

Strengthen the organic program through farmer trainings on IPM, with an emphasis on cultural, physical, chemical, and biological control.

Increase the sales volume of organic cacao by 10% year-over-year (2020 vs. 2019). CAC "Allima

Cacao" ICAM, ECOM

CAC "Cuencas del Huallaga"

ICAM, NORANDINO

CAC "Oro Verde" ICAM

* The Quality Coordinator will be in charge of post-harvest training. Elite technicians will carry out the IPM training. The Agribusiness Manager will oversee and coordinate all trainings.

A.1.2 Support commercial SCMs to develop relationships with independent farming families

The work supported by PCA is based on connecting and establishing commercial relationships between the SCMs and independent farmers within each micro-corridor. To achieve and deepen these connections, we have created lists of farmers that are recognized as leaders in their communities and that can easily adapt to the organic and fair-trade programs supported by the SCMs.

In Year 4, we will continue to facilitate and strengthen these commercial relationships, as detailed in the table below. A key factor to this strategy’s success will be setting the annual sales targets for each SCM in October, which will include collection plans that detail monthly volume targets and provide a basis to estimate the required capital and collection staff.

1 Note that the expected results are based on the assumption that the demand for and prices of organic and quality cacao will stay the same.

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Table N° 2. Commercial Relationship Building Activities REGIONAL

OFFICE CROP SCM ACTIVITY (*) EXPECTED RESULTS

Ucayali

Cacao

Villa Andina Host coordination meetings to introduce SCMs to top fine flavor cacao farmers within the micro-corridors.

At least 10% of the identified farmers join the organizations’ organic programs.

Machu Picchu Foods

CAC "Colpa de Loros"

Plantain Procesadora Tropical

Host coordination meetings to introduce SCMs to top plantain farmers within the Atalaya and Puerto Inca micro-corridors.

565 farmers are incorporated into the Bellaco (“Hartón”) plantain value chain.

Huánuco Cacao Machu Picchu Foods

Host coordination meetings to introduce SCMs to top fine flavor cacao farmers within the micro-corridors.


San Martín Cacao

CAC "Acopagro"

Host coordination meetings to introduce SCMs to top fine flavor cacao farmers within the micro-corridors.


CAC "Allima Cacao"

CAC "Oro Verde"

CAC " Cuencas del Huallaga"

CA "Gran Saposoa" – Coopalgsa

* These activities are within the scope of work of Agribusiness Managers (Palladium personnel), who work to strengthen relationships between aggregators and end buyers.

A.1.3 Develop guidelines and an action plan to manage cadmium levels in cacao

Throughout Phase II, PCA has played a significant role in managing the issue of cadmium levels in Peruvian cacao and has contributed to strengthening Peru’s participation in the following international efforts:

• The Codex Alimentarius, through the participation of representatives from the National Agricultural Health Service (SENASA), Exporters Association (ADEX), Ministry of Foreign Trade and Tourism (MINCETUR) and the Peruvian Association of Cacao Producers (APPCACAO)

• The World Trade Organization (WTO) and the European Union (EU), where Peru is represented by MINCETUR

PCA conducted various field tests in partnership with the National Agrarian University - La Molina and Técnicas Agrobiológicas (TABSAC) regarding mycorrhiza and hyperaccumulator plants (Amaranthus sp.) with promising results, specifically in the use of soil improvers and integrated nutrition to mitigate cadmium levels. We have started working with Cacao Seguro and Bioversity to validate the protocols for the three regions where the Alliance is active and expect to continue these activities in Year 4. The following table provides an overview of all cadmium mitigation activities that PCA will implement during Year 4:

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Table N° 3. Action Plan to Manage Cadmium Levels in Cacao

STRATEGIC/LEAD PARTNER ACTIVITY (*) EXPECTED RESULTS

In terms of representation:

Cacao Seguro Project Working Session N° 2 - Mitigation Measures

At least three proposals are approved and in the process of being implemented.

SENASA (Directorate of Agricultural Inputs and Food Safety)

Meetings with the Committee on Food Contaminants

At least one proposal is agreed upon for submission to the Codex Alimentarius.

In the field:

TABSAC

Three additional tests conducted on heavy metal absorption using arbuscular mycorrhizal fungi (AMF) and hyperaccumulator plants.

Identify the factors that influence cadmium absorption through AMF.

Bioversity - Cacao Seguro

Three cadmium mitigation tests implemented, including nine treatments and 10 repeat samplings on cacao production plantations (Ucayali, Huánuco, and San Martín).

At least one treatment shows positive results for cadmium mitigation.

Peru Cacao Alliance Promote INTP as a strategic mitigation measure to decrease cadmium levels.

At least 20 mega events on INTP held across the three regions.

* These activities will be implemented by the PCA technical team (Palladium staff).

A.1.4 Support SCMs and end buyers in the development and promotion of differentiated products

Environmental responsibility is core to PCA’s ongoing work with SCMs. Specifically, PCA is encouraging enrichment of cacao plots through planting timber species and implementing EBPs to decrease GHG production. Table 4 highlights PCA’s planned activities in Year 4 to enhance the environmental responsibility of cacao farming. This work will be supported by an external consultant, at a cost of approximately $10,000.

Table N° 4. Environmental Responsibility Activities REGIONAL

OFFICE CROP SCM(s) ACTIVITY (*) EXPECTED RESULTS

Ucayali Cacao CAC "Colpa de Loros" Plant timber species in cacao monocultures (enrichment planting).

At least 70% of CAC "Colpa de Loros” members have an agroforestry system in place for their cacao.

Huánuco Cacao

CAC “Paraíso," ASPROC NBT, CAC "Cordillera Azul," CPCACAO, and CAC "Mishollo"

Develop and implement plans to monitor and mitigate GHG production in coordination with PROMPERU.

10 organizations implement a plan to monitor and mitigate GHG production in the field and among all their members. San Martín Cacao

ACOPAGRO, ALLIMA CACAO, APAHUI, CAI TOCACHE, and ORO VERDE

* These activities will be completed with staff and an external consultant with a cost of approximately $10,000 for

these activities. Additionally, through March 2020, PCA will have support from an adviser from UNITERRA, who will

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monitor work in the field, this amount is estimated to cover one local consultant (part time), his or her travel and per diem in the region. Activities will include quarterly monitoring of organizations implementing these programs for a period of 9 months.

Further, PCA is addressing cacao bean post-harvest process traceability, which directly impacts product quality and flavor profile differentiation. The following activities are planned for Year 4:

• Facilitate post-harvest and tasting trainings for SCMs in Huánuco, Ucayali, and San Martín via Schools of Excellence to enhance their ability to assess cacao and establish flavor profiles. This will help SCMs develop processes necessary to maintain the quality of their raw materials.

• Develop training courses for tasters and cacao quality specialists implemented in partnership with other institutions to train cacao specialists. We expect to implement at least one course in each region.

Table N° 5. Training Activity Budget

Region Course name Number of

participants

Number of

courses

Cost per course

Total ($)

Ucayali Quality Excellence

School 25 1 3,000.00 3,000.00

Huánuco Quality Excellence

School 25 1 3,000.00 3,000.00

San Martín Quality Excellence

School 25 1 3,000.00 3,000.00

TOTAL 75 3 9,000.00

Table N° 6. Training Activity disaggregated

Item Cost per module Number of modules Total

Training materials (flipcharts, markers, adhesive, tape, etc). 66.6 3 200

Disposable materials (plates, paper, water, spoons, etc). 66.7 3 200

Inputs to prepare demonstrations 150.0 3 450

Food for participants 566.7 3 1,700

Local 150.0 3 450

Total USD $ 1,000 3,000

* The Quality Coordinator will serve as instructor for the School of Excellence, it is part of the SOW.

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Table N° 7. Quality Improvement Action Plan REGIONAL

OFFICE ORGANIZATION ACTIVITIES (*) EXPECTED RESULTS

UCAYALI

Comité Central con Desarrollo al Futuro de Curimana

Provide guidance on improving the centralized post-harvest processes.

The organization implements a quality control laboratory that will be used to identify flavor profiles.

