Interestying topics for discussion. World commidty chains are getting more inclusive but also more competitive. Many commodities are still produced by smallholder farmers in the emerging economies and so-called developing countries. Commodity traders and exporters are more and more engaged with these farmers to create more sustainable supply chains. This is an economic need for these companies to secure supply over the long term. And this calls for investments in extension, right agricultural technology to close the yield and productivity gap. At the other hand many farmers are not (yet) reached by these initiatives, especially in Africa with a deficit in human capital skills and infrastructure. Many of these farmers are food crop planters by default, not that they choose this as a profession - and often facing structural problems. How many rural smallholders will be left as opposed to urban city dwellers in 10-20 years time? Must we focus on the more succesfull farmers only for sustainable business engagement?
Who is the best to address nutrition security???
Certified production has the advantage to use organised farmer groups as entry point. Industry players claim: "We do not certify poverty!"
Undernutrition is a cause and consequence of poverty.
GAIN investigate the overlap op cash crop production locations and under-nutrition. More than 70& of the cocoa growing areas, more than 33% of the coffee production areas in Africa and Asia and more than 75% of the tea export production areas face severe stunting rates above 30%.
Nutrition security can be measured by ONE indicator: Dietary Diversity Score (Fanta/USAID) which is cost efficient and easy to apply.
Why not taking the lead in addressing nutrition security that has a proven impact on productivity?
The tools and gaps are closely related. Smallholder farmers in developing countries face a number of challenges. Access to agronomy and market information is limited. Many farmers lack basic business skills. Value chains are fragmented and farmers find it difficult to access markets that pay a fair price. Poor infrastructure makes it difficult to get crops from the field to the buyer.
Even when obstacles such as these are overcome, the challenge remains scaling successes up to the point where they become commercially sustainable across the value chain. Often, agricultural development initiatives are pilots or small-scale efforts. When a critical mass of a value chain is operating efficiently, the market will step in to fill support roles. But there is a cost to transforming smallholders into commercial farmers. Who will invest in training farmers, supporting rural enterprises and improving the business environment? Sustainable change requires a sustained commitment from donors.
Sub-Saharan Africa now imports $50 billion in food a year. So, African farmers are not able to produce a large amount of the food that Sub-Saharan Africa eats. With the highest projected population, income and consumption averages projected to 2050, it would seem that the countries are at a crossroads--become increasing dependent on globally produced food (and sell other things--mostly oil and gas and minerals to pay for them) or begin to invest in and make agriculture in Africa more productive. We are working with Mars, NEPAD and BGI to map the genomes of 90 food crops that have been neglected up to this point by plant breeders. All the information will be put in the public domain and made available to all plant breeders and wwe will be training and equipping 90 African plant breeders per year for the next five years in marker assisted breeding. The goal is to focus on yields, nutrition, disease resistance and drought tolerance. And, to help plant breeders develop and sell to farmers better planing materials to produce the types of food that are most popular in the places demand will increase most rapidly rather than develop and protect IP around seed technologies.
Jason/Simon - do you think we are getting to the point where there is enough data in crops like palm oil, soy, cocoa where we can make the business case for standards adoption/certification or do we still have further work to do for the purpose of making a compelling case for banks/financiers?
Just going to Project Nuture in the Havard report its noted the Coke will recover its investment many times over. And here's the point: an initiative like this is commendable however without a doubt Coke's will message this in its marketing to build brand value/equity and drive up its NBAV (net brand asset value). So there'll be exponential ROI for Coke. The question is - in the full knowledge of how its efforts with Project Nuture will enhance NBAV - is the arrangement truly equitable? On balance its seems very one-sided.
Perhaps the best way to frame this is to recount how Anita Roddick, personally cashed out making around $400 million selling Body Shop to L’Oreal in a deal valued at $1,2 billion. She masterfully manipulated Body Shop’s version of Fair Trade with her “Body Shop Supports Communities” campaign. Take the Brazil nut oil ingredient example: Roddick is recorded, saying that Body Shop paid at least twice the local price for Brazil nut oil and thereby could justifiably claim that indigenous communities benefited greatly from the venture. Body Shop milked the “we-are-buying-the-Brazil-nut-oil-story-from-the-poor-forest-communities”, claiming this supported the Amazon forest communities’ struggle to preserve their way of life, was promoting the need for Amazon conservation, and forging the partnerships needed to manage a great Amazon biological treasure trove of species. In so doing the Body Shop saw a significant increase in their corporate brand’s value from the bounty of favorable PR marketing that the Brazil nut containing products generated. Stoking the fire of the Body Shop brand story to take advantage of her customers’ charitable instincts, led to mega-millions for Roddick but nothing for the thousands of Body Shop forest-based communities or Developing World suppliers she so frequently used and dropped as she moved to the next flavor or ingredient of the month. It is without question morally wrong and exploitive – and very much against the spirit of Fair Trade – to pay a few extra pennies more to poor community suppliers and then leverage this to build brands and businesses worth millions. Very disappointing insights for those who believed that Roddick operated with a superior moral compass to other business operators and most astounding of all she gets a knighthood for this!! ( this is another Roddick perspective not widely considered http://www.dailymail.co.uk/femail/article-482012/Queen-Green-Roddic... ) It would have been infinitely preferable if she had allocated Body Shop's Community suppliers say 10% of Body Shop's equity - at the time of the L’Oreal sale this would be worth $124 million. Instead of the extra pennies she paid for thier ingredients they would have built real wealth.
