Creating social value is at the heart of our business model, minimising risks and opening up partnership opportunities.
Given our dependence on 4.76 million farmers, the vast majority being smallholders in emerging markets, the definition of Social Capital by the OECD as “networks together with shared norms, values and understandings that facilitate co-operation within or among groups” is particularly resonant. Much of our focus therefore is on lifting smallholders out of poverty. To secure the crops for customers tomorrow, we must help rural communities to thrive today. In turn, this delivers economic value for the countries where we operate.
Large-scale farmers also face many challenges. Often 3rd or 4th generation family farms, they have grown through hard work, perseverance and sacrifice. While Olam’s extensive farmgate experience means we are well-placed to support farmers from America to Zimbabwe, we must work in partnership to achieve the scale of transformational change required in the agricultural sector.
Currently, there is no single methodology to put a financial value on all elements identified under Social Capital creation. So, as a ‘stepping stone’, we are measuring the investments we make in social infrastructure and impacts on livelihoods.
Social Capital – desired outcomes
- Farmers and associated agri-industries are prosperous and stay in business
- Young people see farming and related activities as a viable career, ensuring long-term security of supply
- Women farmers in emerging markets are empowered, boosting production and quality
- Farmers are healthy and educated commercially, reaching their production potential
- Risks such as child labour are minimised and mitigated, protecting reputation
- Communities around Olam operations see the company as a positive force and people want to work for us
- Governments see Olam contributing to supporting society and the economy, and welcome growth
- Stakeholders see Olam as a reliable and trusted implementation partner, opening opportunities to scale up initiatives
- Stakeholders understand our business and the external challenges we face.
- Pursue 2020 Goals laid out under CR&S, MATS1 and HR material areas – Livelihoods, Food Security and Nutrition, and Labour2
- Put integrity, openness and fair play at the heart of all relationships. Be proactive when issues arise
- Uphold all laws, including compliance and securities laws, bribery and corruption
- Help to catalyse food crop production in areas where we operate for domestic food security
- Expand the Olam Livelihood Charter programme, promoting holistic long-term support tackling economic, social and environmental issues
- Promote gender empowerment
- Encourage good health and well-being through better nutrition e.g. via crop diversification, healthy foods, and through access to safe water and sanitation
- In own operations assess social risks, and adhere to Free Prior and Informed Consent procedures. Ensure the development and implementation of a Social Management Plan, incorporating a continual improvement loop
- Expect adherence to human rights across supply chains (‘No Exploitation’) as per UN Declaration on Human Rights, ILO Declaration on Fundamental Principles and Rights and Work, and UN Global Compact
- Participate in Private and Public partnerships to enable initiatives to scale up and replicate.
- Manufacturing and Technical Services.
- Material areas for FY17. New Material Areas agreed for FY18. See Group CEO Review.
Examples of challenges and influencing factors in 2017
- Low commodity prices for crops such as coffee, cocoa and rubber impact farmer livelihoods. Large-scale farmers are also facing economic challenges
- Weather e.g. drought in Tanzania, Brazil and India, affected smallholder cashew, coffee and sugar farmers
- Infrastructure issues are slowly improving in emerging markets, especially mobile coverage; but access to water and electricity hamper efforts to lift farmers out of poverty. In Sub-Saharan Africa, 609 million people (6 out of 10) do not have access to electricity, and in South Asia, 343 million people do not have access to electricity.1
- Speed of transformational change – while we see improvements in farmer livelihoods and communities in programmes of 2 years or more, many are still classified as living in poverty. Issues inhibiting the process include mastering new agricultural practices, culture, literacy etc
- Increasing scale of support – how to reach (physically and financially) smallholders
- Challenge of balancing social development (particularly extreme poverty) with protecting Natural Capital
- Challenge of all stakeholders agreeing where corporate responsibility starts and stops (e.g. origins where Olam is providing healthcare education and other social infrastructure)
- Tensions between driving short-term cost efficiencies and long-term investment in programmes.
- World Bank State of Electricity Access Report 2017