Cooperativa Colpa de Loros

Train a team of post-harvest specialists/specialists in cacao liquor tasting via the Schools of Excellence.

Improved post-harvest processes.

Various Train technical personnel that specialize in cacao quality control via the Schools of Excellence.


HUÁNUCO

Cooperativa Agroindustrial Alto Huallaga Ltda. (CAICAH)

Provide guidance on the goods receipt process, EBP, managing wastewater, and ways to continue to improve traceability in order to position their certified cacao.

CAICAH positions itself in premium cacao niche markets.

Cooperativa Agroindustrial y de Servicios del Centro Poblado de Bella, Bajo Monzón (CAI BELLA)


The organization positions itself in premium cacao niche markets.

KATO SAC

Provide guidance on improving the organization’s chocolate-making processes to ensure high quality final products.

The organization achieves high quality final products.



SAN MARTÍN

Allima Cacao Provide guidance on ways to improve the fermentation system in terms of safety and environmental impact.

At least one of the centralized post-harvest systems has a safety program in place.

Asociación Cuencas del Huallaga

Provide guidance on ways to improve the fermentation system in terms of safety and environmental impact.

The organization achieves high quality cacao and improves safety conditions.



* These activities are part of the quality program, executed directly by Palladium.

• Participate in the Cacao and Chocolate Technical Committee to contribute to the revision, modification, and approval of the regulatory standards that impact cacao, both in terms of cacao beans and final cacao-based products. This committee is part of the Peruvian National Institute for the Protection of Competition and Intellectual Property (INDECOPI).

• Continue to provide one-on-one specialized support to PCA SCMs on physical and sensory analysis as well as assist SCMs in developing cacao flavor profiles in Ucayali, Huánuco, and San Martín (via the quality program coordinator). Given that the chocolate and cacao market is extremely demanding, we will seek to ensure that SCMs’ quality control measures result in products that conform to industry requirements—primarily the roasting parameters (humidity, roasting time, and temperature) of each sample—to effectively highlight their attributes.

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Table N° 8. Quality Improvement Action Plan REGIONAL

OFFICE ORGANIZATION ACTIVITIES (*) EXPECTED RESULTS

UCAYALI

Comité Central con Desarrollo al Futuro de Curimana

Provide guidance on improving the centralized post-harvest processes.

The organization implements a quality control laboratory that will be used to identify flavor profiles.

Cooperativa Colpa de Loros

Train a team of post-harvest specialists/specialists in cacao liquor tasting via the Schools of Excellence.




HUÁNUCO

Cooperativa Agroindustrial Alto Huallaga Ltda. (CAICAH)


CAICAH positions itself in premium cacao niche markets.

Cooperativa Agroindustrial y de Servicios del Centro Poblado de Bella, Bajo Monzón (CAI BELLA)


The organization positions itself in premium cacao niche markets.

KATO SAC

Provide guidance on improving the organization’s chocolate-making processes to ensure high quality final products.

The organization achieves high quality final products.



SAN MARTÍN

Allima Cacao Provide guidance on ways to improve the fermentation system in terms of safety and environmental impact.

At least one of the centralized post-harvest systems has a safety program in place.

Asociación Cuencas del Huallaga

Provide guidance on ways to improve the fermentation system in terms of safety and environmental impact.

The organization achieves high quality cacao and improves safety conditions.



* These activities are part of the quality program, executed directly by Palladium.

During Year 4, we plan to engage in marketing efforts on both the national and international level to promote the quality of Peruvian cacao, including the following activities:

• Participate in events and develop activities to promote and commercialize Peruvian cacao throughout the year in the areas where PCA is active (Ucayali, Huánuco, San Martín), including sharing information on the potential of fine flavor cacao and working to increase per capita consumption. PCA will disseminate educational resource kits for each region to help consumers learn about the complete process of turning cacao into chocolate (and the benefits of eating quality chocolate) and to provide buyers with physical and sensory profiles of Peruvian cacao.

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These activities will be implemented primarily on holidays or important dates in each region or included as part of the technical roundtables on cacao.

• Submit flavor profiles from PCA SCMs to regional trade fairs. We will seek to identify the best flavor profiles for cacao beans, cacao paste, and bitter chocolate from our SCMs in Ucayali, Huánuco, and San Martín, and refine and improve each presentation to help establish commercial contacts in niche markets.

• Participate in the Organizing Committee of the XI Salón del Cacao y Chocolate, an event that brings together Peruvian cacao farmers and chocolate producers.

Table N° 9. Budget for Salón del Cacao y Chocolate 2020

Activities Cost (USD)

Membership fee to organizing committee 15,000

Implementation of Foro del Cacao y Chocolate (streaming, wiring, cameras, 8000 lumen projector, microphones and closed circuit) 4,500

Payment to exhibitors 300

Printing of marketing materials 1,200

TOTAL $21,000

• Participate on panels and sessions at the Expoalimentaria and Expoamazónica events.

Table N° 10. Budget for Expoalimentaria 2020

Activities (*) Cost (USD) Payment for space in the Alternative Development pavilion, led by DEVIDA 7,600

Development of activities to promote cacao in the pavilion and at the fair 600

Printing of materials for PCA and partners 1,050

Additional invitations for partners 450

TOTAL $9,700

*In the Expoamazonica event, PCA will only incur costs for travel, lodging ad per diem for PCA staff that attend as conference speakers. In the case of Expoalimentaria, a detailed budget has been added.

Develop an international exchange program to observe and learn from the quality control processes in countries that produce quality cacao and submit the program to challenge funds.

Support participation in international trade fairs such as:

• Northwest Chocolate Festival (https://www.nwchocolate.com; Seattle, WA; November 9-10, 2019). This is the most important trade show for the U.S. chocolate industry and will provide an opportunity to demonstrate the high quality of Peruvian cacao.

• Salon Du Chocolat (https://www.salon-du-chocolat.com/; Paris, France; October 30-November 1, 2019). This is the most important trade show for European chocolatiers; PCA will support APPCACAO’s delegation to the fair.

• Biofach (http://www.biofach.de; Nuremberg, Germany; February 12-15, 2020). Specializing in organic products, Biofach offers an opportunity to showcase organic cacao from Peru.

• Chocoa Festival (http://www.chocoa.nl; Amsterdam, Netherlands; February 19-23, 2020). A key event for the European cacao, chocolate, and derivatives industry, Chocoa offers a forum for meetings with chocolate makers and other key industry organizations.

https://www.nwchocolate.com/

https://www.salon-du-chocolat.com/

http://www.biofach.de/

http://www.chocoa.nl/

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• Other specialized fairs in the U.S. and Asia as appropriate, which may or may not involve exhibiting with a stand. When potential events have been identified, PCA will send a request to USAID, along with a detailed budget explaining the costs and benefits of participation. ACP will require approval for USAID.

Table N° 11. Activity Timeline to Facilitate Market Access

Activities

2019 2020

Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep

Facilitate intermediation between SCMs and end buyers

Strengthen the SCMs’ organic program to offer quality products

Improve the centralized, post-harvest processes for cacao

Support commercial SCMs to develop relationships with independent farming families

Host coordination meetings between farmers and SCMs – cacao

Host coordination meetings between farmers and SCMs – plantains

Develop guidelines and an action plan to manage cadmium levels in cacao

Contribute to the Cacao Seguro Project's Working Session N° 2 - Mitigation Measures

Participate in SENASA meetings with the Committee on Food Contaminants

Conduct tests using mycorrhiza and hyperaccumulator plants

Conduct tests using soil improvers and fertilizers

Conduct tests using INTP

Host coordination meetings

Support SCMs and end buyers in the development and promotion of differentiated products

Plant timber species in cacao monocultures (forest enrichment planting)

Develop and implement plans to monitor and mitigate GHG production

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Activities

2019 2020


Facilitate post-harvest and tasting trainings for SCMs

Develop training courses for tasters and cacao quality specialists

Participate in the Cacao and Chocolate Technical Committee to contribute to the regulatory standards that impact cacao

Pprovide one-on-one specialized support to PCA SCMs on physical and sensory analysis and developing cacao flavor profiles

Disseminate educational resource kits for consumers and buyers

Submit flavor profiles from PCA SCMs to regional trade fairs

Participate in the Organizing Committee of the XI Salón del Cacao y Chocolate

Participate on panels and sessions at the Expoalimentaria and Expoamazónica events

Develop an international exchange program and submit it to challenge funds

Support participation in international trade fairs

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RESULT 2: INCREASE CACAO

FARMER PRODUCTIVITY AND

CACAO QUALITY

HUANUCO, 2019. PCA TRAINS FARMERS SO THAT THEY CAN APPLY TECHNOLOGIES THAT INCREASE CACAO

PRODUCTIVITY.

