October 2011 Newsletter
The Sustainable Food Lab is a consortium of business, non-profit and public organizations working to accelerate the shift toward sustainability in the food system globally.
2011 Linking Worlds Learning Event: Practical Lessons Connecting Small Scale Producers to Formal Markets
Addis Ababa, Ethiopia October 17-21, 2011
What practical lessons are emerging from the work connecting small-scale producers to formal markets? How can international companies, domestic companies, NGOs, and farmer groups collaborate to create commercially viable trading relationships that bring benefits to the rural poor?
The Sustainable Food Lab, together the partners of the New Business Models for Sustainable Trading Relationship Project and Oxfam Great Britain hosted an in-depth learning event in Ethiopia in October 2011. Experienced practitioners from NGOs and company partners gathered to share lessons, experiences, and questions about linking small scale producers to formal markets. More than 50 people participated, including many long-time Sustainable Food Lab partners from Green Mountain Coffee, CIAT, Catholic Relief Services, Oxfam, Kraft, IIED, ACOS, Rainforest Alliance and Innocent Drinks.
To ground the discussions in real experience, the workshop started with learning journeys in Ethiopia and Kenya exploring on-going collaborations in the field. Each trip followed a supply chain and engaged farmers, buyers, supporting government agencies, farmer organization, and NGOs to understand the potential benefits, challenges, and lessons. The supply chains visited were:
The groups saw very hopeful results – good income gains for women in rural Ethiopia with s few as 3 modern bee hives, local companies investing in developing local supplies for honey, barley, beans, and other intermediary business models to stabilize pricing and volumes for producers. Challenges were plentiful making for rich workshop discussion.
“We were getting very low production [of flowers] and we didn’t know why. The plants were also rotting. Now we have better production and this has been the advantage of the soil sampling and liming [supported by Wilmar Flowers and the Kenyan Agricultural Competitiveness Project].”
–Mr. Muchai, Smallholder Flower Grower, Kenya
There was lively discussion of key issues such as farmer engagement, trading relationships, the role of Government and private sector partnerships at the two-day workshop in Addis Ababa following the journeys. The focus was on the critical investments required to establish smallholder supply chains ranging from reducing smallholders and companies investment risk, through to investments that bring less commercially ready smallholders into supply chains or deliver women’s economic leadership. Questions addressed included:
Linking smallholders with well-functioning formal markets can play an important part in long-term strategies to reduce poverty and hunger. At the same time, including smallholders in supply chains offers companies a chance to diversify and increase resilience in their supply base, while also appealing (through labeled products or corporate reputation) to ethically-motivated consumers and ensuring legitimacy in developing country markets.
While the potential benefits are great, organizations also struggle with the challenges of linking diverse and fragmented smallholders to formal markets—and there are real barriers and risks that must be addressed. Small-scale producers in developing countries often operate in areas with inadequate infrastructure (roads, electricity, and irrigation). They lack access to skills and services (training, credit, inputs), and are dependent on favorable weather. Their lack of uniformity and scattered locations require creative solutions to aggregating production. But when properly organized and when needed investments are made, smallholder farmers can participate effectively and efficiently in formal supply chains. Under the right circumstances, they are able to reap important benefits and are able to manage their risks even in highly demanding markets. Companies can expand trade with smallholders, often through modest adaptations in their business model or how they work across the entire chain. This can include altered purchasing practices or support to suppliers organizational development that can increase the depth of the development impact of this trade for women and other marginalized producers.
Hal Hamilton in consultation with Kevin Rabinovitch
Mars is the third largest food company in the world. Across their business segments (chocolate, petcare, food, gum and beverages), Mars sells an average of more than a kilogram of something to every person in the world every year. Their impacts are significant and as a privately owned business they feel a responsibility to and see an opportunity in reducing those impacts.
The Mars approach to sustainability is driven by data. For example, following the International Panel on Climate Change recommendations to keep temperature rise below two degrees centigrade, Mars has calculated their scope 1 & 2 GHG emissions and set a goal of reducing this footprint by 3% a year. They have also estimated their scope 3 emissions across many other parts of the supply chain and found agriculture to be the largest source of GHG emissions.
In their direct operations (scope 1 & 2 emissions) Mars already has the capacity to calculate their emissions (factories and offices) and they have developed a decision-making framework that enables managers to allocate resources to operational efficiencies, capital efficiencies, new technology and renewable energy. They are willing to share the details behind their framework for pursuing these objectives. The low hanging fruit is in efficiencies. The eventual big wins are in new technologies and energy sources. The 25% by 2015 and 100% by 2040 reduction targets vs. 2007 absolute values will increasingly require big wins, but they believe that the costs of new technologies and energy sources will decline as the pace of innovation and adoption increases. Mars is setting similar goals for water and waste.
