Improving quality and traceability in emerging market supply chains
Among our smallholder initiatives, Quality and Traceability are two distinct principles that must be met for Olam Livelihood Charter status.
As well as helping smallholder farmers to improve their yields we advise on quality and reducing post-harvest losses. This is critical because good quality means they can command a premium, whilst preventing wastage means they improve their incomes.
In 2015, in addition to training 254,146 farmers in Good Agricultural Practices, we invested in 7 farmer resource centres, 12 warehouses, 40 drying floors and 310 solar driers. Drying floors or mats, as can be seen in the photograph of the chillis, prevent contamination from the soil, yet many smallholders do not have the funds to buy one.
Smallholders live in some of the most remote parts of the world where often roads are nothing more than dirt tracks.
Collecting one sack of cocoa or coffee from every farmer is highly inefficient. We therefore work with farmers to help them form farmer groups or co-operatives where they bring their crop to a central warehouse. Here the crop is weighed and stamped, ready for collection by Olam.
Under the OLC in 2015, 1,263,228 tonnes of product were traceable (16% increase on 2014). Of this, 324,671 tonnes were externally certified (UTZ, Rainforest Alliance, Fairtrade, Organic, Cotton Made in Africa, Better Cotton Initiative and 4C).
In many cases, thanks to our investment in processing in origin countries, the product then travels directly to our processing units. We call this being ‘fully backward integrated’. Here the products go under rigorous food safety testing.
Our efforts are not only confined to smallholder supply chains. Olam Spices and Vegetable Ingredients (SVI) has transferred onion seed from its USA operations to Egypt to reproduce a high solids onion programme in the same way as it is run in the USA.
Working with contract growers, SVI supplies the seed and agronomy advice, effectively controlling and managing the supply chain to ensure that it is compliant from a pesticide and/or contaminants perspective, whilst also ensuring consistency of supply and reducing market volatility. By crop year 2016, SVI will oversee 600 hectares of onion traceable from the fields direct to its two processing facilities in Egypt where the onions will be dried.
The 3S and Sustainable Cashew Grower Programme
In Côte d’Ivoire, Olam has partnered with IDH (Dutch Sustainable Trade Initiative) to create ‘3S – Sustainable Supply System’. It brings together the traders, processors, roasters and retailers to provide a completely transparent, traceable supply chain of cashews. As is often the case, efforts to improve food quality, safety and traceability among smallholder crops are linked directly to improving farmer livelihoods.
Beginning in 2011, the 3S MIS system was created to provide complete information on the village from where cashews are purchased, including their quality, moisture and past performances.
The tool is now so powerful it can enable the user to find out how the cashew has evolved in the particular zone and where the best quality regions are. This empowers the user to collect top quality cashews for their customer, with traceability up to the village/region level. It also enables farmers with better quality cashews to fetch a better price, which motivates the farmers to improve further.
SCGP started in 2011 with the first full commercial season in 2012. It covers 34,479 hectares and involves 27,350 farmers (FY2015). Highlights include:
- 23,183 individual farmers and 15 cooperatives trained by 45 dedicated field staff and 7 team members of IDH (Sustainable Trade Initiative)
- 5 models farms set up in partnership with GIZ
- 80% of our 4,000 employees are women
- Two female cooperatives provide more than 500 employees to our Dimbokro factory.
The programme has directly impacted the livelihoods of 164,100 people in the targeted communities.