Coming back to Project Nuture of course its great that thousands of farmers are earning, that they are embedded into a successful brand's supply chain however the model needs to configured mor inclusively so that these farmers move from suppliers to brand co-owners. We've worked on this and our efforts are currently framed like this:
Promoting co-ownership and sharing Intangible Brand Value with poor producers, EquiTrade™ enables small-scale farmers to share via equity in the value of a brand-led business. It is a huge multiplier of value and sets the standard for life-changing upward financial mobility for farmers, producers and small enterprise owners who are traditionally at the base of the global economic pyramid. EquiTrade™ represents a staggering, high-powered economic pathway out of poverty. EquiTrade™ is wealth-constraint alleviation and enables the poor to increase their market power and rise out of poverty by sharing ownership of the crown jewels of capitalism — Intellectual Property (IP) and Successful Brands.
Hope brand-owners can get on board with this an catalyze a whole new pro-development brand genre wherein they configure and launch EquiTrade™ type brands in partnership with their poor farmer suppliers.
Jumping back up a bit, interesting perspectives as to why should, or perhaps why they shouldn’t companies invest / “purchase from” small farmers. Among other areas, lack of infrastructure in rural communities is among the biggest hindrance for private sector companies.
One interesting project we’ve seen, here at CDS, to address this, is through John Deere Foundation, who made a 3-year investment to support a the development of a rural village, India, with a focus on smallholder farm households. They are doing this through a combination of tactics, including sending skills-based volunteers to assist in transferring knowledge about modern agriculture techniques to drawing on agricultural approaches that John Deere implemented earlier in the century.
It’s a learning curve in both directions, both for John Deere Foundation and for local farmers. Here’s a link to a video about the project.
For me the comments by Allison, Simon, and Jason are really highlighting how many "shoulds" there are in the conversation about sustainable agriculture and specifically smallholders' role within it. It's probably safe to say we'd all love it if smallholders could improve their incomes and standards of living - including nutrition, education, and the other social measures Jason points out are so difficult to get agreement on. But does that mean small-scale farming is necessarily optimal - for farmers themselves or for broader food supply/security goals - or just a logical starting place? Would it be bad if small-scale farming gave way to larger-scale farming and some smallholders moved into other economic pursuits? There's a really interesting model in the Tanzanian sugar industry where smallholders have come together to manage their farmers jointly, hiring professional managers in some cases, leaving them to be more like landlords who can use their time to earn money in other ways too. And if we recognize that smallholders are businesspeople, and more broadly will make the most logical decisions for themselves and their families given the opportunities they have available, how much can we sort of prescribe/engineer in terms of what they should farm, how they should farm, whether they should use earned income to meet certain nutritional needs rather than grow themselves, etc. - leaving aside other spending decisions for the moment? We all want positive change for farmers and need to think about how we catalyze it. I'm a particular fan of the TechnoServe approach. But where do we stop? Where is the line between catalyzing and over-engineering or over-prescribing?
Increasingly farmers need to know how to think, not just what to think. What is possible today will be obsolete tomorrow. Wisdom from the past is important as a building block, but is not always fit for purpose. Outside of the farmers own areas of expertise and control, there are the issues of more open markets, infrastructure improvments and reductions of post harvest losses and ease of access to inputs. Society needs to invest in solving food production problems--this can be to identify entirely new tools or strategies or create systems to disseminate more quickly. We live in an IT world, but it takes 10 years or longer to disseminate better management practices (BMPs) around the world, and often they never make it to small holders. We need to use cell phones in villages to do this. Some work has happending in Madagascar and India, but much more needs to be done.
In reply to your 2nd question I want to say that sustainable food production among other things need first and foremost a conducive agro-climatic environment, which is unfortunately increasingly threatened by climate change and host of other human factors in many countries and poorer regions of the world. Agreed that many of these are beyond our control, still one can search for the solutions that already exist.
I work with one such powerful solution to free the farmlands which are submerged by water logging due to lesser soil permeability as a result of excessive salinity. Farmers dependent on rains can't cultivate in the monsoon season and have to depend on the winter crop unreasonably, which is also difficult as the land is already too dry. In India alone, more than 6.2 million hectares of land is affected by salinity and water logging and nearly 5 million small farmers have to bear its brunt. 'Bhungroo' is a World Bank Development Marketplace award winning irrigation technology, innovated by an Ashoka Fellow, Mr. Biplab Paul, which solves twofold the problem of year-round irrigation and low crop productivity besides presenting host of social solutions like women empowerment and commune cultivation.
