Sabrina Mustopo (BOS, BRU, SIN 07-13) is the visionary behind Indonesia-based Krakakoa Chocolate. Discover what led her to establish this groundbreaking venture and why her unwavering commitment to empowering smallholder cocoa farmers has become a driving force in her pursuit of sustainable economic development.
What inspired you to start Krakakoa, and why was it important to you to focus on supporting smallholder cocoa farmers?
I've always been passionate about the agriculture sector and sustainable economic and agricultural development. During my time at McKinsey, I was a Sustainability and Resource Productivity Fellow and there I learned about developing strategies and solutions to various issues plaguing the agriculture industry. I was writing an MGI report on the state of the Indonesian agriculture sector and it was during that time that I first learned about the issues in the Indonesian cocoa sector, and started thinking about private sector-driven solutions that would address these problems, and that was how the idea and inspiration for Krakakoa came about.
It was important that the solution was focused on empowering smallholder farmers as therein lies the key to more equitable economic development. In most developing countries, the poorest segment of the population is found in the agriculture sector, and you have to solve the issue of how to provide better livelihoods and better economic opportunities to smallholder farmers in order to help move countries up the development ladder.
Can you tell us about a particularly inspiring or challenging experience you've had working with the cocoa farmers in your supply chain, and how it has shaped your approach to your business?
Over the years, I've learned that many smallholder farmers optimize for short-term gains as that is what they've had to do in order to survive. When you are exposed to sudden and catastrophic risks such as adverse weather conditions that can decimate your crop in a matter of hours or a drop in market price for your crop, you have to capture every opportunity to get as much money as you can, as soon as possible.
This means that it can be very difficult for farmers to switch to long-term thinking, and we've learned that not all communities are well suited to working with Krakakoa. Nowadays we overinvest in the "prescreening" process to ensure that farmers fully understand what it takes to work with us, and that they know that change is a marathon and not a sprint.
How does Krakakoa ensure that the cocoa farmers you work with receive fair compensation and are able to build sustainable livelihoods from their work?
We provide free training and equipment to farmers to improve the productivity on their farms and the quality of their beans, and in addition we also pay a significantly higher price for the cocoa beans.
Unlike a certification program like FairTrade that pays farmers a premium over a fluctuating market price, we pay a steady price for the beans, regardless of what the market price is. This price has been up to three times the market price when cocoa prices were low. By providing a guaranteed price to farmers, we help to mitigate risk and uncertainty for them, which allows them to make better decisions that pay off in the long run.
What role do you see Krakakoa playing in the larger conversation around sustainable and ethical sourcing of cocoa, both in Indonesia and globally?
One of the goals of the company is to show that you do not need to choose between environmental conservation and economic development. There is a way to achieve both if you give a fair share of the benefits to communities who live and work in the frontlines of where the battle against deforestation is happening.
Looking to the future, what are your goals for Krakakoa, and how do you see the company continuing to make a positive impact on the lives of farmers in Indonesia?
The approach that we have of shortening the value chain and providing farmers with better prices is applicable to many other agricultural value chains, so we see ourselves expanding beyond cocoa to go into other commodities and reaching more farmers in Indonesia.