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A.2.1 Develop and implement a methodology to encourage the mass adoption among smallholder farmers of new technological packages for agroforestry system (AFS) products

2.1.1 Develop and implement capacity building and training strategies for farmers

During the first three years of Phase II, PCA focused on increasing productivity via improved agronomy and crop management practices. During Year 4, we will continue to promote INTP and IPM technologies and EBPs that integrate crop management measures, with a particular emphasis on implementation during the beginning of the production cycle (August through March).

To date PCA has supported 21,712 families, of which approximately 4,400 are no longer active participants in the program due to one or more of the following:

• The family’s economic situation has improved, and they are no longer as focused on their cacao crops.

• The family has stopped cultivating cacao due to its need to focus on other income-producing activities, e.g. selling their labor.

• The family has experienced health issues and/or migration to other areas.

• The family has experienced the death of the landholder.

• The family has been impacted by illegal activities.

• The family’s plot is located in permanent production forests (PPFs) or other areas.

The table below details active farmers by region for Year 4.

Table N° 12. Number of Active PCA Farmers - Year 4 Regional Office

# of Registered Farmers

# of Active Farmers

# of Hectares

# of Managers

# of Lead Extensionists

# of PCA Field Extensionists

Ucayali 5,000 4,400 13,000 2 4 18

Huánuco 6,300 5,900 16,380 2 4 20

San Martín 8,700 7,000 22,620 2 4 23

Total 20,000 17,300 52,000 6 12 61

The period from August to December 2019 will be key to ensuring an increase in productivity during the 2019-2020 crop year. During this period, the PCA technical team will implement the following activities:

• From October to December 2019, the business managers from the San Martín regional office and Tocache will work with PCA SCMs to design a technical support plan for their members, which will be implemented beginning in January 2020. We expect to work with approximately eight SCMs over the course of Year 4, the majority of which are cooperatives.

• From October 2019 to March 2020, the facilitating extensionists will conduct an evaluation of agronomic productivity by counting the number of cacao pods on each tree to give them an idea of harvest totals.

• PCA extensionists (who each provide support to approximately 150 farmers) will visit 40 farmers per month, so that each farmer receives multiple visits during the crop year to ensure the proper application of INTP and IPM. During the technical visits, each field extensionist will record the condition of the plot and the various activities implemented by each farmer to improve their productivity.

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• PCA will organize field days to motivate participating farmers and demonstrate innovative technologies. At these field days, PCA will use model plots to disseminate technologies supported and promoted by PCA.

• PCA will offer group trainings to small groups of farmers that meet established requirements. Based on our experience to date, the farmers that normally participate in the group trainings are those with model plots or an interest in improving their productivity.

• PCA will refer farmers who have specific questions about the technologies to be applied to their crops to service points that will offer specialized guidance and support in the form of cacao clinics run by more experienced Lead Extensionists.

• PCA will also organize technology fairs (“CACAOTECH”) in the primary cacao micro-corridors in coordination with partner companies including Husqvarna, Yara, Mallki, TABSAC as well as other product and/or service providers, such as Technology Agents, buyers, and partner FIs. Each regional office will host at least 10 fairs with a minimum of 120 participating farmers. The fairs also offer an opportunity to implement training workshops and clinics on cacao.

Table N° 13. Number of Families Supported by the PCA Technical Team

Trainings

Regional Office

Ucayali Huánuco San Martín

Total Men Women Total Men Women Total Men Women

Via PCA Extensionists

Technical Visits 2,600 1,820 780 4,000 2,800 1,200 4,700 3,290 1,410

Field Days 700 490 210 700 490 210 900 630 270

Group Trainings 900 630 270 1,000 700 300 1,200 840 360

Subtotal 4,200 2,940 1,260 5,700 39,90 1,710 6,800 4,760 2,040

Via Technical Agents

Various methods 200 140 60 200 140 60 200 140 60

Subtotal 200 140 60 200 140 60 200 140 60

Total 4,400 3,080 1,320 5,900 4,130 1,770 7,000 4,900 2,100

Developing local capacities in the micro-corridors

As PCA “graduates” certain areas, we will implement the following activities to ensure the sustainability of the technology transfer to improve cacao productivity:

Technical consortiums: PCA will strengthen partners’ technical capacity by establishing technical consortiums comprised of SCMs, cacao-related organizations, and private companies operating in each economic corridor. The consortiums will offer standardized technology packages with a single, streamlined message for farmers for more sustainable knowledge transfer. Each of the CACAOTECH trade fairs will include a stand for the technical consortiums to share their progress.

We expect to roll out the consortiums in San Martín beginning in January 2020 and in the Ucayali region by June 2020, so that most technical assistance in those areas will be provided by the consortiums by Year 5.

For Monitoring and Evaluation (M&E) purposes, the consortiums will register participating farmers in PCA’s centralized information system. The following table features an overview of some of the consortiums that will be established and the number of farmers they will support.

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Table N° 14. Technical Consortiums and Number of Farmers Supported

N° Region

Corridor Consortium N° of farmers supported

1

San Martín

Tocache

CAI Tocache, ASPROC NBT, Cooperativa Uchiza, CATO SAC, Cooperativa Cordillera Azul, CPCACAO, Cooperativa Paraíso, PROCESADORA TROPICAL

3,000

2 Juanjui APAHUI, ACOPAGRO (SCM), Asociación Cuencas del Huallaga, ROMEX, 3,000

3 San José de Sisa Cooperativa Oro Verde, Asociación Cuencas del Huallaga, Machu Picchu Foods, Asociación Monte Azul

1,000

4 Chazuta- Pongo Caynarachi

ALLIMACACAO, COPANA, CASA QOYA, ROMEX, 700

Subtotal 7,700

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Ucayali

Atalaya Procesadora Tropical, Cooperativa Atalaya, 700

6 Campo Verde- Honoria – Nueva Requena.

Cooperativa Campos Verdes, Colpa de Loros 800

7 Puerto Inca Cooperativa Puerto Inca 700

Subtotal 2,200

Total 9,900

Certificate in IPM-INTP for cacao: PCA will implement a certificate course on INTP (including subjects such as soil analysis and the interpretation of test data, soil classification, nutritional analysis, nutrition based on the age of the tree, and timely pruning based on the age of the crop) as well as IPM (including topics such as fundamentals of IPM, types of control, using IPM to manage major pests, and others) in at least four areas: Tarapoto, Tocache, Tingo María, and Aguaytia. The certificate program will consist of eight modules that will be implemented over the course of Year 4 in partnership with the National Agrarian University - La Molina, which will also issue the corresponding program certificate. PCA has already identified potential participating field extensionists in each of the micro-corridors.

Leadership Academy: Over the past three years, PCA has identified leaders in each of the economic micro-corridors where cacao is cultivated. These natural leaders are already working to promote the development of their areas through cacao cultivation and use certain innate qualities to connect with other farmers. Over the course of Year 4, we plan to implement three Leadership Academies in San Martín, Huánuco, and Ucayali to further develop their capacity to promote local development.

Technology Agents Mentoring Program: During the prior year, PCA Lead Extensionists received coaching from the Central Café y Cacao del Perú. This three-workshop training course helped the Lead Extensionists establish a support plan for the Technology Agents that are already working in the field as service providers (e.g. pruning, grafting) or inputs suppliers. The goal is for all of the Lead Extensionists that have participated in this training to offer their support for a period of four consecutive months until the agents’ businesses are viable.

