Couple successfully grows cacao and makes products without owning a farm or factory

By Yvette Tan

Many people wish that they could pack up, move out of the city, and live on a farm. Husband and wife Kenneth and Shirley Reyes-Lao, 36 and 33 respectively, did just that.

In 2016, they left their jobs in the Information Technology (IT) industry and moved to Davao to start Cacao Culture Farms. “We were searching for something that we wanted to do and agriculture was something that was always in the periphery,” Ken says. “People say that when they retire, they’ll run a farm. That’s when we decided, why wait until retirement age to go into agriculture?”

They scouted provinces to move to, and decided on Davao when a local representative from the Department of Trade and Industry (DTI) pointed them to a five-day seminar on cacao. Ken, who attended the seminar, would later tell Sheila, “We can grow our own cacao and make our own chocolates, and the worst thing that can happen if our business doesn’t fly is that we eat a lot of chocolate.”

Kenneth and Shiela Reyes-Lao left their IT jobs in Manila to start Cacao Culture Farms in Davao.

Another reason they chose Davao is because they valued “personal security, city comfort, and access to agriculture.” “It was a balance of city comforts and access to agriculture. Second was safety. If we were to move somewhere where we didn’t know anyone, at least there was the infrastructure for 911, hospitals, stuff like that,” Ken says. “And when we moved there, we also didn’t know how it would turn out so Sheila had to keep working. At least there’s an IT industry there where we could use our past experience and skills to tide us over in terms of income.”

Farming on rented land

They initially wanted to buy farmland, but after former Davao Mayor Rodrigo Duterte became the President of the Philippines in 2016, land prices went up, and it was out of their budget. But that didn’t stop them from establishing a cacao farm. “We were surprised, coming from Manila, it was very cheap to rent land, especially agricultural land,” Ken says.

The couple started a cacao seedling nursery in Dumoy, Toril, Davao City on half a hectare of land that they leased long-term. They were able to set up the nursery in about a month with the help of people who were knowledgeable about the industry. “That was the common entry point because it’s easier and it’s faster than planting and waiting to harvest,” Ken says.

Another reason they ventured into cacao seedling cultivation was because there was a big demand for it, especially since there was a push from the government to grow cacao. “We had a lot of private farm buyers from all over the country… 80% of cacao comes from Davao,” Sheila says.

The nursery was a success, but it wasn’t their end goal. “Our goal was to have our own farm and grow our own cacao, so alongside that, we looked for someone who would agree to lease us land for a long time,” Sheila says.

Cacao Culture’s cacao seedling nursery.

Leasing agricultural land is a common practice in Davao. The problem was most landowners were used to leasing land short term, say three years, and the Reyes-Laos wanted to lease for at least 10 years. Fortunately, they found a farmland in Gumalang Kalina, Davao City, about 30-40 minute drive from the city center, which they leased for P25,000 a hectare. “We had to do everything,” Sheila says. “You have to improve the soil condition because you don’t know what was planted there before. We had to do everything-fencing, finding a water source. All of this, we learned through doing. Initially, Ken said, ‘farming shouldn’t be very hard,’ but once you’re in it, you realize that it’s not that easy.”

Here, the cacao trees are intercropped with bananas, and the couple is exploring intercropping with peanuts as well. Cacao takes three years before the first harvest, and the couple needed a source of income to sustain farm operations beforehand. Banana can be planted, grown, and harvested in nine months, and is always in demand.

Trade secrets

We asked the Reyes-Laos how they manage their farm. They mostly plant the hybrid trinitario, particularly the BR25, UF18, ICS40, and TVC123 varieties, though they’ve also started cultivating the heirloom variety criollo, which is experiencing a resurgence. “They said that that variety produces the best tasting chocolate,” Sheila says.

They planted lakatan bananas, both as an alternative source of income while waiting for their first cacao harvest, and as a shade crop for cacao. Banana will take nine months before the first harvest, but less time after that. The bananas aren’t planted at the same time so that they mature at different times, thereby supplying the Reyes-Laos with fruit to sell twice a month. “We don’t process anything related to banana. The buyer comes to the farm, picks it up, and ships it to Manila,” Ken says.

Cacao and banana trees are intercropped so that the bananas cover the cacao plants, and the farm has a steady source of income.

They can harvest 1.7 tons of bananas on a good month, though they usually average 900 kilos. Prices vary according to the buyer and season. “When we were harvesting for banana, it’s continuous harvesting. So there’s an income flowing for the farm. The cacao is still growing and maturing, and we wanted to maximize the farm, which is why we were looking at peanuts also since it’s a cover crop,” Ken says.

In Davao, cacao has two peak seasons-the ber months and February to April. “But with global warming and El Niño, they see this harvest time sometimes delayed or moved,” Ken warns. Aside from harvesting from their own farm, Cacao Culture Farms also buys cacao from farmer cooperatives. They’re particular about how their partners ferment and dry their beans. “Fermentation is one of the critical steps in developing the chocolate flavor of cacao. It will affect your final product,” Sheila says.

Cacao beans are sold in different ways. “There are people who sell sun-dried cacao beans without fermentation. They just dry it on the side of the road. It sells for maybe P90-P120 per kilo, and the fermented ones, P130-P150 per kilo,” Ken says. “Some people are consolidators and they ferment. The farmers just harvest and they sell the wet beans. The wet beans vary across time and scarcity, so they could sell for P30-P36 per kilo.”

Value-added products

The couple connected with the Cocoa Foundation of the Philippines (CocoaPhil), and Ken was asked to run the organization’s operations in Davao. This gave Ken the opportunity to further study cocoa processing. When the facility was turned over to the co-op the CocoaPhil was renting it from, Cacao Culture Farms absorbed the employees who decided not to join. “I knew based on working with them that they had the skills that we would need,” Ken says.

