• We can't make progress towards a sustainable future unless the economic resilience and wellbeing of farmers is addressed first.
  • Certification programmes are a good start but need to be backed by corporate investments.
  • Policy-makers and corporations within the supply chain must also work together with farmers on aligned sustainability goals.

The International Day for the Eradication of Poverty on 17 October was a powerful reminder that agricultural development plays a pivotal role in addressing global poverty. Roughly 80% of the world’s poorest people – close to 650 million – live in rural areas and rely largely on farming to make a living. This holds true even amid greater urbanization and employment growth in non-agricultural sectors.

In other words, we cannot address global poverty without addressing farmers’ incomes.

The past two decades have seen a growing emphasis on sustainable food production. Consumers, governments and companies are increasingly aware of the consequences of inaction and the magnitude of the challenges facing us. This has led to advances in sustainable agriculture in areas such as soil health, water and landscape management, as well as more sophisticated tools for monitoring progress along the way.

Smallholder farmers are the backbone of agriculture and food security in developing countries, where, according to estimates from The Food and Agriculture Organization of the United Nations, they account for up to 70% of national food production. What’s more, it is estimated that smallholders are responsible for 30-34% of the world’s total food production. With demand for sustainable farming on the rise, these smallholder farmers are being asked to do more and more to maintain access to global markets. At the same time, the majority are not financially supported or incentivized for making these commitments.

Take the chocolate industry. The industry itself is valued at $100 billion, while most smallholder cocoa farmers in West Africa (producing 70% of the world’s cocoa ) live on less than $1.25 per day, meaning they receive approximately just 6.6% of the retail value of a chocolate bar. These smallholder farmers live a risky existence – their livelihood depends on a temperamental global commodity market where prices can plummet by as much as 25% within three months.

Cocoa prices have halved in the past decade
Cocoa prices have halved in the past decade
Image: International Cocoa Organization

Small beans

Since 1980, the inflation-adjusted global price of cocoa has halved, while the bar for sustainable farming has only grown in scope and ambition, as has the price of key agricultural inputs. How can these smallholders commit to an ever-evolving sustainability agenda when they lack the resources to make the necessary investments?

The structural inequities in commodity supply chains hinder our ability to achieve meaningful progress on the UN’s sustainable development agenda. Be it global poverty, climate change, environmental degradation or inequality and human rights – progress cannot be made unless the economic resilience and wellbeing of farmers is addressed first. Resilient farmers are the foundation of a resilient supply chain. This isn’t just about corporates being an agent of social change, but about companies realizing this is a business imperative in today’s interconnected and dynamic global environment.

So, what will it take? All global food companies – from retailers and brands to processors and manufacturers – need to put the livelihoods of farmers at the forefront of their priorities. They must reshape their supply chains to be more inclusive and equitable, so that farmers can rely on more stable buying commitments with sustainability goals that are ambitious yet realistic. The costs of those sustainability investments should be shared with buyers, and the farmer’s commitment to sustainable agriculture should be rewarded with higher prices.

This is where certification can be useful. The Rainforest Alliance's new programme, for instance, supports global food companies to increase transparency, more accurately measure social and environmental performance in their supply chains, and identify risks. This not only drives value for farmers and companies but also provides a framework for sustainability improvements in certified supply chains. For farmers, that means assistance in establishing a baseline of their sustainability performance to help prioritizing their farm investments so that they can become more sustainable, one step at a time. At the same time, companies buying Rainforest Alliance Certified commodities will be held responsible for contributing to the investment needs identified by farmers in their supply chain, and rewarding certified farmers with a premium over and above the market price of the commodity.

Building the economic resilience of farmers also requires a combination of tools that certification can help provide. More accurate record-keeping as well as digital tools for risk and performance analysis work to improve the financial management of farms. This, combined with good agricultural practices to boost productivity, leads to more resilience and better livelihoods for farmers.

While certification can go a long way to improving the livelihoods of farmers and the sustainability of agricultural supply chains, it cannot solve the problem of farmers’ incomes alone. Corporate sustainability objectives and sourcing strategies need to be better aligned so that supply chains can move towards greater stability and long-term resilience. Moreover, policy-makers in producing and consuming countries, international donors, and civil society need to work jointly on agricultural development, community development, and farmer resilience. All these actors must work together to create a new paradigm for global business.

Food

What is the World Economic Forum doing to help ensure global food security?

Two billion people in the world currently suffer from malnutrition and according to some estimates, we need 60% more food to feed the global population by 2050. Yet the agricultural sector is ill-equipped to meet this demand: 700 million of its workers currently live in poverty, and it is already responsible for 70% of the world’s water consumption and 30% of global greenhouse gas emissions.

New technologies could help our food systems become more sustainable and efficient, but unfortunately the agricultural sector has fallen behind other sectors in terms of technology adoption.

Launched in 2018, the Forum’s Innovation with a Purpose Platform is a large-scale partnership that facilitates the adoption of new technologies and other innovations to transform the way we produce, distribute and consume our food.

With research, increasing investments in new agriculture technologies and the integration of local and regional initiatives aimed at enhancing food security, the platform is working with over 50 partner institutions and 1,000 leaders around the world to leverage emerging technologies to make our food systems more sustainable, inclusive and efficient.

Learn more about Innovation with a Purpose's impact and contact us to see how you can get involved.

Understanding the business case for more sustainable supply chains can help channel the necessary company investments to farmers. The 2020 Edelman Trust Barometer points out that 90% of global consumers want brands “to do everything they can to protect the well-being and financial security of their suppliers”, with the majority saying that putting profit over people will erode their trust in a business forever. Investing in the sustainable livelihoods of smallholder farmers will also help companies secure more stable supply chains in an era of climate change, pandemics, and unprecedented agricultural demand.

If we are to make good on our promise to eradicate global poverty, protect the planet, and improve the lives and prospects of people everywhere, then we have to address the structural inequities in global commodity supply chains. Tackling these issues head-on is a shared responsibility for all actors involved, but also an opportunity for leading global food companies to reap the benefits of more sustainable farming while shaping a brighter future for their sectors.