Connecting with smallholder farmers to enhance livelihoods
We're building stronger, closer connections to the smallholder farmers who supply our business with essential agricultural raw materials – providing them, and us, with the foundation for future growth.
Time for change
What does it mean to be a smallholder farmer in the 21st century? And what will it mean to the next generation and the one after that?
Today, an estimated 450 million people earn most of their income by working on their family smallholding. With their wealth of collective experience and knowledge of local conditions they play a vital role in feeding the planet, producing around 70% of the world's food.
But smallholders often face barriers that prevent them unlocking their full potential, both in terms of their yields, and their livelihoods. Despite their contribution to the global food system, many smallholders themselves live in poverty, and deal with chronic food insecurity and malnutrition. For too many, a life of continuous toil does not currently provide a sustainable livelihood and an unexpected drought or family bereavement can make this even harder to achieve.
The system needs to change. And with the world needing to feed 8.5 billion people by 2030, the time to act is now.
Change won't be easy. But we believe it will create enormous opportunities for smallholder farmers, for the world's food systems, and for our business.
Feeding the future and securing our growth
Creating a sustainable future for smallholders – one in which their incomes and living standards rise, so that current and future generations see smallholding as viable and attractive – will be key to feeding the world's growing population.
Our future success will depend on theirs. We rely on smallholders for a sustainable supply of some of our most important ingredients, including tea, palm oil, vegetables, cocoa and vanilla.
By strengthening our connections to smallholders and helping them flourish, we will make our supply of sustainably sourced ingredients more secure and more transparent, so it can continue to help us grow.
Helping transform smallholder farming will also be key to achieving the ambitions of our Unilever Sustainable Living Plan and play a vital part in contributing to the UN's Sustainable Development Goals, especially No Poverty (SDG1) and Decent Work and Economic Growth (SDG8). In turn, stronger and more sustainable smallholder communities will increase the resilience of our supply chain and strengthen the trust that our consumers have in our brands.
Committed to change and aware of the challenges
We're committed to improving the yields and livelihoods of smallholder farmers and their communities, and we have a clear business interest in achieving it.
We know that the challenges faced by smallholders are complex and diverse, often requiring holistic solutions. Not only does every crop and region have its own dynamic and context, but each individual smallholder faces a unique set of conditions. We work directly with around 30,000 smallholders, while through our suppliers we're connected to around 700,000 more, mostly smallholder tea farmers in Africa.
Tackling the barriers
Smallholder farmers often lack access to markets, to financial support, and to information and training. Without them, they are constrained when it comes to investing in their farms. Their choices of when, how, and what to grow are also constrained – which can mean missed opportunities for improved yields and quality. But many other factors can also hold them back – such as lack of income diversification, poor diet, gender inequalities and health problems, including those caused by inadequate sanitation.
These barriers must be addressed holistically and systematically. We're working with a wide range of partners to improve the systems and infrastructure in which smallholders operate, for example through collaborating on improved regulatory, market and financial processes.
And through our programmes, we're working to help smallholders improve their yields and increase the quality and consistency of the crops they grow. That gives them the platform to increase their incomes, while giving us the visibility and resilience we need to achieve a truly sustainable supply chain.
At the same time, we're strengthening our connections with smallholders, so we can support them in areas like health, nutrition, and education, as well as training, professionalisation and sustainable agricultural methods.
Digitally connected: improving agricultural practices
One way we're helping to improve agricultural practices in Indonesia is through the mFarmer digital platform, developed by Unilever and GrowAsia. It gives smallholders access to mobile content which is free of data charges, to help them make better farming decisions and become more sustainable in their practices. For instance, it includes courses to help smallholder farmers better understand palm oil RSPO standards and the certification process.
Accessed via Free Basics by Facebook on the Indosat network, the content includes weather data and assessment information to help improve productivity and yields, along with communication tools to connect with cooperatives and other farmers.
We piloted mFarmer in January 2017 with independent smallholders in two Indonesian villages, to experiment with various elements of the system and test the user experience. This user acceptance test proved very successful, reaching nearly 22,000 farmers over three weeks via social networking.
The ‘digital first’ approach of mFarmer significantly reduces cost per contact in reaching smallholder farmers. We are now starting to deploy mFarmer in our supply chain, with plans to expand into other markets and crops.
Strengthening smallholder communities in Madagascar
Helping smallholder farmers and their communities increase yields sustainably is key to our strategy. But our programmes increasingly address other barriers to smallholders' growth too.
In Madagascar, our strategic alliance with our supplier Symrise, the German Development Agency GIZ and NGO Save the Children aims to improve livelihoods by supporting vanilla smallholders and the wider community. The development partnership is supported through the develoPPP.de programme of the German Federal Ministry for Economic Cooperation and Development (BMZ).
