Working on Supply Chain Sustainability with Small Scale Producers

Worldwide, small scale producers are key suppliers in many agricultural value chains

Smallholder farmers (defined as those who cultivate less than five hectares of land) represent a significant proportion of the upstream agricultural value chain, providing over 80 percent of the food consumed in a large part of the developing world. Their productivity, especially in rural settings, is linked closely to economic growth, food security and poverty alleviation.

Working with small scale suppliers is therefore key to sustainable development without poverty. At the same time due to increased competition on scarce resources, the increasing environmental and biodiversity threats, climate change and the continuous persistence of poverty, companies are increasingly confronted with sustainability risks, and are requested to address them, be it from consumers worldwide or from international and national guidelines and legislation. Doing this with small scale suppliers has proved to not be easy.

Business, thinking strategically, will need to adopt an inclusive and responsible business approach to address these risks in order to assure a long term business perspective as well as to benefit low-income producers and their communities in a profitable and sustainable way.

Yet often when companies work with small scale producers, both parties can experience challenges

While on the surface this win-win type of business seems straight forward enough, there are challenges with respect to implementation. There are unique characteristics of smallholder farmers. Smallholders are geographically fragmented and often living in remote villages, with limited access to modern farming technology, services and information, inconsistent supply, and slow to adopt sustainable farming practices. On the other hand, many companies focus only on first-tier suppliers, are not checking upwards into their supply chains, are not rewarding suppliers for sustainability improvements. In past years focus has been largely on certifications, but increasingly it is recognized that these have limitations and are often not accessible for small scale producers.

By way of an example, shrimp production and its related activities provide livelihoods and food security for over a million small scale producers, who account for more than 80% of Vietnam’s shrimp production.  For them, one of the most difficult challenges to overcome relates to their fragmentation. Compared to large scale, industrial shrimp farming, for example, introduction of new procedures as well as assuring compliance to achieve international and national sustainability standards require far more resources to have the same amount end product.

While this is clearly a win-win solution, is business paying enough attention?

There is urgent need to address these challenges. But there is more: there is growing evidence that companies can benefit from empowering women within supply chains by increasing gender equality at the workforce within the supplying industries as well as by not just connecting to male family heads of household. Women’s economic empowerment provides variety of benefits and reduces business risks. How many companies do look into this already? Also this year, the top three risks ranked by the World Economic Forum’s top 10 by likelihood were all linked to climate change: Extreme weather events, failure of climate-change mitigation and adaptation, and major natural disasters. Companies will need to work on these with the small scale farmers: without working with farmers to become more resilient to the impacts of climate change, companies are open to production risks.

Increasingly, efforts are being made to address these challenges

We will explore this topic in depth at the CSR Asia Summit 2019. At this year’s session, we will hear from organizations seeking to fix the barriers, diving into the mechanisms and solutions that lead to more responsible and inclusive supply chains, benefiting both business and farmers. Examples will be provided showcasing strategies and approaches to address the inclusion of small scale producers in sustainable supply chains.

The session is organized as part of CSR Asia’s partnership with Oxfam in GRAISEA, a regional program funded by the Embassy of Sweden in Bangkok, that aims to overcome barriers to development through responsible, gender transformative value chains and private sector investments. For more information, please contact Julia Whitney (julia.whitney@elevatelimited.com).

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These blogs are written by ELEVATE staff members or associates and the views and opinions expressed are not necessarily those of ELEVATE.

Photo credit: picture of small prawn producer in Indonesia – Michael Glowacki