At the beginning of October, a total of approximately 60 people are expected to graduate from the Technology Agents training program, at which point they will immediately participate in the coaching program offered by the Central Café y Cacao del Perú. The support process will last for a maximum of one year and should conclude once their business has been shown to be viable.

Support from the Technology Agents will be accompanied by a mentoring process for implementation of the business plans proposed by each agent. The Central Office will be

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responsible for designing a support and training plan that will be implemented by the Lead Extensionists.

International Exchange: Through an agreement with the Central Café y Cacao del Perú, PCA will organize an international exchange program to Bahía, Brazil for PCA SCMs and technical personnel to learn more about the technology they use to manage cacao crops. The Central Café y Cacao del Perú is working with Innóvate to cover the costs of each participant.

2.1.2 Develop a technology package for plantain

During Year 4, we will continue to disseminate the technology included in the technology package for plantain, with a particular focus on cultivation practices, including managing pests and disease, fertilization, and other key cultural work necessary to obtain substantial yields. In partnership with Procesadora Tropical, we expect to support 900 families across the following areas: Aguaytia, Pucallpa, Tocache, Aucayacu, Yuyapichis, and Atalaya.

A.2.2 Expand the distribution network for agricultural inputs, fertilizers, equipment, and technical after-sales services by our technology partners

PCA technology partners (e.g. Husqvarna) have now successfully established a network of distributors that offer a range of different products rather than exclusively promoting the products or services of one technology partner Further, these technology partners are more active in training and technology promotion, coordinating with their distributors to participate in various events that facilitate sales, promotion, and direct contact with farmers, including trade fairs, field days, lectures, and other events.

During Year 4, PCA’s CACAOTECH fairs will provide an opportunity for distributors, technology partners, and financial partners to come together in a single space and connect with the leading domestic and international agricultural technology companies in the cacao plantain, and forestry value chains. Participants will be able to to share the most recent technological advances and latest innovations that will impact production processes and push the cacao farming industry forward.

A.2.3 Develop and implement an online technical support system for crop management and integrated pest and disease management

During Year 4, PCA will collect mobile phone numbers to create WhatsApp groups of approximately 250 farmers to receive information and share their experiences in the field. We will also use this group to remind farmers about certain field activities, offer warnings about the presence of pests, and let them know about training events that will take place in their respective micro-corridors. Currently, we have approximately 5,000 mobile phone numbers on file that are able to use WhatsApp.

PCA will also continue to implement the SMS outreach plan—sending messages to the 3,432 farmers currently in our database—in coordination with the Communications Team and with support from the Monitoring and Evaluation system.

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A.2.4 Support the development of micro, small, and medium enterprises (MSMEs) that provide key services

PCA will support the marketing efforts of MSMEs that offer goods and/or services related to PCA-supported products by providing them with booths at the CACAOTECH fairs and allow them to interact with potential clients across the cacao, plantain, and forestry value chains.

Table N° 10. Activity Timeline to Increase Cacao Farmer Productivity and Cacao Quality

Activities

2019 2020


Develop and implement a methodology to encourage the massive adoption of new technology packages for agroforestry system products

Develop and implement capacity building and training strategies for farmers

Technical visits

Field days

Group trainings

Cacao clinics

Technology fairs (CACAOTECH)

Technical consortiums in San Martin and Ucayali

Certificate in IPM-INTP for cacao

Leadership Academy

Mentoring program for Technology Agents

International exchange program

Develop a technology package for plantain

Disseminate the technology package for plantain

Expand the distribution network for agricultural inputs, fertilizers, equipment, and technical after-sales services by our technology partners

Establish connections between PCA Technology Partners and farmers through PCA extensionists, Technology Agents, and technology fairs

Develop and implement an online technical support system for crop management and integrated pest and disease management

Create WhatsApp groups for farmers to share information

Share information via SMS platform

Support the development of micro, small, and medium enterprises (MSMEs) that provide key services

Identify MSMEs that are active in the micro-corridors

Support MSMEs in the marketing and development of their products and services

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RESULT 3: INCREASE

ACCESS TO FINANCE

TOCACHE, SAN MARTÍN, MAY 2019. WITH A LOAN FROM COOPACT TOCACHE, FARMER NEMÍAS

CÉSPEDES BOUGHT BIOLOGICAL CONTROLLERS TO FIGHT CACAO PESTS IN HIS PLOT.

A.3.1 Increase access to finance for PCA member farmers

During Year 4, PCA will continue to consolidate our work with the six private partners of the PCA—Cooperativa de Ahorro y Crédito Norandino, Cooperativa de Ahorro y Crédito Tocache, Cooperativa de Ahorro y Crédito Prisma, MiBanco, Financiera Confianza, and Caja Rural Los Andes—and will further strengthen the access to credit component by incorporating two municipal savings banks through the Peruvian Federation of Municipal Savings and Loan Banks (FEPCMAC). Working with FEPCMAC represents a great opportunity because of its customer care channels and the Federation’s interest in designing green finance products.

Access to finance activities in Year 4 include:

• Promote training for personnel from the project’s partner financial institutions on the evaluation of agricultural and rural loans, with a focus on the following topics: estimating crop yields, production costs, and cacao crop phenology.

• Continue to invite the partner financial institutions to participate in the Schools of Excellence, field days, and mega events hosted by the PCA at each regional office.

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• Work with the partner financial institutions to develop mobile applications that centralize the complete loan process, from origination to repayment, to encourage sustainable financing based on technological innovation.

• Continue to work with Cedro to increase the financial literacy of the families that receive support from PCA.

• Support Cedro during the Challenge One incubation process, which is focused on designing financial products for cacao and coffee.

• Support and coordinate with FEPCMAC to design financial products focused on improving productivity, forestry, and irrigation using trusts and Development Credit Authority (DCA) financing in Huánuco, San Martín, and Ucayali.

• Develop videos and manuals to facilitate a more effective assessment of agricultural and entrepreneurial businesses.

• Continue to work with insurance companies such as La Positiva and Proagro to incorporate agricultural insurance into the financing products promoted by the Alliance’s financial partners.

A.3.2 Support farmer Fand member companies to develop financing agreements with financial institutions

The following activities will provide continuous support to farmer organizations working with PCA to strengthen their financial structure and ensure they have the liquidity to purchase the cacao they need.

A.3.2.1 Strengthen farmer organizations in the Huánuco and Ucayali regional offices through funding from Root Capital

To address a lack of capital for the collection process, PCA worked with Root Capital and Kiva in Year 3 to develop an institutional strengthening plan focused on PCA farmer organizations in Huánuco and Ucayali. To date, eight organizations have joined: four in Ucayali (ASCAH, COOPCFyA, CACPI, and CAIMARI) and four in Huánuco (CAI BELLA, AUCACOP, COCAAUCHIZA, and COOPAIGOM). The major challenge now is ensuring that these organizations are committed to the plan and fully comply with the parameters established in each module in order to access up to US$200,000 of interest-free financing. PCA will conduct an evaluation of the initiative once the year-long, five-module institutional strengthening plan has been fully implemented, which is expected to be in August 2019.

A.3.2.2 Support farmer organizations in Huánuco, San Martín, and Ucayali to access financing

In 2020, PCA will continue to help farmer organizations establish relationships with the Alliance’s domestic and international financial partner institutions—including Root Capital, Shared Interest, Incofin, Impact Finance, Cooperativa Abaco, and Cooperativa de Ahorro y Crédito Norandino—through the following activities:

• Support farmer organizations to prepare the information they will need to submit to financial institutions.

• Host meetings with financial institutions to share financing opportunities.

• Support the coordination of government programs to provide access to working capital or fixed assets based on business plans, primarily for cacao and plantain.

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A.3.3 Develop an agricultural credit analyst training program in partnership with PCA financial partners

One of the primary weaknesses that PCA has identified in our partner financial institutions is a lack of specialists capable of evaluating agricultural loans, which contributes to the perception of agriculture as a high-risk sector and limits overall agricultural lending. To address this obstacle, PCA will work with its financial partners to design a training program for agricultural credit analysts. We expect the program participants to include professionals from the universities located in the project’s intervention areas, including the National University of Ucayali, the National University of San Martin, and the National Agrarian University - La Selva. Specific steps include:

• Work with the financial partners interested in this initiative to select a PCA intervention area for the launch of a pilot program.

