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  • Olam calls for greater smallholder financial support

    Jul 14th, 2016

    Five years after the launch of its Olam Livelihood Charter (OLC), the global agribusiness has reported on the programme’s achievements thus far, and identified the challenges that still exist for smallholder farmers.The OLC is Olam’s flagship sustainability framework, geared to bringing prosperity to farming and rural communities and based on eight principles that must be fulfilled by Olam teams and partners for an initiative to achieve OLC status.

    The principles include better access to finance and improved agri inputs as well farmer training, social and infrastructure investment, labour and environmental impact training, quality improvement and traceability.Despite extensive progress being made under the charter over the past five years, Olam predicts that until 2020, smallholder productivity across Africa, Asia and South America will still be massively hindered by the dearth in access to finance, a lack of equality for women and climate change impacts, unless far greater collaboration and knowledge sharing across agri supply chains becomes a reality.

    “Smallholders grow globally consumed crops such as cocoa, coffee and cashew and if they don’t see farming as a viable livelihood then they will seek other work, typically in the cities. Since we launched the OLC five years ago, we’ve gone from supporting 64,290 smallholders to just under 345,000, accounting for 23% of our 2015 smallholder procurement. Thanks to our teams ensuring all eight OLC principles are applied, plus the support of our NGO, customer and finance partners, we are definitely seeing yields, quality and income improve so it’s working as a business model,” says Chris Brett, Olam’s global head of corporate responsibility and sustainability.

    “However, it’s fair to say that five years on, there is always more to be done,” he adds.“Let’s take access to finance. Although innovation in mobile payments and banking services has improved, limited rural banking infrastructure and lack of credit history is still severely restricting farmers and their ability to buy agri inputs like fertiliser, hire labour, or invest,” explains Brett.Even when lenders are present, he says, banks are risk-averse, while informal lenders charge high rates.

    As such, the finance gap is still being filled by the agri sector. In 2015 Olam alone provided over US$177mn in finance to cocoa, coffee, cashew, cotton, chilli, hazelnut, rice, sugar and sesame farmers.“By 2020 our aim is to embrace about 500,000 smallholders across 1 million hectares under the OLC but there are millions more who need support,” says Brett.

    As such, Olam has identified five key points to share with others in the field who may be facing similar challenges, as identified in a recent release:

    1. Empowering women: 2015 saw a 6% increase in female farmers under the OLC to reach 67,708. This is despite the fact that some traditions do not permit women to own farms or engage in business meetings. “Encouraging chiefs to permit and welcome women’s participation can be a slow process, and one that has to be based on mutual trust and respect,” says Olam.
    2. Dealing with climate change: Training farmers in climate-smart agriculture (CSA) is essential, and firmly on the agenda across OLC projects in at-risk zones. Last year this training reached approximately 60,000 farmers managing 110,000 hectares of cocoa, coffee, cotton, cashew, sugar and black pepper.
    3. Training beyond the classroom: Although Olam is seeing increased yields thanks to training, behaviour change back on farm takes time to achieve. “Farmers have to put their faith in advice that may be contrary to generations of tradition or they may not be willing to take what appears to be a financial risk,” the company says. This goes hand-in-hand with establishing more model farms and demo plots to run alongside group and one-to-one training.
    4. Farmers need to grow a balanced diet: Most agri training focuses on increasing the productivity of income-earners rather than stomach-fillers but food security is vital for farmer wellbeing, says Olam. In 2015, the OLC cotton initiative in Côte d’Ivoire delivered training on improved nutrition to 4,000 farmers, provided US$2mn-worth of agri inputs and launched ‘Project Maize’ which saw farmers more than double their yields as a result of new varieties of maize that were distributed.
    5. Tech as a game changer: Technological advances such as GPS mapping, big data and online systems are drastically benefiting farmers. This also impacts Olam’s ability to tailor agri advice down to individual farm management plans.


    Source: http://www.gtreview.com