Private companies partner with small producers to create sustainable supply chains of the future
Leveraging their buying power and financial resources, companies are working to create the sustainable supply chains we need in a changing climate. Ones in which farmers and companies prosper together. Where farmers will produce more using ecologically sound practices, and earn decent incomes for their production.
An estimated half a billion smallholder farmers produce 70% of the world’s raw materials and are the pillar of the food industry. Their sustainability is tied together with that of the companies—large and small— that buy this produce, process and market foods and natural products.
For instance, 95% of the milk processed at Brookside Dairy in Kenya—which holds 44% of the Kenya milk-market share and trades in 12 African countries—is sourced from 145,000 smallholders. Firmenich, the Swiss family-owned company that is the world’s largest private manufacturer of natural perfumes and flavours, sources 90% of its raw materials from 200,000 small farms across the globe. And Mars—the largest family-owned chocolate company—has around 1 million small farmers across the globe in its supply chain.
Yet millions of small farmers are impoverished, with little access to the financial capital, tools, technology, and skills they need to boost their farms’ productivity and secure their livelihoods.
At a packed Global Landscapes Forum session on 5 December, private-sector and NGO representatives discussed the topic of Shaping sustainable supply chains of the future: How to create links between smallholder farmers, companies sourcing raw materials, and the environment . The session was convened by the Livelihoods Fund, founded by Danone and Mars Inc., both global food companies that buy millions of tons of commodities from small farmers every year.
In its first phase the Livelihoods Fund is investing 120 million Euro to restore ecosystems, with benefits for around 200,000 farmers in Africa, Asia, and Latin America.
Bernard Giraud, Livelihoods Fund president, said the Fund is not a donor, but rather a true partner working side by side with farming communities to fix the world’s “broken supply chain,” with affordable and replicable solutions, which include agroforestry.
“When people are economically empowered, social and environmental benefits follow,” he said.
Pascal de Petrini said Danone aims to reach not just individual farmers, but the entire communities living around milk and water sources (Danone is the producer of Evian water).
By getting closer to their producers companies gain not only higher and more stable supply chains, but also traceability, which more and more consumers are demanding, he added.
ICRAF director general Tony Simons, was among the panelists at the session. He said in developing countries, rural advisory services (or agricultural extension) had changed fundamentally over the last two decades.
“Twenty years ago, governments were in charge of extension but today, NGOs, private sector and farmers themselves are filling this role,” said Simons. In Kenya, for instance, the number of
government extension workers has gone from nearly 14,000 in the 1990s to under 3000 today. There is a need to re-imagine extension,” said Simons.
Simons offered practical advice for NGOs and researchers on engaging with the private sector, saying trust is essential, as is the need to better identify, manage and share risks among all partners.
Another speaker at the event was Dominique Roques, CFO and Strategy Leader of Firmenich. He said a healthy natural system is the bedrock of the company’s pallete of 180 natural flavours and essences, which includes commonly known ingredients such as mint and lavender, as well as rare essences such as Peru balsam and agarwood. “Nature is our inspiration,” he said.
John Gethi, Director of Milk Procurement at Brookside Dairy in Kenya said Brookside is working with Vi Agroforestry to train smallholder farmers in improved dairy farming which leads to more, and higher-quality milk production and better natural resource management. Vi Agroforestry was represented at the event by their deputy regional director, Wangu Mutua. She said the NGO has worked in East Africa over the last 30 years, training smallholder farmers in
agroforestry and better land management for better livelihoods. The NGO is now partnering with the Livelihoods Fund.
“Small-scale farmers must unite in order to access training by NGOs, and we are involved in the effort to bring together farmers into groups and cooperatives,” said Mutua.
Marco Cerezo, founder member and director general of Fundaeco, described an example of their work with the Livelihoods Fund and the communities in Guatemala, on the cardamom supply chain. The project is lifting the livelihoods of the communities through a better supply chain with guaranteed markets. The effort includes planting 5 million trees within the cardamom agroforestry systems in Guatemala, and is set to lead to great environmental benefits.
“You cannot protect an ecosystem surrounded by impoverished people,” said Cerezo.
Manoj Kumar, Chief Executive Officer of Naandi, termed small farmers ‘the world’s largest private sector.’
“Small farmers must be converted from aid recipients to a farmer entrepreneurs,” said Kumar. In Naandi’s experience, this conversion starts with training farmers to approach their farming as a business, rather than as a subsistence enterprise. Training in keeping profit-and-loss accounts, as well as value addition to their produce is part of this. Kumar said when farms are profitable, farmers’ children will be attracted to go into farming, thus building long-term sustainability of the supply chain.
Barry Parkin, Chief Sustainability and Health & Wellbeing Officer, Mars, Incorporated, emphasized that big investments and long-term action are needed to make the transition from underperforming subsistence agriculture to profitable and sustainable farming. He said Mars recognizes this, and “is in it for the long haul.”
On the cocoa supply chain, for instance, Mars has invested in a long-term project—Vision for Change—in Cote d’Ivoire. This public-private partnership is implemented in by World Agroforestry Centre (ICRAF) working with national partners. It brings farmers together with the technologies, products and know-how they need to boost their cocoa yields and build sustainable cocoa communities. By 2020 the project aims to reach 100,000 cocoa producers in Soubré, one of the highest cocoa-producing areas of the country. After 4 years of implementation, the project is already recording significant successes.
At the event, Giraud announced the entry of Firminech and Veolia (a world leader in waste management)— into the Livelihood Fund.
Veolia’s Senior Executive Vice-President, Innovation & Markets, Laurent Auguste, summed the spirit of public-private partnerships in developing the sustainable, equitable and mutually beneficial supply chains of the future:
“When you can, you have a duty to do it,” he said.
See GLF session description here
All photos by Daisy Ouya/ICRAF, except cocoa demonstration farm photo.
See more photos: https://www.flickr.com/photos/icraf/albums/72157661908799136