Reflecting not only the increasing emphasis food companies are placing on their agricultural supply chains but on supporting smallholder farmers specifically, Mars and Danone have jointly launched the Livelihoods Fund for Family Farming. Barry Parkin, chief sustainability officer and health & wellness officer at Mars, spoke with Ben Cooper about the initiative and the positive impact the founding companies hope it will bring.
Given the world's 500m smallholder farmers account for some 70% of the global food supply, it is no surprise to see the increasing emphasis they are being afforded in the context of the global food security challenge.
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Their significance in the food security debate is further underlined by the fact smallholder farming communities in the developing world, from which developed markets derive so much of their nourishment, are among the poorest and hungriest on the planet.
There is, therefore, both a moral and practical imperative. Quite simply, if the earth is going to be able to sustain 9bn people by 2050, a robust smallholder farming sector is a prerequisite. Companies too are increasingly recognising the dual moral and practical dimensions in supporting smallholder farming communities.
"These smallholder farmers are among the poorest people in the world and it's our duty to help them be more successful," says Barry Parkin, chief sustainability officer and health & wellness officer at Mars Inc.
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The US chocolate-to-petfood group estimates it has around 1m smallholder farmers in its supply chain. Parkin says the company therefore needs "successful, thriving communities at the start of our value chain".
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By GlobalData"We've an absolute interest in them being successful and sustainable going forward for our business being successful and sustainable," he tells just-food. "There is a very clear mutuality between their success and our success."
To that end, Mars, in partnership with Danone, has launched the Livelihoods Fund for Family Farming (Livelihoods 3F), a EUR120m, ten-year project aimed at restoring environments and degraded ecosystems in rural farming communities while also improving productivity, incomes and living conditions.
Parkin points out many food companies have been active in their smallholder supply chains for some time but, while these programmes have made "some progress", they "typically have been relatively small scale and they've typically made incremental progress".
Incremental progress may sound positive but it is not sufficient given the challenge now faced, Parkin continues. "The reality is that many of these farmers are a long way from being economically successful, they are a long way from earning a living income. Some are in poverty, some are in extreme poverty. The gap is big, so increasing their income by 10 or 20% is not sufficient. This is often about doubling or tripling their income to make them truly sustainable and that is a massive challenge which isn't solved by small improvement. You need transformational change and that typically will come from new techniques, new planting materials and sustained support."
He also stresses the fund is a "booster" on top of what the company is already doing. However, Parkin points out although the cocoa supply chain has a dominant smallholder involvement, this is not the primary focus for the fund as there is already considerable corporate engagement in smallholder cocoa farming in the key producing countries of Ghana and Cote d'Ivoire, at both the company level and collectively through CocoaAction, an industry initiative launched a year ago.
"There are many other materials where there is less industry support, where the opportunity to drive change is bigger," says Parkin. The fund is aimed at supporting farmers elsewhere in Africa, South East Asia and Latin America. Priority crops being targeted are palm oil, vanilla and sugar. These commodities share with cocoa a large smallholder presence but, Parkin says, the industry is "less organised in terms of their efforts with smallholders" in these sectors than with cocoa, "so there's a bigger opportunity". These are also key commodities shared by Danone.
Bringing groups of smallholder farmers together, initiatives funded by the programme will have combined economic, social and environmental objectives, namely to increase yields and farmers' incomes; empower farmers, especially women, and improve the livelihoods of farming families; and promote responsible farming practices and technologies that, it says, "sustainably use natural resources to help enhance the resilience of farms, particularly in the face of climate change". Up-front financing and technical support will be provided to NGOs and farmers' organisations which will implement the projects in the field.
A critical facet of the programme is the way it will attempt to "monetise" the benefits to other parties, which will see capital channelled back into the programme. "Partners at a fund level or project level will pay and will financially support the activities because they are going to get real benefit from it," Parkin explains, citing as an example an operator in a supply chain which may gain the opportunity to source a higher quantity or quality of material from a certain area.
By monetising benefits, he says, "funds can flow back into the fund which means we can deliver more impact to more farmers with the same investment". Other beneficiaries that will provide such additional funding might include large scale development agencies and local government agencies.
The aim is to implement around 30 initiatives around the world with smallholders in different materials and different geographies, Parkin explains, which is expected to reach an estimated 200,000 smallholder farmers and more than a million people in their extended families.
Parkin believes the company's experience in cocoa can be brought to bear in other commodities, and there is potential for other learnings across different sectors. "Learnings from individual projects will inform others."
This also means there will be learning shared between companies. "We see this as pre-competitive. What we learn here we are going to be very comfortable sharing, obviously with Danone, but with others as well. This is a challenge that every business faces and I don't see a food company that has solved this." In this sense, the fund reflects another key trend in sustainability, that of pre-competitive industry collaboration.
"We saw this Livelihoods Fund as a fantastic opportunity to both achieve more scale more quickly but also to learn because nobody has all the answers here and in fact the answers you need are different in different situations," Parkin says."Partnering with a like-minded player makes a whole load of sense, and we see Danone as a very like-minded corporation with an ambition to deliver more than just financial bottom line, an ambition to deliver across the social, environmental and economic space."
Parkin says Danone has similar experience to Mars of working on smallholder projects in the developing world, but the founding partners also bring complementary attributes, so "the opportunity to pool that knowledge, poor our resources and learn together is very exciting for us".
In particular, Danone has the experience of launching its first Livelihoods Fund, a carbon investment fund established in 2011, which provides the initiative with a "ready-made infrastructure". Meanwhile, Mars has "good experience of driving productivity improvement at the smallholder level and bringing science to bear to drive step change in productivity".
The two companies are also "expecting to recruit more corporate partners and extend the group", Parkin says, adding he is "entirely open-minded" regarding possible potential partners. Any company with "similar aspirations for their supply chains and good experience" would be welcome, he says, which could include direct competitors. "We've shown through CocoaAction that we can find ways to work with direct competitors on these kind of issues."
This article is part of just-food's management briefing on the latest developments in the sustainability of supply chains for four key commodities: palm oil, cocoa, soy and sugar.
For more on why there has been a step change in industry engagement on cocoa, click here.
To read why some in the industry believe the drive on sustainable palm oil has been to slow, click here.
Is the debate over genetic modification (GM) plays in the soy sector a distraction from more important sustainability issues around deforestation and its consequences? Click here to read our analysis.