• Support the creation of a syllabus for the agricultural analyst training program.

• Implement field days as part of the training platform to strengthen participants’ knowledge of integrated management of cacao and plantain.

A.3.4 Ensure women’s priority access to financing

During Year 4, the project will continue to coordinate with PCA financial partners that offer financial products targeted to women, including MiBanco, Financiera Confianza, Cooperativa de Ahorro y Crédito Norandino, Caja Rural Los Andes, and Coopac Tocache. Promoting these products will allow us to involve more than 300 women in new financing opportunities.

Cedro will also provide support by developing and delivering workshops on financial literacy and family budgeting to support women’s financial inclusion. 1,500 farmers are expected to receive training this year using this strategy.

A.3.5 Increase the use of eWallet services

In Year 3, PCA signed a Memorandum of Understanding (MOU) with Coopac Prisma, Pagos Digitales Peruanos (PDP), and Banco Continental to implement a pilot program in Juanjui, San Martín that would allow Coopac Prisma clients to use the BIM platform (mobile banking) to pay installments and receive access to loans. One of PCA’s major achievements to date has been successfully strengthening the community of BIMERS in the areas close to Juanjui. This year we also established a collection system for Coopac Prisma clients. More than 50 operations were completed between March and June, including payments made individually and through community banks. At the close of Year 3 we plan to implement an assessment with users in the Juanjui area to evaluate user satisfaction with the digital platform and inform Year 4 activities in this area.

During Year 4 we will continue to work with PDP to reach a critical mass of users, moving into new areas with additional financial institutions with the goal of onboarding at least 500 new farmers through the following activities:

• Use radio and television spots and training sessions to promote the use of the BIM platform in PCA’s areas of intervention.

• Involve PCA staff and personnel from the financial institutions in the use of the platform.

• Coordinate and strengthen the work with mobile carriers to ensure that users have handsets that allow them to use the BIM platform.

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Table N° 11. Activity Timeline to Increase Access to Finance

Activities

2019 2020


Increase access to finance for PCA member farmers

Promote training for personnel of PCA's partner FIs on the evaluation of agricultural and rural loans

Continue to invite partner FIs to participate in the Schools of Excellence, field days, and mega events

Work with partner FIs to develop mobile applications that centralize the complete credit process

Continue to work with Cedro to increase the financial literacy of the families that receive support from PCA.

Support Cedro during the Challenge One incubation process

Support and coordinate with the FEPCMAC to design financial products focused on improving productivity, forestry, and irrigation using trusts and DCA financing

Develop videos and manuals to facilitate a more effective assessment of agricultural and entrepreneurial businesses.

Continue to work with insurance companies to incorporate agricultural insurance into the financing products promoted by the Alliance’s financial partners.

Support farmer organizations and member companies to develop financing agreements with FIs

Support qualifying organizations to submit materials required by Root Capital and Kiva.

Support farmer organizations as they prepare the information, they will need to submit to FIs.

Host meetings with FIs to share financing opportunities.

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Activities

2019 2020


Support the coordination of government programs to provide access to working capital or fixed assets based on their business plans.

Develop an agricultural credit analyst training program in partnership with PCA financial partners

Work with the financial partners interested in this initiative to select a PCA intervention area for the launch of a pilot program.

Support the creation of a syllabus for the agricultural analyst training program.

Implement field days as part of the training platform

Ensure women’s priority access to financing

Host meetings with financial partners to assess financial products targeted to women

Train PCA Lead Extensionists to serve as credit analysts

Jointly develop materials to promote the financial products offered by PCA’s financial partners.

Increase the use of eWallet services

Use radio and television spots and training sessions to promote the use of the BIM platform in PCA’s areas of intervention

Involve PCA staff and personnel from the FIs in the use of the platform.

Coordinate and strengthen the work with mobile carriers to ensure that users have handsets compatible with the BIM platform.

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RESULT 4: ENCOURAGE

PRIVATE INVESTMENT

In Year 3 of the project, we continued to identify investment opportunities in the Huánuco, San Martín, and Ucayali regions. The most significant achievement has been helping the Cooperativa Agroindustrial Alto Huallaga access a working capital loan of US$600,000 from the Abaco credit and savings cooperative.

In Year 4, we will shift our focus to prioritize new fixed asset investment opportunities focused on the cacao value chain. During the second quarter of 2019, we implemented an open call to attract new consultants with banking and business experience to help identify and promote new investment opportunities during the coming year.

A.4.1 Identify and support the promotion and development of trusts in the PCA intervention areas

PCA will continue to support the San Martín regional government in implementing the operating regulations for the guarantee fund (FODESAM) to facilitate access to finance for local farmers through a combination of instruments that contribute to the widespread

development of microfinance. The trust will facilitate the creation of new financing opportunities in the region, especially in the agricultural and forestry sectors, encouraging the participation of private funders while also allowing for the negotiation of more competitive rates.

TINGO MARIA, MAY 2019. PCA SEEKS HIGHER YIELDS TO SATISFY MARKET DEMANDS, BECAUSE A

COMPETITIVE VALUE CHAIN ATTRACTS NEW POTENTIAL INVESTORS.

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A.4.2 Identify and sign agreements with investment funds focused on climate-smart agriculture and reforestation activities

PCA will support the United Nations’ financial mechanisms team in Peru to design and promote credit products that encourage reforestation with the participation of the main municipal savings banks. This platform will seek to apply an environmental focus to new financing at both the farmer and investor levels.

We will also coordinate with the Directorate General of Economy and Environmental Financing of the Peruvian Ministry of the Environment in its role as the head of the Green Financing Subgroup to promote the National Plan for Competitiveness and Productivity. The National Plan will create measures that incorporate new financial products and include the participation of private sector financial institutions.

A.4.3 Identify and present investment proposals to investors in the PCA intervention areas

During Year 4, we will implement the following activities to catalyze new investments in PCA’s target areas:

• Update the investment deal book (originally prepared in 2017) featuring the primary partner organizations and private companies that work with PCA in Huánuco, San Martín, and Ucayali.

• Hire new business and banking consultants to facilitate investments through our pay-for-results mechanism in the Lima and regional offices.

• Train the new consultants on the parameters of the pay-for-results mechanism and the new terms of the contract, which will now focus on fixed capital investments for cacao.

In the year 3, 6 proposals were submitted to entities for financing. So far, one has been approved for an amount of USD 600,000. The total amount invested by the Alliance in the pay-for-results program (for the 6 proposals) is USD 24,788. In short, so far, financing has been obtained in excess of 24 times the amount invested in consultancies under the payment for results scheme.

A.4.4 Host meetings with organizations, private companies, and financial institutions to facilitate investment

A.4.4.1 Host business roundtables with organizations and private companies interested in investment funds

PCA will invite our primary partner organizations and firms to roundtable meetings—hosted twice per year at each regional office—to share information on their investment needs. The meetings will also include consultants engaged under our pay-for-results mechanism as well as investment managers.

A.4.4.2 Coordinate with financial entities that promote investment in the Amazon region

PCA will host complementary meetings with new financial institutions—including Scotiabank, Banco Pichincha, Interbank, and Banco Continental—to submit proposals on

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the investment needs of our SCMs. We will also help FIs establish a relationship with the Peruvian securities regulator to facilitate the development of new investment products.

