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INTERNATIONAL DEVELOPMENT

Businesses could reap trillions through sustainable agriculture investment

International Development
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Smallholder farmer selling carrots at the Alamada market, Philippines.
Smallholder farmer selling carrots at the Alamada market, Philippines.
Saving the world is an opportunity for business, not a cost, according to a landmark report released by the Business and Sustainable Development Commission.
O n October 16, people across the planet marked World Food Day, the annual day of action against hunger. Many leading that fight, including former UN Deputy Secretary-General Mark Malloch-Brown, believe that to build a world fit for 9 billion people, it is vital for business to play a leading role.
According to a new report by Lord Malloch-Brown’s Business and Sustainable Development Commission (BSDC), to do so would not only be beneficial for the world’s poorest people, but there is a solid business case behind it. 
Companies could unlock $2.3 trillion a year in the food and agriculture sectors by 2030 by investing $320 billion annually in sustainable business models, the report finds. That is a seven-fold return on investment that the BSDC says could also lead to more than 80 million jobs - 90% of which could be in developing countries, including 21 million in Africa and over 49 million in Asia. It is, according to Paul Polman, CEO of Unilever, “the business opportunity of a lifetime”.
The BSDC finds, for example, that reducing food waste across the production process and value chain could bring in an annual $405 billion. Meanwhile, improving technology in smallholder farms and restoring degraded land could double the incomes of smallholder farmers. Other areas it makes recommendations on include low-income food markets, micro-irrigation, restoring land and forests, product reformulation, changing diets, aquaculture, reducing package waste, cattle intensification and urban agriculture. 
“Our research shows tremendous growth awaits companies that take on the world’s challenges as significant business opportunities,” Lord Malloch-Brown told The World Weekly. “But there first must be a sea-change in the way CEOs understand their relationship with society and the environment, as well as the role of long-term value over short-term rewards. This is why the Business Commission was established: to expand, at speed and scale, the leadership needed to make sustainable development the new business norm.”
Lord Malloch-Brown heads the Business and Sustainable Development Commission
Lord Malloch-Brown heads the Business and Sustainable Development Commission. Business and Sustainable Development Commission
Lord Malloch-Brown believes that with the global population expected to increase by one billion by 2030, the food and agriculture system requires a new way of doing business, not least to feed over 800 million people who already suffer from chronic hunger. It was Lord Malloch-Brown who, at the UN, led the creation of the Millennium Development Goals, intended as a “public safety net” under the world’s poorest. Now he is keen to see businesses seize upon the broader and more ambitious Sustainable Development Goals that succeeded them as opportunities for growth, stressing both the social and economic rewards of doing so in partnership with governments.
The SDGs have been supported by numerous development NGOs, but not all anti-poverty campaigners are comfortable with the role of business in meeting them.
“The Business and Sustainable Development Commission is correct that the global food system is at a critical juncture,” Mark Dearn, senior campaigner at War on Want, told The World Weekly. “However, it fails to recognise that the key reason for this is an economic system that champions big business interests above all else.”
Mr. Dearn added: “Right through from their inception at Rio+20, the SDGs prioritised the interests of the world’s biggest corporations. And the whole process was compromised from the outset because it could not examine the economic system. If business wants to improve the food system, it should pay less attention to the SDGs as an opportunity for a return on investments, and more to what it can do to support far more efficient peasant farmers working for food sovereignty.”
The BSDC, though, wants to see far more business involvement, pointing out companies are not doing enough to realise the opportunities laid out in its report. The current capital base in 31 leading agriculture funds, it finds, is under $4 billion a year - less than 1.5% of the annual investment required. The BSDC urges companies to “operationalise sustainability across its supply chain and internalise social and environmental costs, while transforming consumption”.
Pakistani residents receive rice donations during World Food Day in Lahore on October 16, 2016
Pakistani residents receive rice donations during World Food Day in Lahore on October 16, 2016. ARIF ALI/AFP/Getty Images
Some companies have already been taking up the opportunities identified by the BSDC. Global agri-business Olam, for example, says it is looking to empower smallholders to be more commercially viable in Côte d'Ivoire, which has seen neglected farms and chronic malnutrition as a result of civil unrest. The company looks to purchase cotton from farmers at a “fair market rate”, while investing in smallholders and integrating them into the global supply chain.
Olam’s subsidiary Société d’Exploitation Cotonnière (SECO) reports higher productivity and profitability has contributed to a 500% increase in farmers’ annual revenue since 2008, from $200 to $1,200. Of this, the company says, $300 was a result of yield increases and cost efficiencies due to farmer training, access to inputs and pre-financing.
The company provides its farmers with access to food crops as well, reporting that it has financed more than 16,000 cotton farmers with $2 million in agri-inputs to increase their maize and rice production, and offered storage for food crops after harvest to help during the lean season and reduce waste. It has also trained 3,113 cotton farmers on nutrition and crop diversification and 11,457 on crop rotation. SECO says it provides health assistance and HIV testing, as well as guidance on infant nutrition.
“We now operate throughout Côte d'Ivoire, sourcing cocoa, coffee, cotton, cashew, and rubber, and some 2 million people across the country earn part, or all, of their livelihoods with Olam as farmers, staff, service providers and their dependents,” CEO and co-founder Sunny Verghese told The World Weekly. “And for Olam it means that we have a loyal base of farmers who see that we support them on the ground throughout the year and pay a fair price. All of this helps to ensure they don’t decide to sell to a competitor at the last minute – so again you can see the benefit for both of us.”
Olam’s work is not philanthropy, it is just good business sense. “We need farmers to produce greater yields of quality crops for our customers,” Mr. Verghese, who is a member of the BSDC, points out. “By supporting them we are contributing to our long-term success.”
Fraser Thompson, director of AlphaBeta, which conducted the research for the BSDC, notes that many commentators have mistakenly seen the SDGs as a burden on business. “The reality is that in many cases the SDGs offer a new and higher quality channel for economic growth and business profitability,” Dr. Thompson said.
Salman Shaheen
INSIGHT
20 October 2016 - last edited 20 October 2016
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