Peru farmers drop cocaine in favor of cocoa

Deep in a valley where Peru's snow-capped Andes melt into Amazon jungle, Wilder Diaz Angulo cuts open a football-sized cocoa pod and separates precious brown beans from their fleshy white placentas.

The farmer takes care not to damage a single bean. That would hurt his chances of getting the best price for the specialty organic cocoa his cooperative sells for export to high-end chocolate retailers in Europe and the United States.

Life is calmer now that Mr. Angulo sells cocoa instead of coca.

But just a few short years ago he was dodging bullets and hiding from Peruvian soldiers, Colombian drug traffickers, and the brutal leftist Shining Path insurgents. Like hundreds of thousands of other farmers in Peru's fertile San Martin region, Angulo participated in the global cocaine trade.

"Coca brought lots of easy money … mucho dinero," says Angulo with a wistful smile. "But now we feel comfortable and safe. We don't have to hide from anyone."

Peru's drug traffickers have moved into more remote areas, and cocoa growers from across the globe are coming here to learn how to duplicate Peru's success. It's not a quick fix. But years of coordinated effort by the United Nations, the US and Peruvian governments, foreign aid groups, local leaders, and the farmers are now paying dividends. And key reasons for the turnaround – listening to local needs, creating synergy among a diverse array of actors, and sticking to market fundamentals – could carry lessons for other "narcostates" such as Afghanistan and Colombia.

"This whole area used to be a terrorist haven," says Fernando Rubio, an environmental activist and agroforestry promoter. "Now it is a success story. [French President Nicolas Sarkozy] says it's the best chocolate in the world."

Peru's cocaine production is far below what it was in the late 1980s and early '90s, when the country was home to the world's largest cocaine industry. Back then, more than 25 percent of Peru's coca cultivation – on some 44,500 acres – occurred in San Martin. Now, coca is grown on less than 2.500 acres, according to US embassy figures.

The US worked with former right-wing authoritarian President Alberto Fujimori to eradicate coca crops and push insurgents and narcotraffickers out of San Martin. But initial efforts to get farmers to switch to other crops failed.

In the late 1990s, various foreign aid groups ushered in programs that taught San Martin coca farmers how to grow alternative crops, but didn't do much to connect them with the niche markets that brought the best prices, and rarely coordinated with one another. The result was a damaging lack of trust that led many communities to kick out the groups, says Darwin Aguila Solano, the San Martin regional director for Chemonics, a Washington-based firm contracted by the US Agency for International Development to help the region develop its cocoa and coffee industries.

"When we started, people didn't like us," says Mr. Solano, explaining that peasant farmers thought they would be taught to grow crops that weren't profitable. Farmers often turn to growing coca to pull themselves out of poverty, he notes.

So in 2003, Solano just listened. His group organized events where local civic groups and leaders could gather and list their top concerns and needs. "We're facilitators, not bosses," says Solano. "We focused on getting the active participation of the people and their organizations, and we had to get agreement with the local government."

Another key was synergy. Solano's group brought all major stakeholders – heads of local government, Peruvian and US drug enforcement and development officials, and foreign aid groups – into one room. The goal was to avoid duplicating efforts or working at cross purposes. "It wasn't easy," says Solano, noting that USAID at one point threatened to pull money out of the effort if nongovernmental groups didn't cooperate.

Market fundamentals were also crucial. "NGOs often promote welfare-ism or paternalism," says Solano. Farmers are asked to produce something "without knowing if there's really a market for it. We needed to start with the market demand in order to [know what to] produce."

Today, the approach is paying off. One cocoa cooperative in the Juanjui area of San Martin, for example, exported 2,000 metric tons of top-quality organic cocoa last year, up from 190 metric tons in 2003.

"The Organization of American States came here for 10 days and said: 'We have a model,' " says Solano.

Similar principles have been applied to coffee, with equally impressive results. Coffee farmers in the village of Alto Shamboyaku now make more than double what they made for a bag of coffee in the 1980s, selling it to the Oro Verde (Green Gold) fair trade cooperative.

"We don't care about coca now," says Tercero Salas, the mayor of the small community. "We know we can get a good price growing coffee."

The Oro Verde cooperative exports 10 times as much top-rate coffee as it did in 2000 and nearly 100 times as much cocoa, says manager Hiderico Bocangel Cabala.

"The highlands are happy about coffee. The lowlands are happy about cocoa. I'm happy about both," says Mr. Cabala.

"The miracle of Oro Verde is the people who want to be their own boss, to be entrepreneurs," he says. "Poverty is not in the land, it's in people's minds."

• Matthew Clark traveled to Peru on a Gatekeepers trip organized by the International Reporting Project.