Business and farmer welfare – can the two really go hand in hand?

When it comes to big corporates the traditional image of supply chains from developing countries for ingredients, materials and natural resources is not great. Whatever the sector, the image of low pay, bad working conditions and exploitation taint the private sector. Keeping costs down has usually been the priority. So have things really changed?

Firstly, scrutiny by civil society organisations means that bad practices are being exposed. The global NGO Oxfam International for example, produces an annual report that ranks the top ten global food companies according to social and environmental performance “Behind the Brand”. This means companies are now more answerable for their actions.

Consumers are also becoming more interested in where and how products are grown/ made, in what conditions and their social and environmental impacts. Events like the Rana Plaza disaster in Bangladesh exposed the failings in the garment industry and global brands were criticised for not knowing more about where clothes were being made and in what conditions. The reputational damage was huge and no business needs that kind of publicity, especially as consumers make their opinions known by opting for more ethical brands.

Is that enough?

Change can only really happen if businesses see the value in promoting good practices in their operations – it has to make sense financially as well as socially and environmentally. There has been a shift as smart companies move to think strategically about what they source, how they do it and the role they play in securing the commodities that they rely on.

Nespresso, the single portion coffee company based in Switzerland has integrated social and environmental factors in to the way it works with farmers around the world. The AAA Sustainable Quality Programme looks at quality as much as quantity and sustainability. It recognises that the three go hand in hand if it wants to guarantee access to top grade coffee in the future. That’s what matters – working with farmers to make sure it has a steady supply is vital if the business wants to grow. How they work with farmers is critical and it’s a long-term relationship, not just about short term gains.

This doesn’t just mean working on water management, agroforestry projects and drying techniques, though it does all of those. The business has gone further with the AAA Farmer Future Programme. It knows that farmers face high levels of uncertainty and the insecurity of income they receive in any given year makes financial planning very difficult. Access to insurance schemes or other financial products is not available and they can’t make long-term plans like retirement. As uncertainties grow, the younger generation often look to towns and cities for employment rather than stay in farming. This isn’t great for local communities or for the business which wants to guarantee its supply.

With NGO Fairtrade International, the Colombian Ministry of Labour and the Aguades Coffee Growers Cooperative, Nespresso established the first pension and retirement scheme for small holding coffee farmers in the Caldes region. With time, it wants to extend it to its 40,000 farmers across the country. AAA farmers will receive a contribution of 20% of what they invest annually from the Colombian government. This guarantee of welfare for the elderly means that farmers can build their savings, plan for the future with peace of mind that they can transition the care of farms to younger generations.

Empowering farmers to actively plan for retirement allows them the dignity to be more in control of their own destinies and secures a better standard of living for them and their families.

This innovative and unlikely public-private partnership shows just how business can have a positive effect, for farmers and their families. By thinking more broadly about its supply chain and the needs of the local community, the business has been able to bring together the right partners and meet a social need that helps the farmers and their business too.

Featured in: http://www.negolution.com