Sustainability standards to support small-scale farming

Sustainability standards to support small-scale farming

Agro-processing companies in Africa are increasingly playing a more active role in supporting upstream players in their supply chain, to remove risk and ensure sustainability.

By Wouter Jordaan, partner and principal ESG scientist, SRK Consulting

Large agro-processing companies – often multinationals – rely heavily on small-scale farmers for vital inputs. These companies and their industry bodies are therefore playing a more active role in supporting those upstream players in their supply chain, to remove risk and ensure sustainability.

In addition to addressing risk in the supply chain, the agro-processing sector is responding to growing scrutiny by NGOs and the public of environmental, social and governance (ESG) compliance.

Sustainability standards for agriculture provide a valuable framework to benchmark ESG performance, including the kind of support they provide to small-scale farmers.

In the South African sugar cane industry, for instance, sugar mills often work directly with small-scale farmers to facilitate inputs, management and advice that improve reliability and product quality.

Big data

One of the most valuable tasks they undertake is to collect data from farmers, tracking the volumes of agro-chemicals they consume, what income they derive from their sales, the greenhouse gases they produce, water use and the purity or quality of their product. This allows them to measure whether there are improvements in the operational output from year to year.

This data can then be made available to the farmers in accessible formats. SRK Consulting has worked with two sustainability standard bodies and their respective standards, using their key sustainability indicators to produce dashboards which present farm-based data visually for better interpretation and understanding of the data.

Fair pricing

Pricing and payment are key elements of the sustainability standards in agriculture. International best practice has for some time focused on ensuring that farmers receive a fair price for their produce, and that they get paid timeously.

In Africa, it is not uncommon for agro-producers to pay farmers late, especially as a mechanism to conserve cash when markets are tight, due to operational constraints or unforeseen circumstances such as adverse climatic conditions. The process of calculating the amounts to be paid may also be opaque or concealed, providing insufficient certainty for the farmer’s own planning requirements.

Not only does this disadvantage the farmer, but it also creates problems for the agro-producer in the long-run. Being unable to sustain extended periods without payment, farmers will learn from this experience and start cultivating other crops. This of course can undermine the stability of the supply chain, as the agro-producer looks to secure future supplies.

Sharing value

There are various issues related to pricing, which require dialogue and interaction. Some crops produce waste or by-products that can be used as alternative fuel sources in boilers, for example, which has led farmers to question why they only get compensated for the quality of their produce and not the downstream value associated with the energy source associated with the crop.

Where the components traditionally regarded as waste are put to economic use, farmers have expressed an expectation to share in that value. These discussions become more important as commodity prices fluctuate, and farmers consider diversifying into more stable or lucrative crops – potentially undermining the security of the mills’ supply.

All these factors need consideration in finding the best ways to embrace small farmers in the supply chain, and to include them in the sustainability journey.

At farm level, this might include strategies to map soils and using less synthetic agro-chemicals as a way of minimising impact on soil and groundwater quality. Similarly, water use can be cut by up to 70% by moving away from overhead irrigation and investing in drip systems.

Energy can also be reduced by this method, as it does not require high pressure sprays. Solar energy can be harnessed to pump water to the lands from water sources, reducing both the electricity cost and the carbon footprint of a farm.

Starting with small-scale farmers, these initiatives can create sustainability benefits that ripple throughout the supply chain. They do, of course, demand considerable investment and close management of the technologies as they are applied and monitored.

Preventing child labour

The issue of child labour has plagued many industries, and in agriculture there are added complexities. For example, a small-scale farm is often a family business, so children are engaged in the operation from early on. Sustainability standards acknowledge that there are certain tasks which can be conducted by younger family members of certain ages, but it is vital that this work does not impede their time at school or impact their health and well-being.

In this context, social responsibility initiatives by industry have included supporting the establishment of schools closer to the farmers. This helps to ensure that the cost and distance of travelling to school do not become added obstacles to the universal provision of education.

Internationally forced labour – or bonded labour – is also an issue that has received much attention, notably by groups such as the International Labour Organisation (ILO) and is thus an integral part of sustainability standards. This results in agro-processors extending loans to farmers at such extortionate rates that the loans often become unrepayable. This locks farmers into exploitative supply arrangements at virtually no cost to the customer.

Sustainability standards can provide companies with an auditable process to prove or verify that there is no forced labour being employed in their supply chain.

It is vital that farm work by younger family members does not impede their time at school or impact their health and well-being. Image credit: Annie-spratt-QYcSeY7vuZM-unsplash.jpg

Water

A common aspect of social responsibility by agroproducers is the provision of water to small-scale farming communities. This can include drinking and cleaning water for households, as well as water for irrigation.

At a catchment level, there are also important sustainability considerations; water stewardship requires that all major users in a catchment will engage to ensure that supplies are shared in a fair and responsible way that does not deplete the finite resource.

Developing a sustainable supply chain in agriculture that supports the vital role of the small-scale farmer should not fall on the shoulders of agroproducers alone.

While the funding for sustainability initiatives generally comes from this source, it is useful to look further up the supply chain to other stages as well. Retailers have a strong interest in demonstrating their sustainable practices to the end-consumer and should also be engaged.

There is an important role for sustainability standards in helping companies in the agricultural space to report effectively on their supply chain. Such standards need to be relevant to the commodity and the country and must be able to be verified independently.

Wouter Jordaan, partner and principal ESG scientist, SRK Consulting. Image credit: SRK Consulting.

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