Table N° 12. Activity Timeline to Encourage Private Investment

Activities

2019 2020


Identify and support the promotion and development of trusts in the PCA intervention areas

Support the San Martín regional government to implement the operating regulations for the guarantee fund (FODESAM)

Identify and sign agreements with investment funds focused on climate-smart agriculture and reforestation activities

Coordinate with the United Nations team to design and promote green financing among investors

Coordinate with the Green Financing Subgroup of the Ministry of Economy to create measures that incorporate new financial products and include the participation of private sector financial institutions

Identify and present investment proposals to investors in the PCA intervention areas

Update the investment deal book featuring the primary partner organizations and private companies that work with the PCA

Hire new consultants under the pay-for-results mechanism

Train the new consultants on the parameters of the pay-for-results mechanism and the new terms of the contract

Host business roundtables with the organizations, private companies, and financial institutions interested in investment funds

Host biannual coordination meetings with consultants, private companies, and organizations

Host coordination meetings with financial entities that promote investment in the Amazon region

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COMMUNICATIONS

TOCACHE, 2019. COMMUNICATIONS FOR SOCIAL AND BEHAVIOR CHANGE BEGINS WITH LISTENING

EXERCISES TO BETTER UNDERSTAND FAMILIES’ PROFILES, BELIEFS, AND THOUGHTS WITH RESPECT TO

CACAO CULTIVATION.

The Communications Team plans the following activities for Year 4:

A.5.1 General Communications Activities

5.1.1 Farmer interviews

The Communications Team will conduct quarterly, in-depth interviews with member farmers to collect their feedback and assess to what degree they understand PCA messages as well as how well the messages are being received (based on farmers’ interests and their vision for personal and community development). Collecting this information will allow the Communications Team to identify key elements that motivate farmers and families to change and/or adopt best practices, and to improve the content and design of the messages accordingly.

5.1.2 Validation activities

We will continue to conduct validation activities for all communications products, as the validation reports have helped us identify when it was time to withdraw certain products, change the format of others, and/or simplify technical language.

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5.1.3 Support to the Technical Team

With support from the M&E Team, we will collect information on media consumption, preferred messaging channels, and the type of content requested by partner farmers and families in order to assess whether the Technical Team’s resources align with user expectations

5.1.4 SCM Communications Kit

The SCM Communications Kit will include a series of resources and products to help SCMs communicate the added value of the cacao they produce, including promoting their cacao varieties, flavor profiles, etc. We will also invite SCMs to participate in a spokesperson training to help them simplify their communications and effectively use social media. PCA will only offer the kit to SCMs that have the capacity to assign staff to focus on marketing and communications efforts and their public image.

5.1.5 Gender and communications

We will continue to incorporate a gender focus into PCA’s internal and external communications—including promoting informal spaces for reflection on these issues—as we have learned that the theoretical and practical workshops are not effective spaces for communicating messages in support of women’s inclusion in the cacao value chain. We will also develop a campaign to raise awareness of gender-based violence, sexual harassment, and workplace harassment.

5.1.6 Access to finance

The Communications Team will continue to reinforce the message of the importance of obtaining financing and increase awareness of the cost/benefit of applying good agricultural practices to increase productivity.

A.5.2 Activities to Support the Sustainability Strategy

As PCA implements a new sustainability strategy in San Martín and Ucayali, the Communications Team will provide support by:

• Developing internal messaging for the San Martín team to communicate that the strategy is changing, but that the Alliance is not leaving the region

• Coordinating meetings with the SCMs to explain the new way of working

• Defining joint messaging that will be used by the SCMs and the PCA to explain the change to the public

• Working with representatives from the cooperatives so that they can serve as spokespeople and respond to frequently asked questions during the transition

• Developing technical and communications campaigns focused on issues such as IPM, INTP, and EBPs to meet the needs of the SCMs

• Supporting large-scale technical events, including the mega events and others

• Distributing educational materials on technical and quality management issues, including a kit containing editable communication materials so that all PCA partners are able to access the content and reproduce it on demand

Beginning in January 2020, the positioning of the Alliance in the region will always include our partner SCMs, and all agreements established from that point on will include clauses regarding the inclusion and positioning of the three-part brand (USAID/PCA/Partner). We

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will also coordinate with the SCMs to ensure that all press coverage reminds the public of our presence in the region without creating any additional expectations.

Table N° 13. Communications Activity Timeline

Activities

2019 2020


General Communications activities

Conduct farmer interviews

Conduct validation activities

Provide support to the Technical Team

Develop and disseminate SCM Communications Kit

Incorporate a gender focus in all communications

Promote a campaign to raise awareness of gender-based violence, sexual harassment, and workplace harassment

Reinforce messaging on access to finance

Activities to support the sustainability strategy

Develop internal messaging for the San Martín team

Coordinate meetings with the SCMs to explain the new way of working

Define joint messaging that will be used by the SCMs and the PCA to explain the change to the public

Establish spokespeople for the cooperatives

Develop technical and communications campaigns for the SCMs

Support large-scale technical events

Distribute educational materials and editable communications pieces

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GENDER

TINGO MARIA, 2019. THE PCA TEAM HAS BEEN TRAINED BY UNITERRA TO PROMOTE WOMEN’S

PARTICIPATION, INCLUSION, AND EMPOWERMENT ALONG THE VALUE CHAIN.

Based on the most impactful gender activities implemented during Year 3 of the project, PCA will focus on the following strategic approaches in Year 4:

A.6.1 Capacity building for the PCA team

6.1.1 Conversations on gender that emerge from follow-up in the field

In Year 3, we had a chance to observe the integration of principles highlighted during the gender workshops in the field team’s day-to-day work and assess our strategies to increase women’s active participation in PCA activities.

In Year 4, we will offer personalized recommendations to the team based on their specific area of intervention, which will also help create a trusting environment where the gender consultant can talk with the field team and learn about the difficulties, doubts, and/or issues that may hinder the development of their work and the application of a gender-sensitive approach. The information gathered during these sessions will be used to guide conversations in each region. We will prioritize small group meetings in each micro-corridor, while also taking into account monthly planning. At least two discussions will be hosted per regional office.

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6.1.2 Training program for the staff from the regional offices that have volunteered to work to incorporate a gender perspective

During Year 3, we identified staff members from the regional and central teams interested in promoting a gender-sensitive approach within PCA activities, In Year 4, we will invite them to join a gender-sensitive approach working group within PCA. With support from Uniterra and the PCA gender consultant, we will provider gender training and then help them develop a work plan for each regional office.

General objective:

Ensure that there are at least two allies in each office focused on ensuring equitable access to the productive technical trainings for female members of the Peru Cacao Alliance.

Specific objectives:

• Offer guidance to female PCA members on commercialization processes, decision-making, and access to financing through partner financial institutions.

• Extend the gender-sensitive approach to new team members.

• Promote activities that contribute to reducing gender gaps in the project, increasing the participation of female members in training and leadership programs, and improving their income.

• Share information about the difficulties that the field team may have in terms of implementing its work and applying a gender-sensitive approach.

• Share ideas and strengthen the activities of the gender group from each regional office.

• Hold quarterly meetings with the gender group to provide feedback on the activities.

Contents

The training module will consist of three capacity building sessions implemented over three consecutive months:

• Equal opportunities for male and female members of the Peru Cacao Alliance in the cacao value chain during Year 4 of the project and in the future.

• Gender-based violence, and what to do if you experience harassment in the field.

• Discrimination against vulnerable groups.

Uniterra will facilitate the workshops/discussion groups and will encourage connections with local institutions to share their experiences on topics such as gender-based violence and discrimination.

6.1.3 Training for new team members

New team members that join the project will be expected to participate in a session on gender facilitated by the gender consultant at the beginning of their contract. Additionally, the volunteer gender group team members at each regional office will work to build on the topics presented during this introductory session through the activities developed in each region.

A.6.2. Leadership Academy

6.2.1 Gender module at the Leadership Academy

Based on the experience of implementing workshops as part of the Technology Agents School of Excellence program, we believe it is important that all PCA training programs

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incorporate sessions on gender sensitivity to reduce the gender gap that exists in terms of women’s participation, leadership, and economic empowerment. PCA will therefore develop and implement a gender module consisting of two sessions—Encouraging Equal Opportunities and Gender Division of Labor—as part of the curriculum at our new Leadership Academy.

A.6.3. Strengthening the gender perspective within the San Martín cooperatives

As we implement our sustainability strategy by strengthening producer organizations in San Martin beginning in January 2020, PCA will select a sub-set of cooperatives with an interest in gender issues to receive guidance and support on these issues. In particular, PCA will help them develop and implement gender inclusion plans and better highlight the work of women in their organizations.

