Confectionery and Beverage Ingredients – Capitals snapshot
Manufactured and Intellectual: Cocoa Innovation Centre for customers in USA
- An Innovation Centre in Willowbrook, Illinois was opened by Olam Cocoa to complement centres in Brazil, the Netherlands, Singapore, Spain and the UK. It assists customers in the refinement and reformulation of recipes and product development across beverages, cereals, confectionery, dairy, bakery, and ice cream. A new cocoa product brand for the North American and Asia Pacific markets, Huysman, was also launched.
Intellectual and Human: Koog aan de Zaan in the Netherlands becomes European Cocoa hub
- Under the centralisation strategy to make the deZaan factory complex the European hub of the cocoa business, staff in other locations were offered role continuation and relocation support. The consolidation underpins the goal of improved cross-functional communication and development opportunities by increasing access to the manufacturing facilities for the business’s premium deZaan cocoa brand, onsite R&D teams and learning centre.
Manufactured and Natural: Coffee processing facility inaugurated in Peru; reducing deforestation risk
- Called ‘El Exito’ (‘Success’), the new facility in the industrial township of Lurin, south of Lima, will broaden reach and market share, processing green coffee procured from buying points around the country.
- In Peru the supply chain is very fragmented, with 223,000 farming families producing coffee over about 380,000 ha. This makes it difficult for exporters to buy significant volumes directly, and relying on many intermediaries. Farmers struggle with yields due to lack of training, access to quality seedlings or degraded soil.
- In August, a Chain Reaction Research report from the consortium of NGOs Aidenvironment, Climate Advisers and Profundo, stated that Olam faces reputational risk because “Coffee has been identified as a major driver of deforestation in the Peruvian Amazon.” However, “no direct link between Olam Peru and deforestation in the Peruvian coffee sector could be identified”.
- The report highlighted the preventive steps taken by Olam Peru which include:
- Direct procurement sustainability programmes (over 1,300 farmers) with reforestation and training in Good Agricultural Practices to improve yields, which in turn help to prevent farmers encroaching into fertile forest
- Assembled a core set of intermediary suppliers who commit to upholding the Olam Supplier Code
- Promotion of third-party verification and certification schemes in indirect procurement (70% is certified). Olam agronomists and field staff train smallholders in Good Agricultural Practices to get the certificates.
- We also explained how a company needs to be in the supply chain in order to change it; focusing on remediation and education if smallholders are found to be carrying out poor practices rather than necessarily removing them immediately from the supply chain. Read more about our approach in the Natural Capital section and in the Olam Living Landscapes Policy at olamgroup.com
Natural and Social: Rainforest Alliance-Olam Cocoa partnership in Ghana
- Objective of the 4-year project is to conserve the cocoa forest landscape in the corridor around the Sui River, Suhuma, Tano Ehuro and Tano Suhien and Santomang Forest Reserves, sustaining the agricultural livelihoods of the communities. Reflecting the landscape approach taken in the joint Juabeso-Bia project which produced the world’s first verified Climate Friendly Cocoa, the partnership will work with the Ghana Cocoa Board and the Forestry Commission to demonstrate how partnerships with civil society, government, local communities and the private sector can deliver transformational change and achieve self-governing and multi-actor collaboration at the landscape level.
- Committed to halting deforestation in cocoa supply chains globally, with a goal of 100% sustainable volumes in its direct supply chain by 2020, Olam Cocoa is also a founding member of the Cocoa & Forests Initiative announced in March, the first collective industry commitment specifically to end deforestation and forest degradation. At the UN Climate Talks (COP23) in November, Olam Cocoa CEO Gerard A. Manley welcomed plans put forward by the Governments of Côte d’Ivoire and Ghana, upon whom the management and proactive protection of forests must depend.
- With other industry players, Olam Cocoa responded to allegations made in an NGO cocoa sector report1 and Guardian article that cocoa grown in national parks in Côte d’Ivoire had entered various company supply chains. We acknowledged that one instance was identified but that extensive sustainability efforts were in place to dissuade smallholders from deforestation. These include:
- 113,000 Ivoirian and Ghanian cocoa farmers in Olam Livelihood Charter programmes to improve yield from current land.
- Almost 42,000 farms in the 2 countries mapped on the Olam Farmer Information System for 2017 alone.
- Over 16,200 individual farm management plans generated by end of December for tailored support.
- Almost 581,000 leguminous shade tree seedlings distributed in global programmes where required.
Social: Unlocking value for Laos coffee farmers
- An Olam Livelihood Charter programme with Jacobs Douwe Egberts and IDH-The Sustainable Trade Initiative supports more than 1,700 coffee farmers near the certified Olam plantation.
Top challenges facing the farmers:
- Lack of agronomic/economic capacity to improve coffee production given degrading acidic soils and increasing pressure from pest and disease.
- Land tenure system does not support intensification of production.
- Lack of access to finance for farmers, lack of financial literacy, high default risk on loans.
Top challenges facing the field officers:
- No existing or weak and ineffective organisation at farmer level, hence needing to help organise farmer groups (facilitates training, coffee collection etc).
- Slow take-up of improved practices by farmers (e.g. through low capacity, risk aversity).
- Difficult to access villages in rainy season.
Examples of training:
- Pest and disease management using appropriate mix of cultivated, biological and chemical methods.
- Soil management, especially: composting of coffee pulp and other material available on farm and in the household; combined compost production and pig raising; chemical fertiliser calculation and application.
1. Mighty Earth – Dark Secrets