The partnership aims to reach 40,000 people in 10,000 households in the Sava Region by 2019 by increasing access to fair financial services, providing community education on health, hygiene and child protection, as well as helping farmers improve their agricultural and business skills.
By the end of December 2017, the programme had reached around 35,000 people in over 7,000 households, including around 6,000 smallholder farmers who had accessed agricultural training.
An inclusive approach across the USLP
Our holistic approach recognises that social, environmental and commercial progress are all interconnected. This relationship is reflected across other sections of this report. As the examples on our interactive map show, closer relationships with smallholders enable projects that advance sustainable agriculture practices, increase yields and reduce environmental impacts such as deforestation. All of these are central to our ambitions on sustainable sourcing.
They also help us promote human rights and empower women, and improve access to better hygiene and sanitation. Improving smallholder nutrition through programmes such as Seeds of Prosperity (see below) contributes to our goal of helping hundreds of millions of people achieve a healthier diet.
Tea: where we began
Our tea brands – such as Lipton, Brooke Bond and PG Tips – have worked with tea growers and smallholders for generations. Some of our most mature smallholder farmer programmes are in the tea sector. These have consistently focused on sharing sustainable agriculture best practice, with the aim of improving yields and quality.
Between 2006 and 2016, for example, we worked with the Kenya Tea Development Agency (KTDA) and the NGO IDH to provide education and training through Farmer Field Schools. The programme enabled 86,000 lead farmers, including around 42,000 women, to access initiatives aiming to improve their agricultural practices. It helped 580,000 farms achieve the certification standards set by the Rainforest Alliance – establishing a solid foundation for tea-growing in Kenya which continues to be overseen by KTDA.
A brighter future for tea smallholders
We continue to expand the scope of our programmes within, and beyond, the drive to increase yields sustainably.
In 2017, we had more than 50 separate initiatives in tea worldwide, many in partnerships with NGOs and government stakeholders. Each addresses issues relevant to the industry and the local market, with a range of objectives including increasing smallholders' incomes, improving health and sanitation, empowering women, supporting biodiversity and addressing climate change. We describe some of these initiatives in the sustainable tea section of this report.
Many of our initiatives in tea have successfully used certification programmes to raise standards – but they are not a one-size-fits-all solution. We implement our programmes with a variety of approaches, including working directly with individual smallholders and groups.
We apply the same adaptability across many sectors of our supply chain. Certification plays a very important role in ensuring we do business with suppliers who have equal commitments in place on environmental and social sustainability. At the same time, we need to focus on ensuring we have visibility of what happens in our supply chain through traceability initiatives and programmes that tackle specific issues on the ground.
More knowledge. Better tea: trustea
Daleram Gulia is Unilever Procurement Manager, Sustainable Sourcing.
"You can see the change on the ground – people are hungry for knowledge," says Daleram. "The first question smallholders ask is: 'can you help me on judicious use of pesticides?' Then they want to know about compliance, green leaf-handling, how to improve quality..."
Daleram works with our tea supply chain in India, where around half the country's tea production is grown by smallholders – and where smallholder potential is being unlocked by trustea, a sustainability code devised by a cross-sector alliance supported by the Indian tea industry and tailored to local conditions with global best practices delivered by our implementing partner Solidaridad.
"Conditions for smallholders vary widely across the country, but overall the number of growers is increasing," says Daleram. "Often, smallholders are fragmented and dependent on green leaf agents to sell their green leaf. That can mean they lack access to information about prices, traceability and sustainable agricultural practices – it also means it can be hard to get visibility of where and how our tea is grown.
"trustea requires tea factories to first map their supply chain, which creates a connection to individual smallholders and the opportunity for them to organise in groups. That means we can reach them with soil management practices, training in sustainable agriculture, and a wide range of professional techniques so we can guide them towards compliance with trustea's code requirements.
"So far, trustea has successfully verified 37,500 smallholder farmers in India, accounting for 43% of Indian tea. For Unilever, that means more knowledge about who is growing our tea and how and greater assurance that the tea we sell meets mandatory criteria on wages, plant protection, safety, and pesticide use – as per the Tea Board of India’s Plant Protection Code (PPC).
"Smallholders can reduce their costs through judicious use of chemicals and fertilisers, and access to expertise on agricultural practices should make their farms more sustainable in the long term."
The importance of partnerships
Even in sectors like tea, where we can bring our scale and influence to bear, we do not claim to be able to transform whole systems on our own. Addressing the complex barriers faced by smallholders, and giving them the access to resources they need, requires collaboration with our suppliers, across industries and sectors, and with NGOs and governments.