Cacao Culture’s product innovations garnered it the Regional Winner of Productivity Olympics in 2019.

The company is set up as a social enterprise. They have nine full-time employees, a mix of administrative and farm teams, all of them paid a regular salary and are fully covered by benefits.

They also work with five to 10 individual farmers and one co-op.

The additional employees, plus a seasonal slump in cacao seedling sales, meant that the Reyes-Laos needed to look for additional sources of income. Davao was already saturated with cacao products, so they needed items to make themselves stand out. Their first product was cacao nibs, which is popular with health buffs as superfood, and folks looking for a low-sugar alternative to chocolate, which they sold online.

Since they were fermenting their nibs using techniques meant for tablea, they received a lot of feedback regarding the product’s initially bitter taste. Here, their IT background came into play as they immediately searched for ways to improve their nibs. “We were used to the fast iteration of products. Once you release it, you get feedback, then immediately try to make it better. We realized that we should adopt (the IT) mindset doing this also,” Ken says. They tweaked their process and soon, sales began to soar.

They researched on other products they could develop, and happened upon cocoa tea, which is made up of the cocoa bean shell and is popular overseas as a tisane (herbal infusion) or is added to tea by specialty companies for a cocoa flavor. In the Philippines, the shell is either thrown away or used as fertilizer. “We researched online how to do it and since it’s not out core competency, we also reached out to (experts) for help,” Sheila says. “That’s one of our strategies… We know we can’t do everything by ourselves.”

There’s a specific way of processing the shells to make cocoa tea to keep it hygienic and food-grade, which is why Cacao Culture Farms only uses beans from their farm. Quality cannot be compromised. They also developed cacao butter, which they marketed to artisanal soap makers looking for a steady source of cocoa butter. “We had to really look for a market outside Davao City because we were a new brand and there are many longtime players in Davao,” Sheila says.

Cacao Culture employees at the farm.

Their interaction with soapmakers inspired Cacao Culture Farms to develop their own artisanal soap line made with their own cacao products. “Cocoa butter has really good moisturizing properties,” Sheila says. “A lot of people look for our soap because it’s good for sensitive skin.”

Making value-added products out of cacao has paid off. “We can add that to the value chain and financially it’s feasible for us and sustainable for our company. If you only sell your beans as wet beans to the market, your profit won’t be that big,” Sheila says. “That was one of our realizations. You really have to process it into other products.”

Processing products without a factory 

Cacao Culture Farms accomplished all this without owning their own factory. How did they do it? “We work with toll manufacturers for some of our products,” Ken says.

A toll manufacturer is a company with specialized equipment that processes raw materials into products for their clients. “We came up with these strategies because we didn’t have money to invest in machines,” Sheila says. “With scarcity comes creativity. We had to look for ways on how we would be able to do these products that we have in mind.”

Working with toll manufacturers meant that the Reyes-Laos could perfect their products and test their markets without having to commit to buying equipment.

They estimate that they can make a 200% profit from their value-added products, but that’s without subtracting the cost for packaging, processing, FDA certification, and the like. “If it’s a backyard operation, you don’t need FDA or you don’t pay for those things, you could sell it for really cheap, you could earn like 100% return already. But if you want to retail at the malls or if you want to sell at the restaurants and others, you would need to be an FDA-accredited seller or manufacturer,” Ken explains.

Continuous marketing for continuous profit

Marketing is integral. The Reyes-Laos are very active on social media. Not only do they showcase their products, they also give advice to people who want to become cacao farmers. “We get a lot of questions about how to start a cacao farm, how to make tablea, and a mix of OFWs who want to venture into cacao farming… so we decided to come up with a vlog and answer their questions and at the same time share our journey because many people ask how were we able to grow cacao without land, how were we able to process products without machines,” Ken says. “If we keep all these things to ourselves, then people would be stuck doing tablea… Are we creating our own competition? That’s fine. At the end of the day, the market decides which one they would support. But at least farmers would see that there are other things outside of doing tablea or selling the beans.”

They also banded together with other Davao cacao and chocolate brands under a marketing cooperative called Cacao City. They currently carry nine brands, and are looking to add more. Cacao Culture Farms’ products can also be found in malls, specialty shops, online stores, and on their website and social media. Everything is shipped from Davao. They also do chocolate tasting events in Manila in partnership with a chocolatier friend. “It’s part of our (advocacy) to promote Philippine chocolates. There are a lot of bean to bar chocolate brands in the Philippines but not everyone knows about or has access to them,” Ken says, adding that he hopes more Filipinos try Filipino chocolates. “Instead of bringing chocolates into the country, you can bring Filipino chocolates out of the country. It’s reverse pasalubong,” he adds.

“Our goal is really just to explore whatever we can do with cacao,” Sheila says. “It’s like coconut-you use everything. That’s one of our goals, to create more products and to be able to give more opportunities for our partner cacao farmers that isn’t just chocolate, tablea, or cacao nibs.”

It’s clear that the Reyes-Laos are having fun in their newfound calling. They’ve taken the IT protocol of “release, validate with the market, then iterate” and applied it in agriculture. But according to them, the best part about working with cacao is sometimes being able to eat it. “When we’re making chocolates in the kitchen, the most exciting part for me is the cleanup because I’m in charge of the dishes and I just scrape off the chocolate,” Ken says.

“You can eat (almost) every experiment,” Sheila says. “Even if it’s failed, it’s still good.”

For more information, visit Cacao Culture Farms on Facebook. 

 This appeared in Agriculture Monthly’s November 2019 issue.