Bhungroo is an innovative application of the principle used in groundwater recharge wells. It is a filtered injection method that causes the gathered water to percolate in the ground. A big natural underground water reservoir enables the farmers to store the rainwater and avail of dual cropping during the monsoon and winter. As much as 40 million litres of rainwater can be stored through a massive underground reservoir through this method which can supply water for as long as 7-8 months in a year. Moreover the non-saline rainwater when mixed with the underground saline water brings down the salinity of the groundwater making it fit for agriculture use. After successfully testing 132 Bhungroos in Gujarat state of India, we are able to rid 780 acres of land of water logging benefiting over 3300 small and marginal farmers as these Bhungroos are injecting about 18,00,000 litres of freshwater every year.
We are open to collaborating with all kinds of farmer organizations, NGOs and private entities to spread this vital knowledge for the benefit of smallholder and vulnerable farmers worldwide.
We're excited to be joined on the panel by Mark Murphy, AVP, Corporate Affairs, Cargill.
The key question in your comment Ged - one that surfaces so often - is how much of a return it is OK for a company or an entrepreneur to make. I'm not sure we'll ever get agreement on this! EquiTrade is a really interesting idea. Please keep the BFP community posted on your progress.
There are really two issues here--what do financial institutions need and what do farmers need. I think there is still information needed to make the case for financial institutions, but this will need to be by crop. Also, it is not just the information, but who has done the analysis and whether they are credible--this needs to be considered too. On the farmer side, this is constantly changing, and what is good or better for one farmer is not for another. That is why WWF tries to avoid practice based approaches in favor of more performance based ones. Practice based approaches lead to compliance, performance based approaches lead to innovation (which is what the world needs more of). However, we need to find ways to create open source data bases where farmers can post problems that they have solved, how they did it, what it cost and what the payback period. If the data base is set up around commodities and/or specific problems, this would be very helpful. Such a system could help other farmers understand how to think about solving a specific problem rather than what to think about it.
Thanks Charity - yes indeed. We have seen significant benefits to 90,000 small producers of soy in Mozambique for example from stimulating the growth of the import-substituting poultry sector in that country. Rearing the broilers themselves commercially has been an occupation that has been beyond the reach of far fewer small farmers. So the question comes back again to looking at the entire sector and who are the consumers/users of the value added grains and making sure that investments in boosting productivity are done in a smart way driven by where the growing market opportunities reside.
I think this is where input companies like Syngenta can help. We work directly with farmers and invest significantly in farmer training, knowledge, tech access etc. This is, of course, also linked to our business development - in the future. In the short term, it is pre-competitive market development. And the more partners across the value chain as well as donors and NGOs can come together to collaborate, co-invest and create value, the faster we will change smallholder productivity and profitability.
Q3: Why should the biggest companies in the world help small farmers and their communities? And - as Beth asks - what are the barriers to doing this?
I think the discussion on lower margin crops is important. Especially in farmer market linkages. These crops often dont generate good returns to farmers. There are higher value crops (the perennial crops, fruits etc) which are much more interesting for smallholders to create meaningfull returns. The outgrower programmes and Inclusive Business work done in coffee, cocoa and bananas - including SNV's experiences, are showing that. Converting staple grains into livestock/poultry should certainly be an important option as mentioned. Yet most farmers focus on grains or low value cotton for lack of alternatives.
I think the business case of certification is driven by consumers not development agencies or intermediaries. As we move to certification 2.0 we are increasingly in a world where certification does not attract a premium but becomes a "right to play" aspect of engaging in markets.
The market is important. For which market are the smallholders producing? For their own consumption, their community, local market or much further into export markets? There needs to be a balance between cash crops like cocoa and coffee, and food crops like staples, pulses and vegetables. And then of course, local crops like sorghum and millet. Value chains tend to focus on the big export cash crops and very little on the foods locally eaten, which see very little investment in technology and very little yield gains.
Beth - you make a great point. At TechnoServe, we are increasingly of the view that we need to develop clearer pathways out of traditional smallholder farming into commercial farming but this needs to be graduated. Too fast and we risk increasing the already dismal situation faced by many poor folks who have migrated to urban slums. And there are ongoing sectors where smallholdings can be commercially attractive as we see in the advanced countries - boutique niche horticultural crops for example - or in places in emerging markets where crops can only be grown - speciality arabica coffee for example. What we need is a much clearer shared vision across governments, corporations and civil society as to what the migration path should look like. This is something for the G8 to help provide leadership on and then to engage with all the key stakeholders in the relevant countries to drive a consensus.