Commisioned by FMO, KIT Royal Tropical Institute executed a feasability study and designed an impact evaluation of the MASSIF support to the Agronomika Finance Corporation, the non-bank financial institution for cocoa farmer finance set up by Kennemer Foods International (KFI) in the Philippines. 

In cooperation with the Dutch Sustainable Trade Initiative, FMO supports cacao trader KFI in its efforts to develop the cacao sector in the Philippines, through a MASSIF loan.

This support is mainly directed at the establishment and operation of the Agronomika Finance Corporation (AFC), a non-bank financial institution set up to meet the financing needs of smallholder farmers that work with, and supply cacao beans to, KFI. KFI 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 markets.

Understanding the current state of the cocoa sector 

KIT carried out a scoping study, including literature reviews and interviews with stakeholders and key informants in the Philippines. It aimed to understand the current state of the cocoa sector in the Philippines and the business model of KFI and Agronomika FC. KIT developed and proposed an impact evaluation framework – including an RCT design – that was based on these findings. This was followed by an uptake analysis studying the key characteristics of clients and non-clients, as well as an analysis of the extent of undercoverage (unexplored market). The next phase is focused on programme assessment, evaluation and learning, both for the funder as well as the client.

As part of this study, KIT developed a AI-based Machine Learning Model (Classifier) to test for the potential expansion of the programme. To do that, KIT surveyed a sample of farmers who applied for a loan. Using this data as a training set, our team developed a supervised learning model, which we subsequently applied to a sample of farmers that could potentially apply for loans, as a way of to identifying the programme’s potential.