Sweetening the Deal: Carbon Credits Promise New Income and Environmental Benefits for Cacao Farmers in the Philippines

A woman in the Philippines holds up her cacao crop.
Cacao from Gran Verde Farm, Mindanao. Photo by Michelle Johnsen of Lancaster Photography Collective.

On the island of Mindanao in the Philippines, the agriculture industry is buzzing. The island’s fertile land produces an impressive 40 percent of the country’s food supply, including bananas, coconuts, coffee, and cacao. However, droughts, erosion, pests, and disease are all becoming increasingly common climate hazards for farmers.  

Perhaps nobody has it worse than farmers growing cacao. The so-called ‘sensitive’ crop that drives the chocolate industry only thrives under very specific conditions. Uniform temperatures, plenty of rain, and healthy soil are some of the many requirements that the climate crisis is putting into question. Yet under the right conditions, cacao has the power to boost incomes for farmers and to transition from one of the most vulnerable crops to climate change to a crop that can aid in the fight against climate change.

Shifting smallholder cacao farming from plantations to the shade of trees  

Studies have shown that growing cacao in the shade of trees offers not only a habitat for greater biodiversity but also a means of creating more hospitable conditions for cacao growth by helping to manage increasing temperatures and control pests and diseases. Realizing financial gains from these changes, however, takes time and typically will not show the immediate results that converting forests into cacao plantations yield. This places an unfair burden on smallholder cacao farmers to make the shift towards a more environmentally friendly approach.     

Enter incentives: Carbon credits for cacao farmers

Creating effective incentives for farmers to invest in biodiversity offers a means to support farmers to overcome these barriers. This is where carbon credits come into play. Small cacao farmers are encouraged to cultivate cacao under tree canopies that preserve biodiversity. In return, they generate more cash by continuing to harvest their cacao crops – and adding additional income from sequestering carbon through the planting of endemic tree species in forest fringes that face extraction pressure. Credits for planting these trees are then sold to buyers in the voluntary carbon market to offset their contributions to greenhouse gas emissions. Finally, farmers are paid following an agreed-upon payment schedule – which often includes advance payments – so they do not have to wait until the carbon credits are verified and sold.

Meeting in the Pauibato District to discuss needs and aspirations of cacao farming community.
MEDA and Kennemer visit the Paquibato District to discuss needs and aspirations of the cacao farming community.

In the Philippines, this model has been championed by Kennemer Eco Solutions. Their “MinTrees” agroforestry project on Mindanao has worked with around 3,000 smallholder cacao farmers from 2015 to 2023. By integrating cacao farming and agroforestry systems, Kennemer has been able to support more stable farm revenues and better soil health for these farmers.

“Nature-based solutions using voluntary carbon markets unlock a revenue stream for smallholder cacao farmers while, at the same time, providing co-benefits to climate,” says Jonathan Joson, General Manager for Kennemer Eco Solutions. “It provides more permanence to [the] cacao-based agroforestry system.”

MEDA and Kennemer partner on carbon trading initiative

Recognizing these benefits, Kennemer and MEDA announced a partnership in October 2023 and held a ceremonial signing event in January 2024 to bring the carbon trading initiative to Paquibato District on Mindanao. The initiative is supported through a grant under MEDA’s Resilience and Inclusion through Investment for Sustainable Agrikultura (RIISA) project funded by Global Affairs Canada. Partnering with over six MEDA-supported cacao cooperatives, including Malabog Integrated Enterprises Development Cooperative (MIEDECO), the initiative ensures that the carbon credit payment scheme is defined in collaboration with cacao farmers.

By working in partnership on innovative solutions like carbon credits, MEDA is able to scale the impact of its work to create sustainable jobs, while also supporting greater biodiversity and climate action in the Philippines. Carbon credits offer a deal that is both financially viable for cacao farmers and environmentally sustainable – a rare and promising balance to find as climate hazards become more unpredictable. 

Signing ceremony for a cacao-focused carbon trading initiative.
In January 2024, MEDA and Kennemer sign an agreement in Davao, Philippines for a cacao-focused carbon trading initiative.
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  • MEDA (Mennonite Economic Development Associates)

    MEDA is an international economic development organization that creates business solutions to poverty. We work in agri-food market systems, focusing primarily on women and youth in rural communities in the Global South. Our success is measured by income, improved processes, increased knowledge, and the creation of decent work.

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