Global food production is a multi-billion dollar business. Despite the extent to which food and other agricultural products flow from farm to factory to table, approximately 1 in 8 people, many of whom produce food for end consumers, are starving. Food security is not only essential to combating poverty and improving economic development, it is critical for growing the food industry. Dwindling inputs due to climate change, migration of youth away from farms and a growing impatience with supply chain transparency increase concern over the future of food security.
Some government programs have begun to address the problem. For example, the World Food Program Food for Assets initiative links food provision to incentive structures, livelihood training and other humanitarian assistance. Germany, United States, and most western countries, have well-funded aid programs targeting food security and development. These programs are necessary but not sufficient. Rather than put a band aid on the food gap, what can the private sector do to close it completely?
Leading food companies including Nestlé, Unilever and General Mills are facing the challenge head on. For example Nestlé has re-shaped its sourcing strategy to ensure its nearly 700,000 farmers and providers are buoyed by its rural development framework, an origin based investment program aimed at improving infrastructure, increasing access to safe water, address financing and market efficiency gaps and improving labor conditions. Oxfam’s “Behind the Brands” has ranked Nestlé for the second straight year as the number one company in relation to its approach to land use, climate change, water access, social and human rights which together will improve food security in regions where the company sources its products and manufactures its goods.
General Mills launched Partners in Food Solutions (PFS) in 2011. A separate non-profit organization working on food security and improving market efficiencies in Africa, the organization was later joined by Cargill, Royal DSM and Techno Serve to engage 500,000 smallholder farmers in fourteen or more African nations. Ultimately PFS wants to attract more corporate leaders to address the evolving food waste challenge and build more effective and efficient pricing models.
Agriculture conglomerates Monsanto, DuPont and Cargill are prioritizing improving yields, helping make farmers more productive and expanding education about proper nutrition and responsible land use. Working with NGO partners like Conservation International and CARE has helped to highlight the effectiveness of collaboration as companies gain perspective on the social, environmental and development challenges of underserved populations.
What’s missing, however, is a more coordinated approach to collaboration and partnership. Addressing challenges as widespread as food insecurity will take more than bilateral partnerships investing in pilot projects. To truly scale the solutions brought to bear by partnership and collaboration, a coordinated effort is critical. Project investors should select a geography where gaps remain and focus on its niche only. Then, by bringing in others with different skill sets to fill in other gaps, the theory of comparative advantage sets in and the outcomes are stronger. Focusing on the needs of the community in question should be the priority. If other interests take over, the impact will not be as great.
What the private sector can do is (1) encourage broader collaboration beyond bilateral partnerships; (2) target collaborative work to address gaps rather than reinventing the wheel; and (3) be pushy and keep the work moving. Ensuring the needs of the communities drive the efforts and investments is critical. Given social, political and local complexities, it may not be enough to provide funding without involving governments (local, regional and national particularly) and other stakeholders, especially prior to investing, in order to understand the local conditions and considerations.
The B20 Task Force on Food Security, a collaboration of business leaders within the consumer goods sector, aims to “to achieve a 50 percent increase in agricultural production and productivity by 2030” via public and private investment. If guided well the coalition could be quite powerful.
Another example of a broader collaborative approach is the G8’s New Alliance for Food Security and Nutrition. Launched in 2012, the New Alliance “aims to accelerate responsible investment in African agriculture and lift 50 million people out of poverty by 2022” by bringing together the investment community, private sector companies and donor partners. If carried out well, the intent is to drive country policies and investments toward sustainable agriculture, market efficiency improvements and collaborative approaches to improving engagement among smallholder farming families.
Both examples take a broader approach beyond bilateral partnerships, target specific needs to address food security and include key actors from the private sector. What remains to be seen in each case is the effectiveness.
