Setting New Standards - Olam's Livelihood Charter Drives Prosperity Through its Principles

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Olam

22 May, 2013, 13:11 BST

LONDON, May 22, 2013 /PRNewswire/ --

US$118.6m microfinance at 0% helps over 300,000 smallholder farmers gain US$13.9m premium

Olam Livelihood Charter Key Highlights for 2013[1]

  • Number of farmers involved in OLC has increased 388% in last 3 years to 313,476
  • US$118.6 million of microfinance provided to 313,476 farmers at 0% interest
  • US$267.2 million income generated for OLC farmers
  • 200,000 metric tonnes of product brought to market through sustainable value chains on farms covering over 500,000 hectares
  • US$13.9 million paid in premiums for quality (+67%, from US$8.3m in 2012)
  • 19.2% of OLC farmers are women
  • 73% of OLC farmers own a mobile as a business tool  
  • 99,681 people reached over 3 years in HIV/AIDS programmes

Olam, a leading global, integrated supply chain manager and processor of agricultural products and food ingredients, today announced third year results for the Olam Livelihood Charter.  A practical and measurable framework that focuses on creating economic prosperity, improving social welfare and safeguarding the environment, the Charter aims to generate mutual value for smallholders, customers, NGOs and ultimately, shareholders.

     (Photo: http://photos.prnewswire.com/prnh/20130522/614170 )

The smallholder farmers growing many of the products that Olam purchases, are in emerging markets, often working on less than 3 hectares of land with limited access to fertiliser, seedlings, education, farmer training or credit for investment.

"Only by unlocking value for farmers and creating thriving agricultural communities can we ensure the long-term security and quality of crop supply," said Sunny Verghese, Group Managing Director and Chief Executive Officer, Olam. "Enabling farmers to become serious commercial partners is integral to our business model, as it allows us to build sustainable supply chains delivering the large volumes of high quality, traceable products that our customers require. In turn this provides us with a competitive edge and benefits our overall business performance."

The OLC is based on eight principles to achieve holistic long-term improvement: finance, improving yields, market access, quality produce, social investment, labour practices, environmental impact and traceability. They are aligned with the United Nation's Millennium Development goals to maximise impact and drive inclusivity. To qualify for OLC status, initiatives have to meet all eight principles. From the many corporate sustainability initiatives that Olam conducts across its operations, 20 programmes achieved the flagship OLC status in 2013.

Key 2013 highlights include:

Commercialising smallholder production: US$118.6 million microfinance offered to farmers at 0% interest

Helping farmers to become commercial partners in the global supply chain by improving quality and yield through investment, drives profitable growth for farmers and Olam:

  • Pre-finance at 0% interest: US$118.6 million in both short and long-term finance for crop production, purchasing and asset investments (+86%, from US$63.8m in 2012)
  • Supply of inputs: US$19.1m invested to train and support farmers (+34%, from US$14.3m in 2012)
  • Farmer training: US$3.8m invested over 5,583 training days
  • US$13.9m paid in premiums for quality (+67%, from US$8.3m in 2012)
  • 19.2% of OLC farmers are women who traditionally face problems raising credit
  • Example of yield improvements[2]:

    - Côte d'Ivoire Farmers, Blommer and Olam (CIFOB) initiative:
      farmer cocoa yields have increased 34% (484kg/ha to 650kg/ha)

Integrating technology innovation into agriculture: 73% of OLC farmers have mobile phones

Provision of mobile technology helps overcome poor infrastructure by connecting farmers to global markets, as well as enabling farmers to share crop information, access pricing data and receive payments:

  • 73% of OLC farmers now have mobile phones
  • 37,682 GPS mapped farms - builds economic and social profile to enhance farmer access to services and inputs

Improved social benefits: US$1.6m invested in community development during 2013 to continue programmes initiated in last three years

By collaborating with expert partners, Olam increases access to health programmes, as well as education, and skills development, including business skills. Such support enables the long-term development of self-sustaining enterprises.

Results achieved between 2010 and 2013:

  • HIV/AIDS & long-term awareness, testing and counseling programmes: 99,681 beneficiaries
  • Medical facilities: 3 health centres built, 1 maternity unit built, 1 medical laboratory built
  • Vaccinations: 3,142
  • Provision of basic healthcare: 12,035 beneficiaries
  • Financial support for education: 1,200 beneficiaries including 200 women
  • Schools and materials: 2 primary schools built, 14 schools rehabilitated, 20,979 pupil beneficiaries of education materials  

Pioneering 'next practice' environmental impact

Olam manages its overall environmental footprint by reinforcing sustainable agricultural practices such as water management and working with farmers to maximise production on existing land. In Côte d'Ivoire, for example, Olam promoted sustainable production of cashew through certification: 3,183 farmers obtained certification for 17,014 hectares and 7,780 tonnes of organic raw cashew nuts.

Collaboration for lasting change

637 Olam staff work directly with farming communities to ensure the effective transfer and implementation of OLC-led initiatives amounting to an investment of US$7.7m.

Many programmes are in close partnership with the public, private and NGO sectors which is essential when delivering a multitude of programmes at any one time, as well as in helping to create lasting social and economic change.  Partners include Blommer Chocolate, CAFÉ, Control Union, COSTCO, Nestlé, Bill & Melinda Gates Foundation, BMZ, USAID, Douwe Egberts Foundation, GIZ, Greater Capital, Rainforest Alliance, UTZ, Fairtrade, Soil Association, Better Cotton Initiative, ACDI/VOCA, Winrock, Solidaridad, TechnoServe, IDH, 4C and Bureau Veritas.

Chris Brett, Global Head of Corporate Responsibility and Sustainability concluded: "Rigorous data collection shows that in just three years, sustainable business practices under the OLC principles are facilitating smallholder growth and benefiting communities. Customers and other stakeholders are increasingly recognising the OLC as the defining framework for sustainable smallholder supply chains. We will ensure momentum is maintained and that initiatives are up-scaled and replicated through innovation and collaboration to set new standards and create further value for all."

A further breakdown of the 2013 OLC results across Olam's different business units is available here.

The OLC recently won the Guardian Sustainable Business Award for its positive impact on Society.  In 2012 it was also recognised at the Africa Investor Awards where Olam received the Leadership in Sustainable Investment in Africa Award.

Notes to editors

[1] 2013 results are based on April 2012 to March 2013 (i.e. not the financial year)

[2] Not all projects are at a stage where robust yield comparisons can be made against external factors

SOURCE Olam