Why supporting smallholder farmers will benefit your supply chain and company

By Peter Derksen | January 27, 2016

For some, or maybe even most companies, the true impact of their supply chain lies beyond tier 1 suppliers. Suppliers of suppliers, perhaps even up to farmer level, can sometimes have the biggest impact in a chain. Therefore, creating sustainable supply chains often involves engaging with all stakeholders in the chain.

One group of stakeholders that has gained increasingly more interest over the years is that of the smallholder farmer. In many food and non-food supply chains, smallholder farmers represent a large group of suppliers delivering the raw materials for the products we buy. Many smallholder farmers are, however, barely able to sustain a decent living. As a result, smallholder farmers rarely consider sustainable practices as a priority, despite this being a way of improving their current and future livelihood.

Good Agricultural Practices bring benefits for both the environment, as well as the smallholder farmer. It is often a lack of knowledge that prevents smallholder farmers from becoming more sustainable, yet with key support in areas such as pesticide usage and replanting, positive progress can really be made.

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One example of the support available for sustainable farming is the Better Cotton Initiative (BCI). BCI promotes the production of sustainable cotton and has developed the Better Cotton Standard which covers all three pillars of sustainability: environmental, social and economic. Cotton farmers adopting the Better Cotton Standard benefit from training and support through working with experienced partners in the field. These partners train farmers on effective pest control, water usage and better fertilizer usage, making cotton farming kinder for the environment, whilst improving production for farmers. In addition, as the costs involved in growing cotton are lowered, the livelihood of farmers is also improved. Supplying Better Cotton also enables farmers to deliver a premium product that is less susceptible to market fluctuations.

See below an example from VF Corporation and BCI on supporting smallholder farmers in China. The project was implemented by Solidaridad, an international civil society organization with global experience in facilitating the development of socially responsible, ecologically sound and profitable supply chains. Solidaridad and VF Corporation, a global clothing company with brands such as Timberland®, The North Face®, Lee®, and Wrangler® jeans, partnered in 2013 to set up a project with smallholder farmers in the Chinese province of Hebei. Since then, Solidaridad has been training smallholder farmers, through farmer field school techniques, on the Better Cotton production principles, as laid out by the Better Cotton Initiative (BCI). This helps farmers grow cotton in a way that reduces stress on the environment, while increasing productivity.

 

Why engage with smallholder farmers?

There are many reasons why engaging with smallholder farmers brings benefits for both corporates and NGOs:

  • Securing supply
    If the livelihood of smallholder farmers is not improved, the number of farmers growing crops such as cashew or cocoa will reduce significantly as farmers migrate to cities. As a result, the supply of certain commodities may fall short. Supporting smallholder farmers improves the livelihood of farmers, whilst securing the future supply of raw materials.

  • Food safety & traceability
    By registering the entire supply chain, from farmer down to the end consumer, full traceability is achieved. In order to comply with food safety and legislation, traceability is key. But in order to get the information you need, you firstly need to collaborate and engage with smallholder farmers or farmer aggregations.

  • Quality control upstream the supply chain
    A lot of quality data is present early in the supply chain. This data is usually paper-based and remains purely within the domain of the smaller holder farmer themselves. But by connecting smallholder farmers via a Supply Chain Collaboration solution, such as ChainPoint, this data can be digitalized and integrated much earlier into an organization’s quality control procedures. Proactive, automated software analysis then enables early warnings to be issued in case of quality issues, since the quality, origin, and yield of raw materials are recorded and made available much earlier in the supply chain.

  • Environmental issues
    To reduce the environmental, quality and cost impact of a supply chain, all stakeholders need to work together. Registering key metrics such as fertilizer use, pesticide use, water use, land use and other KPIs, provides a better overview of supply chain impact, allowing hotspots to be quickly identified and corrective actions initiated. Producing sustainable raw commodities is key to ensuring future supplies as certain commodities contribute heavily to deforestation, greenhouse gas emissions, loss of biodiversity or pollution of surface water.

  • Measuring results
    After a farmer has received training and support, it is vital to also measure the results. By continuously measuring the output of produce, a detailed report can be created, indicating the extent to which training has improved the livelihood of the respective farmers. All data gathered along the supply chain can be measured and analyzed to learn trends using specialized Supply Chain Analytics software, such as ChainPoint Analytics.

  • Micro-credits
    Some supply chains depend on seasonal crops, meaning that there is a gap of a few months where smallholder suppliers receive no income. It is not uncommon that smallholder farmers suffer real hardship during these months. However, with their farm and production data stored in ChainPoint, farmers can more easily apply for microcredit to overcome these difficult months. Alternatively they can use microcredit to invest in another source of income to cover the months where there is no yield.

Connecting smallholder farmers

Collaboration with many thousands of smallholder farmers can be quite a daunting task in terms of data collection and analysis. However with a dedicated, flexible Supply Chain Collaboration system in place, such as ChainPoint, the effectiveness of ground teams and downstream decision making can be dramatically increased. Easy to use data collection software employed throughout the supply chain provides a chain with greater control and the agility to respond to supply chain threats in a more timely manner.

During March and April, ChainPoint will be focusing on smallholder farmers with the release of a solution paper and a webinar. Click here to register your interest and be kept up to date.

 

Posted in supply chain collaboration, supplier management, smallholder farmers

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