With climate change threatening global food production, companies from Olam to Unilever are focusing on lifting smallholder farmers out of poverty
Experts says humans must somehow increase food production by 70% by 2050 to feed ourselves, yet if we do that by conventional production means our greenhouse gas emissions will soar (around 70%), our water sources suffer and our soils degrade.
It is farmers, and mostly smaller-scale farmers, who are expected to achieve those dazzling productivity gains while performing a sustainable agriculture miracle.Yet these same smallholders are struggling to lift themselves from poverty and food insecurity.
Luckily helping smallholders achieve more sustainability is rising on corporations’ radar: from Olam to Unilever, conglomerates committed to responsible sourcing and smallholder wellbeing have formed important multi-stakeholder partnerships to work with smallholders and get them the tools they need to be more productive, profitable and sustainable.
This includes last month’s launch of the Global Agri-business Alliance, which brings together agribusiness producers with traders, processors, and suppliers for food and non-food crops. GAA members say they aim to scale up measures that improve livelihoods for smallholders, increase sustainable development, and move toward the UN’s Sustainable Development Goal 2 of ending world hunger.
The companies do this in part for reputational reasons, but also because there’s a good business case to be made for securing sourcing in a world of changed climate and volatility.
The problem
By their nature, smallholders or small farmers are not a uniform group. There’s no one-size solution that can address the needs of the 500 million farms that are working 10 hectares of land or less, and no single strategy that can work for all commodities and crops. That’s why companies and their NGO and government partners have launched innumerable small pilot programmes to select groups of farmers. But whether we are talking about a small-sized corn farmer in the Americas, a palm oil producer in Malaysia or African cocoa or coffee producers, they all need better access: to capital; education/knowledge or technical assistance, and to the actual inputs (usually better seeds and fertilisers, but also technology tools). For all the initiatives, too, there is a common need for ongoing financing to scale and replicate programmes to meet future needs without causing escalating harm to the very earth that makes agriculture possible.
Evan Fraser of the University of Guelph in Canada holds the Tier 1 Canada Research Chair in Global Food Security and produces the feeding9billion.com site. He sees a glass half-full scenario in global progress.
“Poverty and hunger indicators are going down, and that’s a good thing,” Fraser says. “And in many ways, many of our technologies are creating environmental benefits, our food storage capacities are getting better, infrastructure is expanding.”
However, Fraser says there is a race to keep up with environmental degradation. Even with NGOs, government agencies and companies involved in smallholder programmes, there is also a danger that the public’s and individual farmers’ interests are superseded by corporate profit motives. “We’ve got to make sure there’s an appropriate mechanism for distributing the benefits [of programmes and partnerships], and that’s complicated but it’s the road we have to go down.”
The business case
What large companies have realised is that it is in their own interests to help small farmers become more resilient. Dutch giant Unilever, which has provided training and help to 600,000 smallholders, has a partnership with the Indian government that financed a tomato processing plant and improved practices and yields for 3,000 tomato farmers, improving quality control for Unilever’s Kissan ketchup brand. A partnership in Madagascar with German flavours producer Symrise and the German Agency for International Cooperation benefits vanilla producers with “prefinancing” and price premiums for improving their harvesting practices.
In July, Unilever and IFF announced a partnership with Oxfam and Heifer International on a project in Haiti that aims to make vetiver farmers and their families more financially sustainable and food secure. Unilever uses oil from the plant as a fragrance in its Axe and Impulse products.
Kip Cleverley, IFF’s director of global sustainability based in New York, says the model treats the challenges smallholders face –food security, income diversity, soil management practices and skill gaps –from a number of different yet interrelated approaches. “We use vetiver and have compelling business reasons for creating a more resilient supply chain, but we looked deeply at the root causes of the supply chain instability.”
Instead of providing microcredit to the vetiver farmers, the partnership provides microcredit to women in the programme to use in other activities, such as animal husbandry, that improve the farmers’ food security. Part of the payback is that vetiver farmers keep farming, instead of moving to cities for job opportunities.
Coffee farmers
Keurig Green Mountain coffee company of Waterbury, Vermont, worked with the Sustainable Food Lab of nearby Hartland, Vermont, on a report that found that more than half the coffee farmers in its supply chain suffered food insecurity for up to four months of the year. For five years Keurig funded a project with numerous partners so that by 2013 the average “thin months” had been reduced on average to two and chronic malnutrition in children in coffee growing communities decreased from 43% to 25%.
Keurig, which aims to improve the livelihoods of one million farmers by 2020 (and has reached 282,000 so far) has figured out the metrics it thinks are most important in improving coffee farmers’ lives. In its latest 2015 sustainability reporting, Keurig shows resiliency in the company’s supply chain. These smallholder efforts are expensive, however, especially when made for the long haul. Earlier this year Starbucks issued a sustainability debt bond for $500m, in part to finance its ethical sourcing of coffee and smallholder training programmes.
Commodities
Olam, which has its HQ in Singapore, has a vested interest in the productivity and profitability of smallholders. The company’s main business is as a commodities buyer, and since starting its smallholder "Livelihood Charter" in 2010, it has provided some type of support to 345,000 farmers. Olam’s CSR sustainability head, Chris Brett, says they constitute 23% of the farmers in its procurement programmes (2015 stats), and Olam has a 2020 goal of expanding its support to reach 500,000 farmers.