First it was the pink goop. Then the horse meat. Now azodicarbonamide. Thanks to the growing savviness of consumers, and non-stop media attention around the ingredients and processes used by food and consumer goods companies in manufacturing, companies are facing increased pressure to explain where their products originated, how they were made and what ingredients are inside. If news hits, for example, that a company is sourcing lettuce from unsound farms with unhealthy sanitary practices, it causes a deterrence away from that company.
Dirty lettuce = no sales = no profit = unhappy shareholders = bad for business.
School lunch mystery meat a thing of the past
Until recently, companies disclosed ingredients around their products but most consumers never paid much attention. With increased education around food safety and more awareness around manufacturing practices, however, the pendulum has swung. Consumers are faced with greater decisions about where to buy products and with more information at their fingertips, these choices are becoming more complex. Companies are now on the hook to provide as much information as possible about their products in order to retain market share.
What is meant by ‘supply chain transparency’?
Supply chain transparency is when companies provide information to end consumers around the social, humanitarian, environmental and health conditions throughout the chain of custody of each product. From farm or factory to table, products take multiple trips for processing, packaging, consolidating, testing and improving. Companies responsible for getting their product to your home may not directly participate in unsound practices, but because they purchase from an entity that either grows, processes, packages or ships the end product, ultimately they are to blame. This burden of proof is encouraging companies to capture more information on the practices, both good and bad, across their supply chain(s).
In Oxfam’s latest Behind the Brands campaign, top food companies were ranked according to how they disclose information about their supply chain, partners and practices. Additionally, Oxfam examined how companies enforce certain requirements on their suppliers regardless of the sophistication or complexity of their supply chain. Companies like Nestlé, Unilever and Coca-Cola scored higher for providing public information about their supply chain partners and their various practices (i.e. labor conditions, wages, prevalence of disease, availability of education, gender rights, environmental practices, etc) but General Mills scored lowest given its lack of available public information. This lack of information may lead consumers to question General Mills’ efforts to ensure safe, healthy and natural ingredients in its products.
Progress Being Made
Former Hugo Boss Art Director, Bruno Pieters, created a clothing line called HonestBy that exemplifies success in sustainability, material use and transparency. By sharing the name of the factory where each product is sewn and the name of its textile suppliers, Pieters is getting out in front of any criticism and taking steps to ensure his products are made well and under the most favorable conditions. This, after harsh criticism of the apparel industry around unsafe and minimal humanitarian working conditions in regions where large companies like Gap and H&M source their textiles.
While the big brands are jumping on the transparency band wagon, it’s time for some of the smaller and more nimble companies to take the lead and speak out on the importance of transparency. The growth in certification and labeling is helping in some ways, but the lack of due diligence, complexity and misinformation on the various certification programs only confuses the end consumer. An innovative program developed by B Labs, a non-profit that “serves a global movement of entrepreneurs using the power of business to solve social and environmental problems” to award companies with the “B Corporation” moniker is taking certification and transparency by storm. A product with a “B Corporation” label is one that can be trusted to have met “rigorous standards of social and environmental performance, accountability, and transparency.” The number of B Corps companies is growing with familiar names like Seventh Generation, Patagonia, Ben & Jerry’s, Method, Green Mountain Coffee Roasters and Plum Organics. Smaller, more regional companies (more than 800!) from 27 countries and 60 industries have signed on to prioritize the environmental and social footprint of their products from place of origin to end consumer.
Why should you care?
The trend towards greater transparency and communication is critical. Traditionally the environmentalists were the ones that cared about how their food was grown, where their products came from and what their companies were doing with their profit. Nowadays, access is equally divided between processed foods and inexpensive consumer products, and all-natural, safely grown and manufactured whole foods and sound products. There remains a cost divide, although that is slowly closing. The more consumers recognize where their dollars go, the more they will allocate budgets to products that are made from the safest ingredients, by the best treated employees and in facilities that are as healthy as possible. Ultimately as more consumers push for greater transparency from the companies filling our stores, the better, healthier and more cost-effective our products will be. That means greater prosperity for our populations and a better future for our families.