On February 12 and 13, around 60 companies, NGOs, academics and experts from every corner of the world met in a workshop in Amsterdam. They considered the question on how we can achieve better long-term involvement of small-scale producers in commercial, modern markets. Vredeseilanden was there also. We shared our experience about cooperating with Colruyt and learned a lot on how companies envision the challenge to buy from small-scale farmers.
“We stepped in a pilot project in order to involve small-scale farmers in Peru in the lettuce and tomatoes supply chain of Mc Donalds”, says Leonardo Correa de Souza Lima from Arcos Dourados, McDonalds’ franchise holder in Latin America. “Obviously, McDonalds’ supply chain is enormous, therefore it seemed like a huge challenge to involve smallholders, but now we are very happy with the successful pilot project”, Correa continues. “Together with the NGO Syngenta Foundation, the farmers were trained in how to produce, because they didn’t know McDonalds’ quality standards; their production was not yet sufficiently efficient; they lacked experience with greenhouses; no commercial experience, and there was quite some distrust among the farmers. However, after two years they succeeded in supplying vegetables and tomatoes to McDonalds, and their income rose with 177%.” Arcos Dourados is now also planning to set up similar projects in other Latin American countries. With this example, the tone was set to discuss on how farmer organisations, companies and ngo’s can collaborate and how to scale up pilots to a more structural level, every actor from his own power and identity.
Also the international NGO Catholic Relief Services presented the cooperation of their partners-farmers’ organizations with companies: cocoa farmers who supply the chocolate company Ritter; vegetable and fruit farmers who sell to the supermarkets chain Walmart,… “We see the need to cooperate with companies if we want to fulfill our mission – a better income for farmers. And we see we are able to realize win-win situations through a regular dialogue”, says Jefferson Shriver of CRS. A quote that also could have come from Vredeseilanden.
Heineken told about its policy of local procurement in Africa. By 2020 they want to purchase in Africa 60% of the inputs (rice, sorghum, cassava,…) for their beer brewed for the African market. “It is difficult and time consuming”, says Paul Stanger of Heineken, “however for Heineken it saves expenses (less transport) and it safeguards our supply in the long term, making us less dependent of price volatility on the market. That way we decrease our ecological footprint and for the farmers it is a significant increase of income. For instance, in Congo we have reached already 57000 farmers’ families since 2009, and on average each farmer’s production rose with 42%; also their income increased significantly.” Also Vredeseilanden is looking to Heineken, who knows one day also our partners from East-Africa can sell their rice for a good price to the brewery.
“It is indeed difficult to involve smallholders in the supply chain”, says Jan Kees Vis of Unilever, “but in the end it is also easier than we thought at the beginning. And it is simply a necessity. If we want to grow we have to make sure the supply increases, and the biggest potential lies with smallholders. Sustainability and transparence are important for the reputation of companies. We already train our buyers (1500 people) in sustainability and purchasing from small-scale producers.”
According to Bill Vorley, senior researcher at the IIED (International Institute for Environment and Development), five factors are important for successfully integrating small-scale producers in modern markets:
- As a company you need a clear sustainable purchasing strategy, which must permeate from top management to buyers and accountants, because otherwise pricing will kill the business;
- The purchasing policy must be in line with the company strategy. Thus, inclusive buying could be comprised in the bonus system for employees, in order to avoid tension between the purchasing policy and risk management;
- The purchasing policy must be built on relations;
- Adapt your approach to the kind of product you want to purchase. Investing in smallholders only pays off if the purchaser sees a win in it, e.g. a guaranteed supply or a plus-value for the brand, or an interesting innovation;
- Implement only pilot projects with a view on up-scaling to the mainstream business, otherwise it will remain merely a project.
Success factors which we at Vredeseilanden will certainly consider in our future cooperation with companies. This and other exchanges and networking with companies and organizations that are engaged daily with inclusive business, was no doubt an interesting input and learning experience to take with us in our own work, always with the objective that farmers have to earn a viable income.