What can farmers do with a $10m grant? Maybe fix the global supply chain
A Unilever and the Clinton Foundation grant could be a significant step towards smoothing out the global supply chain. But will it meet its lofty goals?
Executive Director of UN Women Phumzile Mlambo-Ngcuka and former US President Bill Clinton at the Clinton Global Initiative’s 2015 Winter Meeting in New York, where an initiative to support smallholder farmers in developing countries launched this week. Photograph: Brendan McDermid/Reuters
When Christian Loucq visited a fresh fruit and juicing company in Ghana, the chief of operations at the Stanford Institute for Innovation in Developing Economies was struck by just how much hung in delicate balance for the local company.
Blue Skies was turning fresh, ripe fruits from Ghana, Egypt, South Africa and Brazil into salads and juices, and delivering them to European retailers within 48 hours. The process required finding farmers who could supply the fruits reliably and making sure those fruits got to the packing facilities before losing their freshness. Precious hours, if lost, would spoil an entire shipment.
“It’s not easy work. But investing in social enterprises is about creating the tools to generate wealth and combat poverty,” says Loucq, whose work with at Stanford helps entrepreneurs in the developing world successfully build their businesses. “It’s about teaching someone to fish and not about supplying the fish.”
Agricultural social enterprises like Blue Skies might soon, however, find themselves in a stronger financial position to tackle these everyday challenges of working in the global supply chain. Unilever and the Clinton Foundation announced this week a $10m plan to help impoverished growers in the developing world to improve farming techniques and the efficiency of selling their harvests to buyers.
According to its organisers, the grant is intended to be spent over three years to fund private businesses that will support 60,000 farmers in Africa, South Asia, Latin America and the Caribbean. The aim is to improve the lives of 300,000 people overall in those farming communities. Fund recipients will help make up the network of food processors and other businesses that make up the supply chain for Unilever.
The project, called Enhanced Livelihoods Investment Initiative, is designed to create a more efficient way for Unilever to buy from small producers and enable those farmers to generate more incomes as well. UN data shows that 75% of the 1.4 billion people who live in extreme poverty are located in rural regions of developing countries and depend on agriculture as a main source of income, and about 500m small family farms supply 80% of the food eaten in the developing world.
“It’s about sustainable sourcing,” says Paul Polman, CEO of Unilever, the company behind over 400 consumer product brands such as Ben & Jerry’s, Lipton and Dove. “Increasingly consumers want to know where and how our products are made.”
Unilever is contributing $5m while the Clinton Giustra Enterprise Partnership, part of the Clinton Foundation, is putting in the other $5m. Clinton Giustra and Acumen, a nonprofit that makes loans or equity investments in social entrepreneurships, will identify or create businesses that will get funding.
“We need to build a suite of ethical companies, and the money will invest in entrepreneurs who are building those companies that can then serve farmers,” Acumen CEO Jacqueline Novogratz says.
Mark Gunton, CEO of Clinton Giustra, gives an example of how the new fund will help, say, Ben & Jerry’s find good supplies of bananas among over thousands of growers in Mozambique. The money will go to local businesses that reach out to those farmers, teaching them better farming practices and connecting them to food processors come harvest time, he says. Money will also go towards creating food processing plants or other logistics infrastructure to help ensure there’s no delay in moving the bananas from the orchards to Ben & Jerry’s suppliers.
Accomplishing the initiative’s goals won’t be an easy task. Farmers in different locations face different challenges, from selecting the right seeds and applying the appropriate amount of fertilizer, to lining up contracts with food processors or other buyers, Loucq says. The farmers also have to find adequate transportation, such as trucks, to move their goods to food processors.
Whether the initiative will truly achieve its lofty goals remains to be seen. One of its goals is to boost incomes of those in the agricultural communities by 50%, on average. Another goal is to train and fund women entrepreneurs given women’s active role in rural farming.
Companies that receive funding need to show how they can become profitable within three years, though this is not the sole criterion for securing the funding. Businesses working on creating different parts of the supply chain will face separate obstacles, which could require more time and money to overcome for some companies, Loucq says.
Developing and applying sustainable farming techniques has gotten an increasing attention from businesses, nonprofits and policy makers because creating an ample food supply is critical for the world’s growing population. Climate change could seriously hamper that effort because it’s altering crop-growing conditions and slowing yields in parts of the world, according to a UN report last year.
Article by: Ucilia Wang. Posted to The Guardian on Friday 13 February 2015 12.03 GMT