A.6.4. Gatherings with a gender focus on significant dates

6.4.1 International Day of Rural Women

Based on the October 2018 event for local female leaders in Tarapoto, PCA and Uniterra will implement events in celebration of the International Day of Rural Women in Ucayali and Huánuco. This year the events will also include Technology Agents from different areas.

6.4.2 International Day for the Elimination of Violence Against Women

PCA and Uniterra will implement an event for PCA staff and Technology Agents in celebration of the International Day for the Elimination of Violence Against Women.

The purpose of the event will be to increase awareness of the importance of men’s involvement in efforts to promote gender justice and in the fight against violence. The event will also provide an opportunity to review the issue of workplace harassment and the content that was developed for the PCA team by the Human Resources team.

A.6.5. Communications and gender

PCA will work with the Communications team to raise awareness of the important role that women play in the cacao and chocolate value chains, in particular through success stories of couples that share the responsibilities of caring for their cacao plantations and completing housework.

PCA partner Uniterra has developed a communications guide with a gender focus that we will distribute as a resource to help standardize internal and external communications in the use of inclusive language and promote the productive role of women without reinforcing stereotypes.

A.6.6. Financing and Quality

The gender consultant will coordinate with the Finance and Quality Assurance teams to ensure the active participation of women in activities pertaining to financial education, access to credit, management, negotiations, and the preparation and marketing of cacao products.

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6.6.1 Access to finance

The business manager in each region will work together with local financial institutions to promote products targeted to women during group trainings.

6.6.2 Quality and commercialization

In coordination with the business manager, the quality specialist and gender consultant will develop trainings for the cooperatives and organizations that are primarily led by women, which are responsible for the production and processing of cacao paste and chocolate.

Each regional implementation of the School of Excellence in Quality will include workshops on gender to ensure that training sessions help increase women's participation and enhance women’s and men’s understanding and awareness of gender equity.

Table N° 14. Gender Activity Timeline

Activities

2019 2020


Capacity building for the PCA team

Host conversations on gender that emerge from follow-up in the field

Conduct a training program for the regional office staff that have volunteered to work to incorporate a gender perspective

Conduct gender training for new team members

Hold feedback meetings on the follow up in the field with the gender group from the different regions

Leadership Academies

Conduct gender workshops at the Leadership Academies

Strengthen the gender perspective within the San Martín cooperatives

Select a group of cooperatives interested in gender issues to receive guidance and support on gender issues

Host gatherings with a gender focus on significant dates

International Day of Rural Women events

International Day for the Elimination of Violence Against Women events

Communications and gender

Support the development of success stories featuring cacao-producing couples

Disseminate gender and communications guide

Financing and quality

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Activities

2019 2020


Promote financial products targeted to women within the group trainings

Conduct gender workshops at the Schools of Excellence on Quality

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MONITORING AND

EVALUATION

TOCACHE, 2019. THE M&E TEAM WILL CONTINUE TO VALIDATE DATA GENERATED BY THE PCA

TECHNICAL TEAM TO ENSURE THE INTEGRITY OF OUR RESULTS.

The monitoring and evaluation activities during Year 4 will focus on the following aspects:

A.7.1. Validation of data quality

On the regional level, we will continue to validate the data in two ways: 1) through visits from each regional M&E specialist every two months (less coverage of families) and 2) through two studies conducted by external consultants—one in March and the other in August 2020—using a statistically representative sample to measure the efficiency and progress of the main indicators: families, hectares, income, and productivity (greater coverage of families).

A.7.2. Annual survey to measure indicators

We will use surveys to collect data on the required indicators (income, cacao productivity, sales, etc.) and other perceptions, segmenting farmers by region and by community. The survey is scheduled for August 2020 and will also cover environmental monitoring.

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A.7.3. Monitoring and evaluation system

The “CacaoToGo” application is a mobile tool that PCA implemented to gather information from the field regarding its work with cacao-producing families. We plan to expand the use of this mobile application to a greater number of field extensionists and PCA partner organizations and will also incorporate additional functionalities based on the lessons learned during the pilot.

A.7.4. Reporting to DEVIDA Based on discussions with USAID and DEVIDA, PCA has developed a draft template for reporting to DEVIDA, which is set to be finalized in September. The reporting will include three indicators:

• Number of families assisted

• Number of hectares assisted

• Number of women assisted.

A.7.5. Website and investment promotion system

The PCA website and the investment promotion system will be implemented during Year 4. The investment promotion system allows the user to interact with maps that offer various layers of information and statistics related to the cultivation of cacao, providing users with a more informed panorama of the cacao industry in San Martín, Huánuco and Ucayali.

Table N° 15. Monitoring and Evaluation Timeline

Activities

2019 2020


Validation of data quality

Visits from regional M&E specialists

Studies by external consultants

Annual survey to measure indicators

Conduct surveys to collect data on the required indicators, including environmental monitoring

Monitoring and evaluation system

Expand the “CacaoToGo” application

Incorporate additional functionalities in the "CacaoToGo" application

M&E Reporting to DEVIDA

Finalize template and provide reports to DEVIDA

Website and investment promotion system

Develop and maintain the PCA website

Gather field data and information from secondary sources on georeferenced variables for publication on the investment promotion system

Start production of the investment promotion system

Integrate the investment promotion system with the Alliance’s Monitoring and Evaluation system

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FINANCE AND

ADMINISTRATION

A.8.1. ADMINISTRATION

At the end of the third year of PCA’s phase II, we have successfully implemented participatory workshops to sensitize our technical and administrative staff on various topics, including:

• Code of conduct - Integrity and ethics - Fraud and Anti-Corruption - Privacy and information protection - Antidiscrimination and child protection - Environment, Health and Safety - Notification of concerns about compliance matters

• Child protection - Definition - Who is likely to commit the abuse? - What prevents children from talking about what happened? - Palladium commitment to child protection - Guiding principles

• Diversity and inclusion - What is diversity and inclusion? - Palladium's commitment to diversity and inclusion - How diversity and inclusion work

• Whistleblower policies - Policies on whistleblowers - Reportable matters - Reporting - Review of the accusations - Protection of whisleblowers - Disciplinary measures

• Preventing sexual harassment - What is sexual harassment at work? - Legal regulations - Examples of sexual harassment at work - Types of sexual harassment: Sexual blackmail, examples. Environmental harassment, examples. - Myths and truths. - Subjects of sexual harassment: Harasser / Victim. - Unwanted act or rejection by the victim. - Manifestations of sexual harassment - Policies and procedures to report sexual harassment - Investigation procedure - Procedure to investigate and resolve. - Contacts for complaints.

As part of the Alliance’s prevention efforts, and with the objective of protecting the project’s assets, we have renewed three insurance policies (multi-risk, employee dishonesty, and vehicle insurance).

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The table below details the expected activities and timeline for the Finance and Administration team in Year 4:

Table N° 16. Finance and Administration Timeline

Activities

2019 2020


Conduct participatory workshops on gender equity and workplace harassment, and strengthen lessons learned from previous workshops

Conduct trainings on workplace safety and security

Conduct operational and financial reviews for regional offices

Issue RFPs to select recurring service providers for Year 4

Engage recurring service providers for Year 4 under BPAs

Perform annual update of inventory and assets

A.8.2. FINANCE AND BUDGETS

From September 2016 through June 2019, the project had expenses totaling US$14,563,689.

Based on the projected expenses for July and August 2019 (US$1,024,970), the expectation is that Year 3 of the project implementation will conclude with accumulated expenses totaling US$15,588,659.

The current estimated expenses for Year 4 come to a total of US$4,857,841, broken down as follows: (a) US$1,943,136 allocated to component 1, (b) US$2,428,921 allocated to component 2, and (c) US$485,784 allocated to component 3.

The following tables show the expense forecast by component and CLIN:

Table N° 17. Overview of expenses from Years 1, 2, 3 and expense forecast for Year 4

* Reflects actual expenditure through June 2019, plus the estimated expenditure for July and August 2019.