Implementing our programmes is itself often a collaborative process, and we have global partnerships with many organisations including Acumen, Clinton Giustra Enterprise Partnership, the Ford Foundation, IDH, the International Fund for Agricultural Development (IFAD), GAIN, GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit), Oxfam, PSI, the Rainforest Alliance, Save the Children, Solidaridad and national and local government agencies.
Seeds of Prosperity: cultivating a healthier future in partnership
Information is priceless, and many smallholders simply do not have enough access to it. That could be farming information such as prices, best agricultural practices and routes to market. But it could also be about hygiene, or diet, because disease and malnutrition are also barriers to smallholders' livelihoods and productivity.
Many smallholders, for example, sell their nutritious crops to buy starchy foods which feed their families but lack micronutrients. That's why we're increasingly looking for ways to help them improve their diets and hygiene habits too.
Partnership in action
The Seeds of Prosperity programme, is a partnership between Unilever, the Global Alliance for Improved Nutrition (GAIN) and the Sustainable Trade Initiative (IDH). It began in a pilot in India, reaching 2,600 people in Tamil Nadu with a nine-week behaviour-change programme dedicated to encouraging more diverse diets and handwashing.
Women who participated in the programme reported a 41% increase in the variety of foods consumed, almost double the 24% increase in women who were not part of the programme. The hygiene component saw 78% of tea growers washing their hands before lunch daily, compared with 51% of growers who did not participate in the programme.
Building on success
We believe a business like ours has a commercial, as well as a moral, responsibility to explore initiatives like Seeds of Prosperity. By building healthier communities, we make our supply chain more robust, both directly and indirectly. Indeed, 98% of pilot participants said the programme was likely to positively affect their decision to stay with their tea estate or factory, which in turn increases farmers’ loyalty.
After promising results from the pilot, in 2017, the partnership began to replicate the programme in tea farming communities in Assam and Tamil Nadu as well as in Kenya and Malawi. We aim to reach a further 300,000 people and are encouraging other businesses to help us scale the programme even further.
Working with smallholders on sustainable palm oil
The majority of the palm oil we buy is grown in Malaysia and Indonesia – the biggest producing countries worldwide.
Smallholder farmers play an important role in palm oil production. They represent 40% of all palm oil production in South-East Asia. Many smallholder farmers face issues in productivity, profitability and sustainability. These can include land tenure, poor agricultural practices and a lack of access – both to finance for replanting and certification, and to sustainable markets.
We aim to support 25,000 farmers by sourcing or buying certificates directly from independent smallholders, and by working with NGO partners to help and incentivise smallholders to adopt sustainable management and agricultural practices. Find out more about how we are transforming the palm oil industry.
The sustainable palm oil village
Smallholders working on family plots are an important part of palm oil production. Together, they produce around 40% of the global supply. But the challenges they face in getting access to markets, finance and the training that could help them improve their yields mean that their incomes often remain low. This in turn can drive deforestation and loss of biodiversity as they seek new land to cultivate.
In 2017, we worked with partners on a pioneering new approach to help independent smallholders in Indonesia produce more oil and generate higher incomes while having a lower environmental impact.
Sometimes known as a 'jurisdictional approach', we prefer to think of it as creating 'sustainable villages'. It is a way of working with communities of smallholders and local government to increase yields and prevent deforestation within a set geographical area, while assuring us of a sustainable source of palm oil.
The path to systemic change
We began with the village of Pangkalan Tiga. In October, our programme helped 190 independent smallholders of the village's KUD Tani Subur farmer cooperative achieve RSPO certification – the first cooperative in Kalimantan to do so.
Alongside sustainable palm cultivation, the cooperative involves an integrated livestock farm and a fish farm, so that palm by-products such as fronds are used in feed for livestock, cow manure is used for fertiliser for the oil palms, and palm oil mill effluent is used in fish feed. This integrated model gives farmers an opportunity to earn additional income, while the support of the district and provincial government helps monitor farming and combat deforestation.
Altogether, our public-private partnership with the provincial government of Central Kalimantan, the district government of Kotawaringin Barat and Yayasan Penelitian Inovasi Bumi (INOBU) has directly helped 253 independent smallholders achieve certification in 2017. If it continues to succeed, we aim to scale it up to reach as many as 12,000.
We do not claim to have all the answers when it comes to addressing sustainability issues in our agricultural supply chain – nor the issues facing the smallholder farmers we depend on. But we know that the status quo is not sustainable and that more change at a systems level is needed. For our future work with smallholders, this means broadening out our activities beyond improving agricultural practices, to include strategic and enabling areas such as access to finance, income diversification and resilience to the effects of climate change.