The sustainability of the entire supply chain requires that raw materials, particularly those from agriculture, be on a similar path to reduce their footprint. This path is more complex than operations and will be facilitated by the collaborative development of measurement and decision making tools, as well as shared learning about the deployment of these tools.
Neither set of tools (measurement and decision making in agriculture) is well developed yet, and additional resources are needed on both fronts. The Sustainability Consortium is a central host for the development of measurement tools that are aligned with life cycle analysis protocols. Several initiatives are piloting different tools and metrics systems for agriculture, but these are still at an early phase and need further development and standardization.
Mars is keen for industry collaboration on these agricultural tools because every player would benefit, and the improvement of agricultural supply lies within a pre-competitive space. If we follow the logic of what Mars has adopted for operations, we would set targets in relation to global limits (for example, how much water is available in each geographic region, and how much greenhouse gas emissions each production system can put into the atmosphere without the globe’s temperature rising more than two degrees centigrade). Once we set those targets on a timeline, we can build out a framework that allocates educational resources and incentives for the diffusion of better varieties and practices, as well as investments in new practices, varieties, technologies, and energy sources.
There are a wide range of challenges in adapting this approach to agricultural systems as the relationships between input, outputs and impacts can be different in agricultural vs. industrial systems. For example, the economic optimum for application of nitrogen fertilizer might suggest a higher rate of application than the environmental optimum; even if farmers can reduce application rates from the current rate and increase their net returns, if they reduce these rates all the way to the best rate from the point of view of water quality, crop yields might drop and net financial returns drop. This is one of many such dilemmas.
The necessity of industry collaboration is clear as we consider these dilemmas as examples of the inherent complexity of managing biology-based productions systems. That’s why Mars has joined the Sustainable Food Lab.
To learn more about Mars’ work in sustainability, please visit:
President, Sustainable Harvest
“The global problems we face require us to work with others – so instead of thinking in terms of supply chains think of value chains. So that includes more than just the suppliers and buyers. It means bringing together all the people involved in the chain – that’s the only way I can imagine solving the complex and daunting social and environmental and economic problems that we see on the horizon. In relationship based models I think we can move forward.”
Sustainable Harvest imports specialty coffee, building long-term relationships with farmers and customers rooted in transparency and trust. Many years ago, we began collecting the information that seemed most relevant to our business: volumes purchased, prices paid, and other contract-related data. For instance, last year we purchased 14 million pounds of Fair Trade and organic certified coffee from smallholder farmers at prices averaging 51% more per pound than they would earn on the commodity market. We channeled $8.26 million more to these communities than they would have received working through local middlemen in traditional supply chain channels.
Our suppliers number nearly 200,000 Latin American and East African smallholder farmers. As we grew, we recognized the need to track more comprehensive metrics than just contract data in order to better understand the entire social, environmental, and economic impact of our work. Sustainable Harvest’s business model, called “Relationship Coffee,” strives to internalize some of the social and environmental costs in the coffee supply chain, so we needed to develop broader metrics. We wanted to look at data specific to our actions, beyond the general supplier information we received from Fair Trade, and targeted to measuring the change that resulted from training we provided to farmers. We began
Collecting Household Data with iPads and Measuring Impact
Why have we started collecting detailed household information from our suppliers? Rarely do data collection or certification systems reach the last mile to the farm and the family producing coffee. But we want to understand how the money from coffee we purchase is spent by the family, and whether it sustains their need for cash income throughout the year. Demonstrating the concrete changes that have occurred in coffee communities as a result of Sustainable Harvest’s Relationship Coffee model allows us to maintain our credibility as an innovator and attract investment to expand our impact.
We started two pilot initiatives in 2011 to train cooperatives to collect household-level information and production data from their members using iPads. iPads can travel into the communities easily, and farmers and co-op staff require less than a third of the training to use an iPad that they need to learn how to use a computer. For the first time, the iPad allows co-ops to efficiently integrate data collection into their everyday operations.
As we began teaching cooperatives how to conduct field surveys – using the iPad and syncing it to an online database – cooperatives quickly recognized the power of this system for collecting information for their operations. Many have asked us to add survey questions to collect information for certification applications and more. As we increasingly tie cooperative information needs into the metrics systems we develop, the greater the interest and the participation we see from farmers and cooperative leaders.