Olam has provided $177m million in financing to cocoa, coffee, cashew, cotton, chili, hazelnut, rice, sugar and sesame farmers, most of that in the form of short-term loans. Empowering women and training farmers in climate-smart agriculture and the use of new technologies are top concerns.
“To be honest the first Charter challenge was to show the internal commercial value,” Brett says. Yet with funding directly from Olam as well as from some commodity-buying customers, foundations and non-profits, a framework to support smallholders emerged. “It’s a shared cost, and [Olam customers] can see a very efficient mechanism at work. We’ve influenced yield and quality increases and that larger volume has huge commercial value to us.”
With inputs provided in the form of seeds and chemicals and cash loans, Brett says there is increased economic viability for farmers. But without steady short-term, medium-term and long-term financing, farmers just can’t use all the other tools, from information to solar-cooled storage sheds, to improve their lives. “We’ve all got to do a lot more. It’s worth investing in,” Brett continues.
Don Seville, co-director of the Sustainable Food Lab, an NGO in Vermont dedicated to accelerating smallholder and agricultural sustainability, says he sees scale-up happening in companies engaging with smallholder companies in their supply chains. “But there’s another form of scale,” he says. “How do you move from pilots to changes that cover most of the supply chain?”
Seville says there are only two ways for companies to do this: either cascade appropriate technologies or innovations to an entire supply chain or, for a single commodity, work in partnerships to change the rules of the game for everybody. Seville says the World Cocoa Foundation’s CocoaAction multi-stakeholder is a good example of the latter, but he says he sees fewer success stories than he would like of “pre-competitive", forum-style partnerships that will grapple head-on with the investment necessities of smallholders of a particular crop.
“As the situation with Madagascar vanilla shows us, success on the ground is harder than it seems,” he says. Drought conditions have pushed vanilla prices 150% higher than two years ago, leading to more volatility for farmer-producers. “There are times when prices are high and then everything shifts. And farmers will always be at the mercy of weather and markets.”
Belal El-Banna, CEO of a New York-based company called The Real Co, says he believes a new model of distribution is necessary to reach maximum productivity and sustainability. The Real Co has a business model diametrically opposite of conglomerates: the company sources globally and delivers "single-origin" products – coffee, rice, salt – to local consumers who want to know where their goods come from. El-Banna says this cuts out the traders of the world, like Olam, which take a portion of smallholders profit.
The Real Co has transparency that seems impossible for huge food companies – each package lists the name of farmer/grower/miners. The relationships it has created with smallholders has concentrated on making each one reach maximum productive capacity, then helps these farmers form co-ops.
El-Banna admits that The Real Co, as a "fair profit" company, has none of the shareholder concerns of huge food conglomerates. But he says his company’s approach is important to look at if the bigger goal truly is sustainable. The Real Co creates a guarantee for its farmers that if they adopt sustainable practices, or need time to gain Fair Trade certification, the company will take the product during conversion time. It is that type of bridge that smallholders need, he says, to become sustainable.
“Is it the most profitable model?” El-Banna asks. “No. But with the type of radical transparency this type of model has, it allows consumers to know the quality of the product and farmers to truly benefit.
How tech is revolutionising agriculture
Mobile apps are some of the strongest new tools to support smallholders. Chris Brett, CSR sustainability head for Olam, says Olam’s mobile platform has gathered data on 345,000 registered smallholders. “Technology is a big game changer,” Brett says. “And critical to linking smallholders to global markets.”
Though smallholders are frequently reluctant to take on technologies until they’ve proven their long-term value, companies love these app platforms because the data they generate is both valuable, and proprietary.
Unilever has its own smallholder app platform, created with telecoms company Vodafone; huge seed and crop company Syngenta has one, too. Targeted up-to-the-minute weather information as well as crop quality stats and educational updates can all be delivered to smallholders by SMS. Unilever’s system will also include a mobile money feature for smallholder payments.
Feeding the Future
When US Congress passed the Global Food Security Act in July, it was hailed as a blessing for smallholders. The act continues the billions of dollars that have gone into funding for the 2009 Feed the Future programme, which has already touched 350,000 farmers in 14 countries via its Partnering for Innovation initiative. One example, a Feed the Future partnership with Syngenta Foundation for Sustainable Agriculture, allows smallholder cooperatives access to the web-based application FarmForce, which helps to monitor and manage farms. Another Feed the Future partnership, with a company called Hello Tractor, is making hundreds of tractors embedded with GPS and internet available in Nigeria for rentals – like an Uber for tractor users. Feed the Future partners with small- to mid-sized companies; though bigger partnerships, like one with Walmart in Rwanda, helped spread "bio-intensive" growing techniques to scores of farmers in Malawi.
Smallholder facts
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500 to 600 million smallholder farms are thought to exist globally, with an estimated 1.5 to 2 billion people working in the field (Oxfam)
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Two-thirds of the world’s rural households depend on smallholder agriculture (Oxfam)
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If women smallholder farmers had the same access to resources as men, the number of hungry in the world could be reduced by up to 150 million (FAO)
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Global conglomerates successful at incorporating smallholders into their supply chains include: Unilever, Cadbury, Costco, Coca-Cola, Marks & Spencer, SABMiller, Sodexo, Sysco, Tate & Lyle and The Body Shop (Oxfam)
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The International Food Policy Research Institute predicts that climate change will reduce global agricultural productivity by 10%-25% by 2080 (IFPRI)