Workshops SummaryIn many workshops and during plenary sessions it became clear that innovation and sustainability must go hand in hand to make 100% sustainable value chains profitable. Or, as Marc Engel, CPO of the Year 2010 put it: 'It is the sweet spot that procurement officers must be looking for. The combination of innovation and sustainable growth, that will make companies winning'. Please find below an overview of some of the most important workshops during the congress.
The Future of Certification and its Role in Market Transformation Collaboration and Beyond "Joint certification efforts is a good method of removing barriers" Speakers:
Summary What is the future of certification initiatives and what role can they play in market transformation? There have been numerous calls to improve the coordination of certification bodies. This workshop looked at the role of certification in market transformation and offered an overview of possible futures for certification body collaboration and certification itself. It will showcase key initiatives in which organizations like UTZ Certified, Rainforest Alliance, and Fairtrade are already actively collaborating in the tea and cocoa sectors in order to accelerate market transformation and respond to the needs of their stakeholders. Currently, the demand for sustainable labels is greater than the ability to satisfy ? rather than producers being inundated with the different trainings, more capacity is needed to carry out more training. Joint certification efforts is a good method of removing barriers. Prediction of future scenarios is very difficult and uncertain. However, a future shortage in ability satisfy demands is the likely situation. Financing is becoming more involved and interest is growing in both consumers and producers. A member of the audience asked if the cost of obtaining labels would reduce in the future to allow more widespread adoption. The reply was that there is uncertainty in future price. However, the decision to obtain a label/certification is a business decision as there are many economic benefits to obtaining such a label or certification. One of the speakers mentioned that it is sometimes obvious that the workers are only complying during audits. Unfortunately, these audits are the best method at the moment. "Adding value in each stage of the value chain" Speakers:
Summary Key thought leaders from business, government, civil society and academia came together to debate and learn about market transformation. The case study for the workshop was the cocoa sector. This workshop featured presentations on: the stages of development for market transformation and key elements required at each stage; UNDP Green Commodity Facility and their work in the West Africa Cocoa Sector; the Indonesia and Ivorian national strategies for developing the cocoa sector; and the financing of market transformation by IFC. In the second part of the workshop, a lively group of panelists represented each segment of the supply chain: Producing country government (Ghana COCOBOD), Intergovernmental Organizations (UNDP), International Financing (IFC), Retailers (Ahold), Chocolate Manufacturers (Mars), Traders/Processors (Cargill), NGO Implementers (Solidaridad), Producer organization (Cocoa Abrabopa). The panelists discussed what they felt was the most important thing needed to advance market transformation. The responses included: Leadership; each stage of the value chain focusing on adding value; financing; and strong, clear, and consistent communication to consumers to mobilize them. Some key initiatives emerged that show great promise to advance market transformation in the market sector, including: financing of producers in West Africa, and the development of a national platform for dialogue and collaboration around making the cocoa sector increasingly sustainable. IFC is taking the lead on the former, with UNDP collaborating with West African national governments on the latter.
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Summary Sustainable purchasing must become the norm. But it is a niche when you start out. What changes are there for a buyer? What issues do you face? Logistics, quality, timing, pricing. how do relationships with suppliers or clients change? How do you change measures of purchasing performance? How do you deal with extra costs and higher prices? How do you distinguish between "real" extra costs and opportunism? How do you motivate/reward suppliers beyond simply paying premiums? What does the "give and take of business" look like when you compare sustainable purchasing with conventional? In this session heads of procurement of leading companies will share their insights and discuss strategies. In an interactive panel discussion the panelist described how the business changed after their company had decided to source sustainably. The workshop was a rare occasion to get high level insights into how sustainable purchasing looks on the ground. For commodities, an important factor in purchasing is the price differences between the sustainable and the non-sustainable product. While lower for cocoa, it is much higher in commodities like cashew, where economies of scale for the sustainable product are not yet in place. However, it was charismatically argued that we would have to stop comparing prices, as the sustainable price is the only viable price in the long run. Another important factor for purchasers is the degree to which the input price is reflected in the final product price. While the companies did allocate more resources to their purchasing, to some extent also the consumer will have to bear a part of the costs. Ward de Groote, former CEO of Ahold,explained how the nature of his visits to the suppliers completely turned around after Ahold started purchasing sustainably: From bargaining, the focus shifted to building trusting partnerships. The other companies underlined this statement and stressed that it was important to work closely suppliers to develop the demanded product.
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Summary More and more companies give ambitious commitments towards sustainable sourcing of their products. Most of the agricultural supply chains depend highly on small-scale suppliers. Because of the size of the commitments and to truly guarantee supplies companies have to engage large masses of small-scale suppliers. Building capacity and creating change within the small-scale supplier communities is needed. Engagement of small-scale suppliers is not new. What is new is to approach small-scale suppliers as supply chain actors. Big western companies need to work together with large masses of small-holders. IDH plays a role in this in tea, cacao, cashew, spices, cotton, aquaculture and palm-oil. Peter Mbadi KTDA In the session Peter Mbadi from the Kenyan Tea Development Agency (KTDA) presented his organizations impressive model that?s able to engage 560.000 small-scale tea farmers in Kenya. Owned entirely by the small-scale tea farmers the KTDA is a unique organization in the world. Since 2010 the KTDA is working together with Unilever, Rainforest Alliance and IDH to roll out the successful Farmer Field School methodology to all it?s factories. This program promotes sustainable agriculture, empowers farmers and improves extension services. Also the KTDA is working with these partners to certify (Rainforest Alliance) 24 factories on sustainable agriculture practices by the end of 2011. Both tracks of the program are highly valued by the farmers as they have seen their yields grow and quality improved KTDA faces the challenge to maintain the strong export position Kenyan tea has at this moment. Certification seems to be key to that. On the other hand there?s a concern that certification costs will be too high in the future reducing the net farm income.
Mr. Clement discussed the challenge to meet the rapidly rising commitments from companies to source RFA certified products (such as tea and cocoa) and the necessity to certify smallholders to meet this market demand. In the KTDA example it seems to be possible to reach out to high numbers of smallholders. In other countries/commodities this seems much more difficult. You need different approaches in different countries/commodities. Cees Leeuwis Wageningen University As the last speaker prof. dr. Cees Leeuwis from Wageningen University gave a perspective on extension services and other forms of ?innovation intermediary?. He talked about the content (what kinds of capacity building are needed?) and the relationship (how do we get in touch with all these small scale suppliers?). Integrating smallholders in sustainable chains is a contextual affair. It requires ?nested? investment in learning processes and relationships locally, in the farmer support network / among intermediaries and in the value chain. This requires not just classical extension, but also other forms of innovation intermediation. One cannot simply engineer the involvement of small-holders from a central point. We must also rely on self-organisational capacity of people. Such capacity becomes active when a safe space for change is created: Real opportunities ? incentives, guarantees, support and with a sufficiently long time horizon: continuity. In the discussions appreciation was given to the KTDA example. The collaboration with Unilever was questioned and Peter Mbadi confirmed that their engagement was crucial. During the discussion he also confirmed that farmers are not considering certification as a hurdle since they see their productivity and quality improving. Several ways to engage small scale suppliers came forward during the discussions. For example sometimes working trough the government seems effective, other times you have to work with local chiefs. |
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