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How Olam contributes to food security – SDG2 Target 2.3

SDG2 Target 2.3

“By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists and fishers, including through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and non-farm employment.”

Much of our progress and contribution to this target is captured under our Livelihoods Section. However, there are 4 key additional areas for discussion:

(a) Helping smallholders to reduce postharvest losses

Food waste is typically linked to the amount wasted by consumers and retailers in the developed world, but smallholders suffer too. As highlighted by the World Food Programme, lack of good drying and storage infrastructure in rural areas can mean that as much as 30% of cash crops go to waste, impacting heavily on incomes.

In 2015, Olam improved post-harvest infrastructure through the construction of 12 warehouses (Côte d’Ivoire and Ghana cashew), over 40 drying floors (Côte d’Ivoire and Ghana cashew; Uganda and Indonesia coffee), and 310 solar driers (Indonesia cocoa).

In 2014 we set ourselves a Goal of reducing post-harvest losses by 5% by the end of 2015. However, we realised that in reality this is incredibly difficult to measure. Post-harvest management is an integral component of our Good Agricultural Practices trainings, which reached three-quarters of our 344,466 Olam Livelihood Charter farmers in 2015. We continue to build farmers’ skills and infrastructure to reduce post-harvest losses through training and investment in drying floors, warehouses, solar driers, hulling machines, and other post-harvest infrastructure, measured through the number of people benefiting from these initiatives. See more in our Goals section.

In January this year we joined Champions 12.3 – a coalition of 30 leaders across industry, government and civil society backing a new SDG effort to reduce food loss and waste all over the world by 2030.

(b) Large-scale commercial farms/plantations working hand in hand with smallholders, catalysing food production in the region.

In March 2015 we announced a new Joint Venture with the Republic of Gabon (49%Olam:51%RoG), with whom we already have JVs for our palm and rubber plantations.

Aimed at skilling rural communities and bringing them into the formal economy of food production, the GRAINE* Project identifies, allocates and transfers parcels of land (with title certificates) that are environmentally and socially suitable for plantation development to cooperatives of Gabonese citizens who will undergo training to grow and manage plantations for palm oil and cash/food crops like cassava, banana, tomatoes and pepper.

The joint venture effectively acts as a Public Private Partnership where RoG provides land and financial resources for developing the smallholder plantations and logistics infrastructure, while Olam leads in the development and management of the nucleus and smallholder plantations. You can read more in the Land section.

c) Helping governments to preserve foreign exchange by reducing imports

Nigeria is a major importer of rice, buying from a number of companies including Olam. In our 2014 report we described the benefits brought by our investment in a 10,000 hectare commercial rice farm with integrated parboiled rice mill, and surrounding outgrower programme. These benefits include helping the Government to reduce imports, providing employment at the farm and giving local rice farmers training to improve yields and a guaranteed market (the rice mill), thus catalysing food production in the area. In 2015, part of the rice outgrower programme was given OLC status.

In November 2015, our Grains Business announced its entry into the domestic Animal Feed and Protein sector in Nigeria. Wheat does not grow well in Nigeria but the population (which is expected to grow to more than that of the USA by 2050 according to the UN) increasingly enjoy low-cost wheat-based staples such as pasta. Following an acquisition in January 2016, today Olam has the second largest flour milling operations in Nigeria (Crown Flour Mills). Recognising the need to maximise the value of the wheat imported by the Government, CFM has focused on bringing higher productivity which, in turn, has helped to drive the sector. The overall result is a more efficient milling industry that is able to pass on all the productivity gains to the consumer.

Innovating to help reduce costly wheat imports

Nigeria used to predominately import high value wheat from the USA. Through product and process innovation, Olam has been able to mill less costly wheat from other countries, while ensuring the same high quality flour for the Nigerian consumers. This has helped the country to reduce its annual imports bill. Olam is also aligned to the Federal Government of Nigeria’s plan to blend High Quality Cassava Flour (HQCF) grown by Nigerian farmers with wheat flour – thereby reducing volume of wheat imported. To this end, we are actively engaged with the Nigerian Cassava Millers to further the availability of HQCF.

Stimulating domestic crop, poultry and fish production

In November 2015, we announced that we would be producing poultry and fish feeds in Nigeria, to support the change in consumer preference towards more protein-rich diets. These feeds will utilise wheat bran, a byproduct of our wheat milling operations, along with corn and soy, and will be produced in mills located in different parts of the country. Not only does this present a clear business opportunity for Olam, but it will also contribute to the development of the Nigerian agricultural sector in three ways:

  • By stimulating the poultry and aquaculture sectors by providing competitively priced inputs and technical support to local poultry and fish farmers, thereby improving productivity and returns for the sector
  • By creating rural self-employment opportunities, particularly for the youth
  • By stimulating the production of corn and soy among local smallholders and guaranteeing a market for their crop

We also identified the non-availability of good quality day-old-chicks as a major impediment in the growth of the poultry sector and we are therefore investing in a modern, state-of-the art breeding and hatchery facility to ensure consistent supplies of high-quality day-old-chicks.

For the Government, the model will also help to conserve foreign exchange by substituting illicit, poor-quality meat imports with fresh, locally produced poultry and fish. This is because the import of (frozen) poultry meat and fish is officially banned in Nigeria, but a substantial volume still finds its way through cross-border channels. This model will therefore help to improve production capacity and cost efficiency locally to meet the domestic demand.

(d) Opportunities for value addition and non-farm employment

Wherever possible Olam has sought to keep as much value of cash crops (cocoa, coffee etc) in the country where it is grown by investing in large-scale processing units close to the growing areas. Whilst infrastructure and energy shortages can make such investments challenging, they are based on a win-win formula: for the government, the processing plant creates employment that is non-farm based, offering new skills development and ancillary jobs such as logistics. It also brings tax income.

For Olam, the investment typically reduces costs – we are not shipping waste and therefore reduce our environmental footprint. Having a processing facility in their locality also means that farmers can see a ready market for their crop and are therefore more inclined not to switch to growing another crop. Traceability for customers in also strengthened.

In March 2015, President Ouattara of Côte d’Ivoire opened our state-of-the-art cocoa processing unit in the port of San Pedro, Côte d’Ivoire. The complex has created employment for 450 people, which includes skilled roles such as engineers, R&D technicians, finance and administration managers, on-site nurses, as well as HR and IT professionals.

Our African cashew processing operations have been of immense interest to stakeholders over the years because typically raw cashew from Africa has had to be exported to Vietnam and India for processing as despite the added cost of shipping 70% shells (waste by-product), it is much more cost effective. Cashew processing is incredibly labour intensive – we currently employ 15,000 people globally.

Mechanisation, however, is gradually improving through significant investment from Olam and, in 2015, we introduced new machines in our Côte d’Ivoire Bouaké plant. An obvious consequence of introducing better machines is that fewer people are needed, but the efficiency is much better. While we still employ 2,000 people, we had to make 147 redundant. However, overall, the plant is now much more efficient and therefore competitive in the long term.

In turn we anticipate this will encourage other processors and entrepreneurs to set up processing in Côte d’Ivoire which will help the country reach its ambitious target of processing 100% of the cashew crop and create many more jobs.

Image: Cassava nursery, part of Project GRAINE, Gabon.

Next section: How Olam contributes to Food Security – SDG2 Target 2.4