History of Cooperative

This is part of a email explaining the history of the Cooperative and of the cacao market here in the DR... let me know if anyone has any questions...

Just to give you an idea of how cacao works over here:

In 2001, cacao was sold at 400 pesos, and by 2003, the price of cacao was less to nothing in the DR, and the quality wasn't any better. I am going to discuss the prices in pesos, which are 33 to the dollar. Cacao was worth 900-1500 pesos per 50 kilo sack in 2003, and the only people farmers sold to were local community members who had an empty house for storage. Then a domestic buyer would come by in a truck and buy it from the community members for about a 3-500 peso profit. At this point there was no market for fermentation, so all cacao was sold dry. Also, a lot of the more rural cacao farms were unable to get buyers for the cacao because there wasn't any way to get into the communities, and the price wasn't worth it to bring it down on horseback. The Red (meaning network) was created by a group of farmers to organize their cacao production and try and find a domestic buyer to help get more sales to the remote (and poorest) areas. In 2003, this was great for domestic buyers, because it was easier for them to get the cacao, and they were paying the same prices as they would anyway. Then in 2005, the Red was sponsored by USAID to go to an agricultural fair in Brazil, where they met cacao buyers from Europe and the USA, and started learning about high quality organic markets and the benefits. So in 2006, the Red got its first year of organic certification, paid for by one of the domestic buyers, Yacao. With this certification, it caused the prices to rise up to 2700 pesos per quintal (50 kilo increment), but all of the cacao was still sold to Yacao and Conocado. Then in the fall of 2006, USAID sent another group of farmers to the Biofach conference in Baltimore, where they made contacts with Taza Chocolate and Dagoba. Through these contacts, we began selling small increments through air freight to Taza, and began discussing financing options for a container shipment to Dagoba in conjunction with the World Bank. Dagoba is a big buyer from Conocado and Rizek, and it seems that upon making these contacts the domestic buyers began seeing the cooperative as a threat to the cacao system here in the DR. Apart from raising prices, many domestic buyers have attempted to get the Red to commit to an exclusive buying contract with them and have encouraged high-interest loan commitments to prevent large scale sales capabilities (we are too much in debt to afford to buy enough cacao independently to fill a container). However, the price wars are just starting in this harvest, beginning in December. The idea is that if the domestic buyers raise their buying price, we will be less likely to seek external exporting capabilities. Also, as we export more, the domestic buyers see us less as a supplier, and more as competition, and have started using other intermediaries to get the cacao out of the communities. This means that we have to meet their buying price for the farmers so that we don't lose cooperative members to the competition. However, these organizations are much bigger, have huge contracts and connections in the government to facilitate export and make exporting harder for us (we have recently run into a few previously unheard of paperwork fees) with the hopes of running us out of business or keeping us as a supplier. As of now, the price of unprocessed cacao in the community 4200 pesos per quintal plus a 500 peso fermenting cost, not including transportation costs.