YAMASÁ, DOMINICAN REPUBLIC - For decades, the Dominican Republic exported tons of low-grade cacao, the chocolate bean, primarily to the United States for use in products like chocolate bars and powdered cocoa. Most of the profits from these sales flowed to a few Dominican companies, which dominated the industry. Relatively little trickled down to the island nation’s tens of thousands of small-scale cacao farmers.

So in the early 1980s, when a German technical-assistance group proposed improving the quality of Dominican cacao, government economist Isidoro de la Rosa embraced the plan – with a twist. Instead of implementing a centralized fermentation system to improve the chocolate, as the Germans proposed, he urged a decentralized approach. Associations of Dominican farmers would learn the fermentation process. An umbrella organization would sell directly to world buyers on their behalf.

From that seed of an idea has sprung a powerhouse. The National Confederation of Dominican Cacao Producers (CONACADO), formed in 1988, has 182 associations organized into eight regional blocks. With a 60 percent share, it’s the biggest single exporter in the small but rapidly growing world market for organic cacao. And it has become a big player in another growing market: fair-trade certified chocolate.

Now, some wonder whether success is going to spoil CONACADO’s recipe. As fair trade continues to grow, will its transition into the mainstream enhance its prospects – or prove it to be, ironically, unsustainable?

“What we’re seeing is rapid growth in demand, so there’s ample room for increased production,” says Laura Raynolds, codirector of Colorado State University’s Center for Fair and Alternative Trade Studies in Fort Collins. But “as this market expands, does it begin to undermine the initial values that the movement seeks to espouse?” Ms. Raynolds doesn’t think so, but others aren’t so sure.

On an overcast March day in Yamasá, in a hilly region north of Santo Domingo, the sour smell of the white-fleshed cacao fruit pervades the air. Smoke rises from burning coconut husks, used to roast the cacao seeds. Young men, balancing 150-pound bags of cacao on their heads, make their way toward a warehouse of CONACADO’S Block 2. The piles of labeled sacks inside will end up in Europe, the US, and Japan.

From the beginning, Mr. de la Rosa knew that the farmers’ only chance of entering the cacao trade directly lay in circumventing the Dominican middlemen who controlled access to the market. That meant moving into a different market entirely: high-quality chocolate in Europe.

Then, as world chocolate prices plummeted in the 1990s, CONACADO moved into the emerging organic market, where prices were substantially higher. By historical artifact, Dominican cacao farmers were perfectly positioned to enter the new niche market. Relatively poor, they had never adopted the pesticide- and fertilizer-intensive methods of modern agriculture. To go organic, they didn’t have to radically alter their farming practices, says Raynolds. Initially, they profited from being the first in the organic market, but as competitors emerged, CONACADO needed a new edge.

Already organized as a cooperative, CONACADO found its new advantage in fair trade – by definition off limits to large commercial producers. The idea behind fair trade: Buyers in the developed world agree to pay at least a guaranteed minimum price to small producers of coffee, bananas, and other exports from the developing world. The built-in floor to prices theoretically protects farmers from being wiped out by major market fluctuations.

Depending on the market, the fair-trade guarantees can translate to substantially higher-than-market selling prices. In 2001, for example, a ton of fair-trade cacao, which has a floor price of $1,600, fetched nearly double the market average of $894.

“That’s an effect that you recycle,” says Abel Fernandez, CONACADO’s export manager. “You make investments, improve your quality. You have a greater volume of higher-quality stuff. And you make more investments.”

Fair trade also includes a social premium: $150 extra per ton earmarked for investment in social infrastructure. In the past eight years, CONACADO has put $500,000 annually toward schools, medical clinics, wells, and plumbing.

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