Leading food companies have recognised the need to transform rural communities to ensure supply continuity
Two-thirds of the three billion people in rural landscapes in the developing world live as part of smallholder farmer communities
, working on land smaller than two hectares in size. In China, 98% of farmers cultivate farms smaller than two hectares. In India, around 80% of farms are small.
According to the UN’s Food and Agriculture Organisation, many of these smallholders are poor, food insecure and have limited access to markets. Many argue that such farms, and their business models, are fundamentally unsustainable.
The fact is that many smallholder farmers’ choices are constrained, yet they farm their land and produce food for a substantial proportion of the world’s population. Brands, retailers and FMCG businesses, of course, rely heavily on a steady supply of ingredients and produce from this vitally important demographic. As an example, Nestlé alone has a supply chain made up of around 760,000 smallholder farmers around the world.
The 2030 agenda
Helping smallholder farmers to grow, thrive and survive in the face of a raft of environmental and social challenges is clearly important to tackling UN Sustainable Development Goal number 2 – to end hunger, achieve food security and improved nutrition and promote sustainable agriculture. Moreover, it is also important to achieving the whole of the 2030 agenda.
Many corporates are well aware of the need to act. The well-funded Nestlé Cocoa Plan
and the Nescafé Plan
, for example, were launched in direct response to the need to support rural communities under increasing economic and environmental pressure to continue delivering agricultural commodities.
Acknowledging that its success depends on the sustainable development of smallholders, Nestlé’s ambition is that by 2030 it will improve 30 million household livelihoods in communities directly connected to its business activities.
New biz models
The Mars Farmer Income Lab
, meanwhile, aims to develop new business models that will significantly reduce farmer poverty. Danone is another that is investing heavily to help increase the productivity of smallholder farmers in key crops, focusing on so-called regenerative agriculture
So concerned by the need to safeguard against specific challenges faced by the rural poor, a number of companies are even taking action to shorten supply chains by developing urban gardens
, for example.
One argument that does seem to have gained traction in recent months is that many developing countries might be able to deliver upon the necessary social outcomes or environmental outcomes – but not both.
But Nestlé argues that that both are important and both need to be achieved. Speaking to Innovation Forum, NHans Jöhr, corporate head of agriculture, Nestlé SA, says that deforestation activities limit smallholder livelihoods, and so the forests and the farmers remain vulnerable, while impacting other income generating activities. For that reason, Jöhr says that the company focuses “on things like improving agricultural yields and diversifying incomes, while developing no deforestation strategies”.
The poverty problem
Agriculture is the world’s main source of employment, so investing in smallholders is considered to be much more effective in alleviating poverty than investing in any other activity.
Demand for food is growing, but farmers face many challenges in meeting that need, due to poor farming practices, ageing or diseased plants, women’s lack of empowerment, and low levels of nutrition and sanitation.
These can be exacerbated by the increasing pressure on arable land from other crops. So, many smallholders live on low incomes, making farming a less desirable career option for the next generation.
While there are examples of progress, there is an urgent need for more action at scale. Farmers need better access to the skills, institutions and production inputs to create more resilient agricultural systems that in turn can produce sufficient, nutritious and diverse products for themselves and their communities, as well as their big brand customers.
Food insecurity and rural poverty are often the root cause of political conflict or migration too. Organisations working on supply chain issues can only play a part in supporting rural development if they have a good understanding of where and how ingredients are produced – and the pressures and challenges farmers and their communities are facing.
Achieving the 2030 Agenda for Sustainable Development relies heavily on flourishing rural areas, characterised by sustainable, thriving smallholder farmers. It’s clear that the companies that will have security of supply, so they can continue to successfully deliver the food and products their customers demand, will be those that recognise this.
Discuss these and related issues at Innovation Forum’s sustainable landscapes conference in London, 6th-7th November. Learn from experts at the likes of Mars, Nestlé, Unilever, Olam, Coca-Cola and Golden Agri-Resources and many more.