Inclusive business

This work supports the following UN Sustainable Development Goals

  • No Poverty
  • Decent Work and Economic Growth
  • Reduced Inequalities
  • Partnership For The Goals

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.

Tea pickers

Feeding the future and securing our growth

Farm house
450m

Estimated number of people worldwide reliant on smallholdings

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.

A sustainable future for smallholders is one in which their incomes and living standards rise, so that current and future generations see smallholding as viable and attractive. That will be key to feeding the world's growing population.

And 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. That can reinforce the trust that our consumers have in our brands and help us continue to grow.

Helping to transform smallholder farming will be key to achieving the ambitions of our Unilever Sustainable Living Plan. At the same time, it plays a vital part in contributing to the UN Sustainable Development Goals, especially No Poverty (SDG 1), and Decent Work and Economic Growth (SDG 8).

Smallholders are stewards of the land, soil and forests. Integrating smallholders into the value chain is critical to sustainable land use and in protecting forests and biodiversity. There is a clear business case to enable farmers to invest in their farms, thereby increasing their yields and profitability.

Marc Engel, our Chief Supply Chain Officer

A holistic approach to tackling the barriers

Farmer with spade
793,000

Smallholders enabled to access initiatives aiming to improve their agricultural practices by 2019

We're committed to improving the livelihoods of smallholder farmers and their communities – in particular, by helping them to improve their agricultural practices and look at income diversification. By 2019, we had enabled around 793,000 smallholder farmers to access initiatives aiming to improve their agricultural practices.

Smallholder farmers often lack access to markets, financial support, and information and training. That can constrain them when it comes to investing in their farms, and in their choices of when, how and what to grow. The result is often missed opportunities for improved yields and quality.

Many other factors can also hold them back – including lack of income diversification, poor diet, gender inequalities and health problems, such as those caused by inadequate sanitation. There isn't a simple fix to these issues – they have to be addressed holistically and systematically. We're doing this in a number of ways: directly with smallholders; with a range of partners; and through certification and other programmes.

Spotlight

Smallholder farmer in Madagascar

Vanilla for Change: strengthening smallholder communities in Madagascar

Helping smallholder farmers and their communities increase yields sustainably is key to our strategy. But our programmes address other barriers to smallholders' growth too.

Vanilla, an essential ingredient in our ice creams, is a prime example. In Madagascar, where the world's best vanilla is grown, smallholders face extreme weather, price fluctuations, and poor health and diet. Theft of vanilla crops is a persistent threat for farmers. Also, the rights of their children and other young people in the community are not always consistently achieved. To add to this, young people often don’t see a sustainable future in vanilla so they migrate to towns in search of other livelihood options. At the same time, the long-term future of vanilla – and of the island's unique ecosystems – is threatened by deforestation.

This complex situation calls for a partnership approach. In 2019, we committed to renew our strategic alliance in Madagascar which we've been part of since 2014, which aims to improve livelihoods by supporting vanilla smallholders and the wider community. Involving our supplier Symrise, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and NGO Save the Children, the development partnership is supported through the develoPPP.de programme of the German Federal Ministry for Economic Cooperation and Development (BMZ).

By the end of September 2019, the holistic initiative had reached over 59,000 people in over 10,000 households, including around 7,800 smallholder farmers who had accessed agricultural training.

The next phase of the strategic alliance will renew the focus on increasing access to fair financial services and financial management, strengthening child-safeguarding and youth development measures, and helping farmers improve their agricultural and business skills, including through climate-smart agricultural techniques.

This work contributes to the UN Sustainable Development Goals

  • No Poverty)
  • Decent Work and Economic Growth)
  • Partnership For The Goals)

Working directly with individual farmers

At the systems level, we're working with a wide range of partners to improve the infrastructure in which smallholders operate. That includes collaborating on improved regulatory, market and financial processes.

At the same time, 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 boost their incomes, while giving us the visibility and resilience we need to achieve a truly sustainable supply chain.