Once the co-op surveys farmers with the iPad, the data is uploaded to a cloud server where it is accessible with an internet connection and we will never lose the data. Drawing from the 550 household surveys completed on the iPad so far, we now have comprehensive information from a sample of our Tanzanian suppliers related to their productivity, agronomy practices, and food security.
After analyzing initial baseline survey responses from four villages in Tanzania, we are learning to better understand the connections between the training we offer, the coffee we purchase from farmers, and their families’ food security. In Tanzania, we have been surprised to find that 38% of the farmers who participated in coffee quality training reported being food secure and 37% of food secure people also received training in agronomy best practices. The correlation between food security and coffee quality training surprised us, and now we can measure the impact our coffee quality training on household economic and food security risks in the future. All this information can be customized in reports to business partners, donors, and other stakeholders.
Providing Training via RITS Ed on the iPad
When we saw that it made the most sense to develop our data collection tools for use on iPads, we asked ourselves, “What other goals can we accomplish using this cutting edge tool?” We have always concentrated on sharing best practices among the suppliers in our value chain, so we developed an iPad app called RITS Ed, which provides video training geared towards co-op agronomists and farmers. For years, Sustainable Harvest has facilitated peer-to-peer training, recognizing that many of the best coffee experts are among the co-op leaders and agronomists in our supply chain. RITS Ed allows us to continue this training at a faster pace and broader scale. Agronomists no longer have to
Making these training resources more mobile by putting them on an iPad decreases the need for farmers to make trips to the cooperative offices for training, which saves time and money. It also helps us remove some of the cultural barriers that keep many women from participating in training because they need to stay close to home to prepare food, fetch water, and care for children. The women we surveyed in four communities in northern Tanzania have 1/3 fewer coffee trees on their farms, and only 18% of women received agronomy training as opposed to 35% of the men in the same communities. With the iPad, agronomists can go to the women with the training information. Tanzanian cooperative leader Anagli Mbise from Kilicafe commented, “By using this tool [iPad app], we can go into the field and target the women who pick the coffee and need the education.” Reaching more women farmers is not only the right thing to do, it is also key to creating a sustainable supply chain that can absorb the predicted growth in demand for specialty coffee in the coming years.
What are the challenges of developing digital systems for smallholder farmers?
First, reliable electricity and internet connectivity in remote areas such as northern Peru and northern Tanzania can be a challenge. Working with the communities, we have figured out ways to connect the coffee processing stations and co-op offices that are key to syncing data and making mobile devices useful in the field. The iPad can use internet over 3G phone networks, providing more options than a normal laptop computer would. For power in the most remote places in Tanzania, we have installed solar panels on the coffee warehouses’ roofs to provide energy and decrease communities’ reliance on diesel generators ubiquitous throughout the region.
One of the most significant challenges we have faced is how to pay for the development of the new technology solutions for smallholder farmers. Significant capital is required: in today’s market, the cost to develop an iPad app is approximately $200,000. Securing that level of investment for apps that serve cooperatives and farmers who are not able to pay enough to recuperate the investment is a hard sell. It’s why some of our strongest partners to date have been public entities and philanthropic institutions. Because of the investment required, we see these kinds of apps as platforms that can be shared with the industry to transform the way business is done.
Creating Shared Benefit
Over the years, Sustainable Harvest has relied on technology to become more efficient and allow us to scale our work. Now we’re able to teach farmers and cooperatives to use the same technology we use, the iPad, to collect data from their members and provide training. As we create data collection systems and share mobile training resources with co-ops, we are also training our supply chain partners to use the technology available – moving them away from antiquated tools and bringing them across the digital divide. By using mobile technology to collect data, we are not only able to better assess our impact on smallholder farmers, but we are also creating shared benefit for our suppliers in the Relationship Coffee supply chain.
 All data from Sustainable Harvest survey of 388 households selling coffee to four washing stations operated by the Kilicafe Cooperative in northern Tanzania.
The James Beard Foundation bestowed their inaugural Leadership Awards on ten visionaries - including SYSCO's Craig Watson, Costco's Sheri Flies and Unilever's Jan Kees Vis - for "creating a healthier, safer, and more sustainable food world."
A 30-year veteran of food industry giant Sysco, Craig Watson spent most of his career in quality assurance, maintaining food safety and consistency. But in 2003 Rick Schnieders, then Sysco’s chairman and CEO, gave VP Craig Watson an additional mission: to find a strategic business reason for Sysco to promote sustainability.
