Kennemer grows, sources, and trades in high quality agriculture produce such as fermented cocoa beans through a contract farming program with smallholder farmers in the Philippines.
Focus: Livelihoods, Agriculture
Geographic Area of Impact: Philippines
Model: Social Innovation Business
Number of Direct Beneficiaries: 10,000 (2015)
Annual Budget: USD $5.5 million (2015)
Percentage Earned Revenue: 100% (2015)
The Social Problem
Philippines has a large agrarian economy, but low crop yields and incomes keep the country’s farmers, especially those with small holdings, in poverty. Coconut farmers are among the poorest in the agricultural sector. Coconut is a low-density crop requiring relatively little labour, leaving farmers with both land and time available to cultivate other crops. However, due to a lack of access to affordable financing, and technical support many coconut farmers are unable to plant alternative cash crops.
At the same time, the cocoa value chain is experiencing a shortage in supply and looking for opportunities to increase production. Cocoa is an ideal intercrop to coconut, as it thrives in a similar climate and requires some level of shade.
Innovation and Activities
With demand for chocolate rising in markets like China and India and global production on the decline, experts project a shortage of cocoa by 2020. Major chocolate manufacturers are looking for new sources and making structural changes to their production and procurement practices to make cocoa a competitive crop for small farmers. The Philippines enjoys the right climatic conditions for growing cocoa, but today the country’s contribution to the global supply is miniscule.
In response to this opportunity, Kennemer has created an end-to-end contract farming model that provides farmers with high quality planting material and technology, training on farming practices, and access to financing and an assured market. The enterprise targets existing coconut farmers who can adopt cocoa as an intercrop in their plantations with minimal investments. A network of “Cocoa Doctors” - farmer entrepreneurs trained by Kennemer – supervises clusters of farmers, provide technical services and consolidate the cocoa beans for the Kennemer buying program.
Kennemer has established key partnerships to remove barriers and uncertainty for the farmer with Land Bank, a government bank offering long term agricultural loans, and Mars Inc., a major buyer of Kennemer’s fermented cocoa beans. Kennemer is self-sufficient with revenues generated through sales of fermented cocoa beans to global buyers as well as sales of seedlings.
In just five years of operations, Kennemer has achieved significant scale, establishing a sourcing network of 10,000 Filipino farmers who stand to gain an average income increase of 340 percent. By adopting modern cocoa technology, farmers can experience cocoa yields of four times the national average – increasing incomes of coconut farmers from USD 555 to USD 3300 net of inputs. By 2020, the company aims to integrate 35,000 farmers into its value chain.
Before founding Kennemer, Simon held many roles in the private sector including the Chief Financial Officer and founding investor at Enderun Colleges, and Managing Director for Asia Pacific at Fidelity National Information Services. Simon is a Dutch national who has lived in South East Asia for over two decades. In 2015, Kennemer Foods, along with its investor LGT Venture Philanthropy, won the Singapore Venture Capital and Private Equity Association (SVCA) Award in the category of "Most Impactful Funder/Social Enterprise of the Year.”
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