Summary Budget Year 1

Year 1

WP2016 Year 2

Year 2

WP2017 Year 3*

Year 3

WP2018

Year 4

WP2019

Personnel 1,430,603$ 1,309,729$ 1,955,940$ 1,947,643$ 1,976,120$ 2,072,326$ 1,766,484$

Fringe Benefi ts 383,695$ 510,812$ 718,425$ 724,017$ 815,221$ 1,005,505$ 707,289$

Al lowances -$ -$ -$ -$ -$ -$ -$

Travel and Transportation 280,848$ 166,066$ 461,706$ 458,588$ 426,420$ 403,587$ 321,256$

Equipment 174,063$ 114,000$ -$ 56,848$ -$ -$ -$

Consultants 357,256$ 1,045,734$ 128,605$ 344,154$ 247,466$ 180,000$ 116,000$

Sungrants/Subawards 42,842$ 400,000$ 108,558$ 89,120$ 195,379$ 410,300$ 379,000$

Other Direct Costs 895,810$ 814,610$ 1,342,420$ 1,126,446$ 1,086,541$ 792,825$ 803,634$

Tota l Direct Cost 3,565,117$ 4,360,951$ 4,715,654$ 4,746,816$ 4,747,148$ 4,864,543$ 4,093,663$

Total Indirect Cost 678,549$ 765,680$ 867,078$ 854,454$ 1,015,113$ 902,707$ 764,178$

Total Budget 4,243,666$ 5,126,631$ 5,582,732$ 5,601,270$ 5,762,261$ 5,767,250$ 4,857,841$

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Table N° 18. Overview of CLIN expenses from Years 1, 2, 3 and expense forecast for Year 4

CLIN Year 1 Year 2 Year 3* Year 4

Improve Market Access $ 1,697,466 $ 2,233,093 $ 2,304,904 $ 1,943,136

Improve Farm Productivity & Size $ 2,121,833 $ 2,791,366 $ 2,881,130 $ 2,428,921

Facilitate Rural Financial Services $ 424,367 $ 558,273 $ 576,226 $ 485,784

USAID Share: $ 4,243,666 $ 5,582,732 $ 5,762,260 $ 4,857,841

Leveraged Contribution $ 10,061,147 $ 9,004,520 $ 14,665,921 $ 13,191,518

Total Budget $ 14,304,813 $ 14,587,252 $ 20,428,181 $ 18,049,359

* Reflects actual expenditure through June 2019, plus the estimated expenditure for July and August 2019.

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LEVERAGE During Year 4, we expect to leverage US$13,191,518, of which US$1,582,958 will be in kind and US$11,608,560 will be in cash. The main expected leverage sources and quantities are as follows:

• Private Partners: With in-kind contributions totaling US$1,350,000 and cash contributions totaling US$4,119,110, the primary partners within this category are Exportadora Romex S.A., Agroindustrias Romex S.A., Procesadora Tropical (Aucayacu and Aguaytia), Casa Qoya, AMT Agroindustrias SAC, Inversiones Agrícola Verde SAC, and Kelab SAC.

• Supply Chain Managers: With in-kind contributions totaling US$35,000 and cash contributions totaling US$6,048,054, the partners within this category include Cooperativa Agraria Cacaotera Acopagro, Asociación de Productores Cuencas del Huallaga, Cooperativa Agraria Allimacacao Ltda., Cooperativa Agroindustrial Alto Huallaga, Cooperativa Agraria Central de Aroma de Tocache Ltda., Kato SAC, Cooperativa Agraria El Gran Saposoa Ltda., Cooperativa Agraria de Cacao Aromático Colpa de Loros, and others.

• Technology Partners: With in-kind contributions totaling US$138,633, the partners within this category include Husqvarna Perú S.A., San Fernando S.A., and Yara Perú SRL.

• Financial Partners: With in-kind contributions totaling US$59,325 and cash contributions totaling US$1,441,396, the partners within this category include MiBanco-Banco de la Microempresa, Cooperativa de Ahorro y Crédito Microfinanzas Prisma, Financiera Confianza, Caja Rural de Ahorro y Crédito Los Andes, Cooperativa de Ahorro y Crédito Norandino, and Cooperativa de Ahorro y Crédito Tocache Ltda.-COOPACT.

Table N° 19. Leverage projections for Year 4

Partner Description In-kind USD Cash USD Total USD

Private Partners

Fixed asset investment, plantation expenses, construction of fermentation systems and post-harvest infrastructure, collection centers, equipment, and personnel

$ 1,350,000 $ 4,119,110 $ 5,469,110

SCMs Post-harvest infrastructure investments, collection centers, equipment, training, and personnel

$ 35,000 $ 6,048,054 $ 6,083,054

Technology Partners

Inputs, trainings on fertilizers and the use of machinery and equipment

$ 138,633 - $ 138,633

Financial Partners Trainings, investments

$ 59,325 $ 1,441,396 $ 1,500,721

Total Leverage $ 1,582,958 $ 11,608,560 $ 13,191,518

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ENVIRONMENTAL

COMPLIANCE

MAY, 2019. COMPOST PREPARATION IS AN ENVIRONMENTAL PRACTICE THAT ALLOWS FARMERS TO

MANAGE BIOLOGICAL WASTE IN THEIR PLOTS.

During Year 4, PCA will continue to implement an agrarian extension service, including all the mitigation measures that form part of the technology package, such as INTP and IPM. We also plan to sign an agreement with the Campo Limpio program, which is dedicated to promoting the safe use of pesticides and the appropriate collection and disposal of pesticide containers. The program has established collection centers throughout PCA’s three areas of intervention.

PCA environmental training will focus on the following issues:

• Safe storage of pesticides in cool, dry environments to avoid exposure

• Safe collection and storage of harvest residue (husks, pulp, funicle/placenta, spoiled beans, etc.) to decrease pests

• Installation of forest trees around the perimeter of the plantations, the edges of streams, and the boundaries of early successional forests2

To encourage mass implementation of these EBPs, we will continue to implement a communications plan to raise awareness and involve all members of the farming families.

2 Secondary forest

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PCA will also conduct environmental monitoring for all the plots that receive technical assistance during the course of the year in accordance with the “Agronomy Monitoring Manual” provided to each Lead Extensionist. We will interview approximately 750 heads of farming families and consolidate the results of the environmental monitoring process into an environmental compliance report (ECR) for Year 4, which will be created by a specialized team. The ECR will include a list of recommendations and viable proposals to better facilitate the creation of the environmental monitoring and mitigation plan (EMMP) for Year 5. For initiatives that promote post-harvest and fertigation infrastructure, PCA will gather information through an initial environmental examination (IEE) that includes recommended mitigation measures.

The Center for Conservation, Research and Management of Natural Areas (CIMA) and the Regional Government of Huanuco (GOREH) have initiated a pilot plan to support 113 cocoa producers located in permanent production forests, to obtain land transfer in accordance with the Forest Law (Art. 63 Law 29763, Art 58 - 65 DS N 020 - 2015 - MINAGRI). They have submitted technical documentation for 59 producers to the Peruvian Forestry and Wildlife Service (SERFOR), of which 49 have been pre-qualified and are still in process. The 10 files returned by SERFOR will be re-submitted in December 2019, and in 2020 the remaining producers will be prepared and submitted.

Table N° 20. Environmental Compliance Timeline

Activities

2019 2020


Conduct environmental monitoring

Select farmers to be interviewed with support from the PCA M&E team

Conduct field visits to gather environmental data - Ucayali

Conduct field visits to gather environmental data - Huánuco

Conduct field visits to gather environmental data - San Martín

Develop environmental monitoring report

Develop the environmental compliance report (ECR) for Year 3 and the EMMP for Year 4

Meet with extensionists to assess compliance with the EMMP for Year 3

Systematize the information collected

Develop the ECR for Year 3

Develop the EMMP for Year 4

Disseminate the EMMP for Year 4 within the PCA technical assistance program

Field extensionists disseminate EMMP

Conduct farmer trainings

Provide ongoing guidance and training on EBPs

CIMA Pilot

Submit land transfer documentation for producers

Documents

PERU CACAO ALLIANCE PHASE II