Though the two men, who both grew up in rural Iowa, bonded over their shared heritage and “understanding of the rapid erosion of rural life in America,” as Watson explains, he at first resented the added workload. “But Rick couldn’t lose. He had a farm kid,” Watson says, referring to his own childhood on a small dairy and hog farm in Elkader, Iowa, the bedrock of his appreciation for sustainability’s social and environmental importance. “Craig assumes that he is personally responsible for protecting our soil, our water, and our air. He knows that unless we protect those precious resources, not only is the foodservice industry in great peril, but the habitability of this green earth is questionable,” Schnieders said, applauding Watson’s leadership of Sysco’s Integrated Pest Management (IPM) program and life-cycle assessment study.
In terms of sheer acreage affected, as well as tons of pesticide and fertilizer not used, Watson is making his largest impact with Sysco’s IPM program, which he launched in 2005. Today, the program includes 921,000 acres, and all suppliers of Sysco-branded potatoes and canned and frozen fruit and vegetables are required to participate. “We leverage our relationships with our suppliers to do what they can to be good stewards of the land and the water. They are now seeing some economic reward from the avoidance of fertilizers or pesticides, because these are expensive inputs,” he says.
Though the IPM program may be his biggest quantifiable sustainability achievement, and through his experience with the Sustainable Food Lab he has forged relationships with organizations like Oxfam and the World Wildlife Federation—Sysco’s animal welfare program has been endorsed by Temple Grandin—Watson describes his proudest accomplishment as his work on the procurement of local food from small and mid-size family farms. The endeavor has allowed him to reconnect with what he refers to as “mid-sized family agriculture in America” and draw on his talent for developing both systems and relationships along the supply chain. The result: in 2007 only five Sysco distribution companies had legitimate local food programs. Today, Watson counts at least thirty.
“Seven years ago, if you’d told me that I was retiring to Iowa and planning to live within ten miles of my parents original farmstead, I would have said you have six heads. Sustainability has dramatically changed my perspective, professionally and personally,” Watson emphasizes. “You can take the person off the farm, but you never really take the farm out of the person.”
It all started with green beans. When Sheri was Costco’s corporate counsel, she worked on a project with a cooperative of farmers growing French green beans in Guatemala. Convinced that protecting the interests of even the smallest players on the supply chain would benefit everyone, the Costco team worked with the Sustainable Food Lab and Mark Lundy of CIAT to analyze the procurement process from start to finish. The results were eye-opening for Flies.
“What I found out was that a fair return is more than how much farmers get paid per pound,” she explains. “We want to make sure that they and their family are healthy, that they have educational opportunities, that they have clean water and access to adequate health care, that there are adequate inputs for soil and plant health, that yields are maximized and proper harvesting techniques are used, and that, in the end, quality products are produced. All of those factors need to be part of the equation, but at the same time you still have to remain competitive. It takes a lot of creativity from a lot of people to get that to work.” Her team is helping to set up a literacy program for adults, a cooperative store for a community located hours from the nearest town, and a midwife-run health center for a village that recently lost women in childbirth, among other projects. Though most people would balk at this challenge, Flies was hooked. After completing the Guatemala project she left her 13-year post as corporate counsel to start over in the company’s procurement department where she felt she could have impact on Costco's sustainability profile through corporate buying practices.
Today Flies oversees the sourcing of many limited-resource commodities—items like nuts, cocoa, and organic eggs—for Costco’s Kirkland Signature label. For each product, Flies’s team evaluates relationships and processes to maximize the benefits for everyone involved: the farmer, the supplier, the processor, the consumer, and Costco. “It’s not philanthropy, it’s not charity. It’s the true intrinsic cost of responsible sourcing,” she explains. “If everyone gets a fair return, the system works and it continues to renew itself.”
Flies also works closely with producers to make sure all operations are as environmentally sustainable as possible. Using a greenhouse gas calculator sponsored by Sustainable Food Lab, which partners with Costco on sustainability issues, Flies’s team helped the farms that supply the company’s organic eggs examine their carbon footprint. She also convened a meeting of all the farmers to share ideas about environmentally friendly procedures.
Sustainable Food Lab’s Hal Hamilton commends Flies for her unique approach. “Because she’s led from a sense of purpose as well as being very pragmatic about business,” he says, “she’s been able to connect a lot of people with each other in a deeper way than normally happens in the business world.” Flies is more than happy to do her part. “I truly believe you know your vocation when your heart’s desire meets the world’s need,” she says. “For me, my heart’s desire is to do this work. I feel so fortunate that Costco has given me the opportunity.”
