Companies have long wanted their supply chain efforts to make a significant difference to rural communities and the environment. Here Dr Peter Stanbury and Tobias Webb discuss how two recent meetings helped inform thinking on how this can happen. They argue that taking a ‘landscape’ approach to farmers, as well as conservation/restoration, must be the way forward.
At the end of 2019, Innovation Forum facilitated two workshops on behalf of Nestlé which brought together leading experts from the corporate sector, civil society and academia.
The events focused on two key aspects of Nestlé’s work with smallholder farmers: how to address the challenge of deforestation and move towards becoming ‘forest positive’; and how to improve farmer livelihoods and ensure a living income for those working in commodity supply chains.
A familiar problem…
Perhaps the most significant point to emerge from both events is that deforestation and farmer incomes remain challenges because they are factors which have not been properly internalised in the way that commodity markets operate.
Supply chains of products such as palm oil, cocoa and coffee price these goods in ways which do not properly account for external factors such as deforestation and farmer welfare. If these issues are to be addressed in a sustainable way, there is a need to understand in much more detail how supply chains fit within the wider social, political and environmental context of the countries from which commodities are sourced.
The challenge, however, is that these contextual issues are complex, and are not, therefore, readily addressed by simple interventions. In the cocoa market, for example, the Governments of Cote d’Ivoire and Ghana have recently introduced a ‘Living Income Differential’ as a means to address farmer incomes. Yet it is clear that just raising prices will not solve the problem. Farmers’ welfare and incomes depend on a range of factors, and at different levels.
At farm level, there are challenges related both to agronomy and farm management. Farmers need improved skills, agricultural inputs, and better ability to manage their businesses. Initiatives to address these issues struggle with challenges such as innate conservatism around farming practices, and the practical constraints of improving efficiency of what are usually very small farms.
Public goods count
Challenges also exist at a societal level, for example problems with government provision of public goods such as education, healthcare and farm extension services. At the level of the market, the challenge is that commodity prices have not historically factored in issues such as farmer incomes and welfare, which needs to be addressed. Only by addressing all of these factors in a joined-up way will it be possible sustainably to raise farmers’ incomes.
For the issue of deforestation, too, a sustainable way forward will only come from a more detailed understanding of the complexity of issues on the ground. It is easy for us to see the value of preserving forest, but this rationale may well be less marked for a farmer who wants to feed his family.
Similarly, criticising farmers for the prevalence of traditional farming techniques will not help much. Changes in behaviours can only come about if we properly understand why farmers do what they do and proposing changes in ways which meet farmers’ own incentives.
The commodity-based approach which has predominated so far has not helped – the reality is that farmers do not only grow on crop, but rather a range of them, some for home consumption, others for sale.
Is the model sustainable, at small scale?
A further challenge lies in the very concept of smallholder farming. However well-constructed efforts are to improve the efficiency of small-scale farming, there is a limit to what can be done. Farms of 2-3 hectares cannot make use of all options for mechanisation, nor will justify the expense of the best quality inputs or use of optimal farming methods.
This inefficiency means that it will always be a challenge to guarantee a living income to small-scale farmers. Furthermore, low productivity and poor farming practices mean that, to increase production, smallholders will tend to cut down more forest, thereby driving further deforestation.
What becomes clear, also, is that there is a limit to what companies can achieve on their own. Nestlé and others have taken great strides to improve practices in their supply chains, but recent, highly public criticisms of supply chain standards have demonstrated the limitation of this approach.
Genuine sustainability requires much greater cooperation between companies and other organisations, and in particular with government.
Complexity means that no single actor can ever have the means to address all that needs to be done. A single company, even a very large one like Nestlé, is limited in what it can do on its own. Collective action, by contrast, in which companies of different sizes, civil society, government and other partners work together offers the chance of real systemic change.
Roles for many
Moreover, it was clear from all the discussions that a key facet of collective action is that different types of organisation can achieve different things. For example, as one civil society actor observed, ‘When Nestlé engages with Governments it’s called “lobbying” whereas when others do it it’s called “technical advocacy”’.
To properly address the issue of living income will require coordinated actions by a range of different entities – companies, civil society groups and government.
Furthermore, one size will not fit all. When it comes to addressing living income, the particular challenges vary not just country by country, but location by location. There is a need, therefore, to develop processes – participants at the workshops termed it ‘situational analysis’ – which will enable Nestlé and others to understand properly what the issues are in a given location so that appropriate and workable approaches can be developed.
To sum up…
The clear conclusion therefore is the need to move from a commodity by commodity approach to addressing farmer income and deforestation issues, to something more holistic – the ‘landscapes’ approach. To do this recognises that the challenge is not just to address, for example, levels of farmers’ incomes, but to tackle the wider societal and political issues which affect farming communities.
Farmer poverty, and other such challenges, are driven not just by cocoa, or coffee, or palm oil, but by a complicated mesh of factors. Only by understanding what these factors are and how they interact will it be possible to develop strategies and courses of action that can genuinely address the problems. This will be difficult to do, and will take time, but it is the only viable approach if we genuinely want to create farming communities and commodity supplies which are genuinely sustainable.
This summary was written by Innovation Forum, and is our analysis of the discussions at the two events. If you are interested in discussing these ideas, and ways of convening coalitions to drive change, please see our “Innovation Accelerator” offering here, and get in touch.
You can find more analysis and discussion of issues around smallholder agriculture below:
Forests and agriculture section of Innovation Forum’s website (Lots of podcasts and analysis, all free)
Innovation Forum’s Future of Food conference USA 2020
Minneapolis, 27-28 May 2020
Innovation Forum’s Future of Food conference Europe 2020
London, 2-3 June 2020