Ice cream, margarine, soups, and sauces—scan the supermarket shelves for food products from Unilever, and you’ll find many that contain palm oil or a derivative thereof. The multinational consumer goods corporation buys 1.3 million tons annually, which makes palm oil its highest-volume agricultural raw material, and Unilever one of the largest buyers in the world.
For the casual consumer, the taste of Unilever’s Shedd’s Spread Country Crock may not immediately evoke deforestation and concomitant climate change, destruction of animal habitats, and land disputes in equatorial regions, but these side effects of palm oil production are what Jan Kees Vis has addressed as president of the Roundtable on Sustainable Palm Oil (RSPO) since its launch in 2004. Convening growers, processors, manufacturers, retailers, investors, and NGOs, the RSPO declares a vision “to transform markets to make sustainable palm oil the norm.” For Unilever, the goal is to source all palm oil from certified sustainable providers by 2015.
“[RSPO] is the most advanced of various efforts around the world to develop sustainability standards for bulk commodities, and one from which many other efforts draw their lessons. Jan Kees has been a key player in making that happen,” says Hal Hamilton, director of the Sustainable Food Lab, where Vis is co-chair of the advisory board along with Tensie Whelan, executive director of the Rainforest Alliance.
Vis’s role in the RSPO is just one piece of his 26-year career at Unilever, including work on life cycle assessment, environmental management, and a nine-year tenure as global supply chain director of sustainable agriculture before he was made global director of sustainable sourcing development. “Under Jan Kees Vis’s leadership, Unilever has been an innovator and trend-setter in sustainability, committed to helping farmers and protecting the environment everywhere they work,” lauds Whelan.
His leadership of the company’s sustainability program reached a high point last year with the announcement of the Unilever Sustainable Living Plan (USLP), which articulates ambitious environmental goals associated with Unilever’s plan to double sales by 2020. The USLP aims for three broad goals over the next decade: halve the environmental footprint of its products, source 100% of agricultural raw materials sustainably, and help one billion people improve their health and well-being.
“We started the work on sustainable agriculture in a tiny corner of the company in 1998, and then to see, twelve years later, that it becomes an integral part of the new Unilever business strategy—that was a good year for me,” admits Vis, who is most closely involved in USLP targets that address carbon, water, sourcing, and livelihoods.“The Unilever board realized that doubling the size of the business with business as usual was not possible,” he explains. Vis’s work on life cycle assessment, which calculates the environmental impact of Unilever products, contributed to this awareness that climate change and water stress would put the business at risk over the long term. With the USLP, he says, “We have gone beyond the question, can consumption become sustainable and we have moved on to the question, how can consumption become sustainable?”
2011 SFL Annual Leadership Summit in Portland, Oregon launched collaborations, new learning and development in cross sector pilot projects and industry wide discussions of standards and verification and much, much more. Read the report and view presentations HERE.
Jessica Mullan of the Sustainable Food Lab presented the work done to calculate GHG emissions in coffee cultivation using the Cool Farm Tool at the Coffee & Climate Change conference on 29 September 2011 in Lausanne, Switzerland. The meeting was hosted by GIZ and Ecom Agroindustrial Trading and brought together leaders in the coffee trade, voluntary standards organizations and climate science to discuss approaches to increasing the resiliency of coffee cultivation in the face of progressive climate change. The Cool Farm Tool has been used in over 200 coffee farms and 20 mills in 7 countries. The tool has been upgraded to include carbon sequestration in above ground biomass and calculates basic emissions from wastewater used in coffee mills.
Cool Farm Tool results were presented at FAO's Climate Change, Agriculture and Food Security Conference in Rome, Italy the last week of October in a session titled: Smallholder Mitigation: Whole Farm and Landscape Accounting
|Oct. 31-Nov. 3, 2011||
SEEP Conference: Enterprise and Market Development, Arlington, VA, USA
|November 1-5, 2011||New England Dairy Learning Journey visiting Ben&Jerry's, Cabot, Green Mountain Coffee and Dairy Farmers in Vermont, USA
|December 7-9, 2011||
Leading and Learning for Sustainability, Philadelphia, PA, USA
|January 25-26, 2012||
Healthy Communities, Strong Economies: Cross-Sector Partnerships, Charleston, WV, USA
|April 30-May 4, 2012||SFL Annual Leadership Summit: Sustainable Sourcing in Global Supply Chains, Dominican Republic (TBD)|