By working more directly with smallholders, we can support them in areas like income diversification, health, nutrition and education, as well as training, professionalisation and sustainable agricultural methods.

Joined-up working across our USLP

As our interactive map shows, closer relationships with smallholders help us run projects to advance sustainable agricultural practices, increase yields and reduce environmental impacts – such as deforestation. These aims are central to our ambitions on sustainable sourcing.

Spotlight

Cocoa farmers

Cocoa: empowering smallholders by building resilience

Bad weather. A poor harvest. A sharp drop in market prices. Unpredictable events like these can hit smallholder farmers hard, especially when they rely on growing a single commodity for their income.

We're exploring ways to help smallholders build their resilience to shocks and fluctuations by helping them find additional sources of income. By diversifying the crops they grow, at the same time as sustainably increasing their yields, smallholders are better able to absorb setbacks and invest in their future.

In Côte d'Ivoire, we have been involved in a number of partnerships which aim to support smallholders who grow cocoa. One of the most encouraging projects was a pilot that ended in 2019. A partnership with our supplier Barry Callebaut and implementing partner One Acre Fund, DiRev was supported by the Enhancing Livelihoods Fund (see below).

The pilot worked with 448 smallholder farmers in southern Côte d'Ivoire from 2018 to 2019, using a range of approaches to help them grow maize alongside cocoa. The project aimed to improve smallholders’ livelihoods by diversifying their household incomes and increasing their ability to invest, and included training and supervision by Field Officers who worked directly with the smallholder communities. It had a particular focus on including women farmers.

Despite severe droughts during the project, yields of maize increased on DiRev fields compared to 'control' fields – and 79% of the farmers reported that they were positive about their maize harvest.

While the farmers involved will continue to see cocoa as their main source of income, 90% of women farmers and 95% of men said they would continue to grow maize.

A single intervention like this cannot solve smallholder poverty on its own. But it does highlight the potential for crop diversification, as well as the need to look beyond the fields – at market access and business skills training, for instance, which are now being considered by the DiRev partners as we look to scale the project up.

This work contributes to the UN Sustainable Development Goals

  • No Poverty)
  • Decent Work and Economic Growth)
  • Partnership For The Goals)

Furthermore, our holistic approach recognises that social, environmental and commercial progress are all interconnected. This relationship is reflected across other sections of this report: our smallholder programmes help us promote human rights and empower women, and increase access to better hygiene and sanitation. Improving smallholder nutrition contributes to our goal of helping hundreds of millions of people achieve a healthier diet.

Unlocking progress – and funding – through partnerships

Addressing the complex barriers faced by smallholders and giving them access to the resources they need, requires collaboration with our suppliers, across industries and sectors, and with NGOs and governments.

We have global partnerships with many organisations, including Acumen, Acceso (formerly the Clinton Giustra Enterprise Partnership), the Ford Foundation, the Sustainable Trade Initiative (IDH), the International Fund for Agricultural Development (IFAD), Global Alliance for Improved Nutrition (GAIN), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Oxfam, Population Services International (PSI), the Rainforest Alliance, Save the Children and Solidaridad, along with national and local government agencies.

To take just one example of how ambitious these partnerships can be, the IDH Farmfit Fund, launched by the IDH Sustainable Trade Initiative in coalition with Unilever, Jacobs DE, Mondelēz and Rabobank, is the world’s biggest-ever impact fund for smallholder farmer finance. Starting with €100 million, the Farmfit Fund's aim is to pave the way for commercial investors, including banks, companies and institutional asset managers, to invest in a space that up until now was perceived as too risky. The goal is to catalyse up to €1 billion in investment for smallholder farmers in developing countries.

More inclusive sourcing through the Enhancing Livelihoods Fund

How can we find innovative supply models that enhance the livelihoods of smallholders while securing our ingredients sustainably? That's the mission of the Enhancing Livelihoods Fund (ELF), a joint initiative between Unilever, Oxfam and the Ford Foundation which has financial support from the Ford Foundation and Unilever.

ELF awards grants to partners in our supply chains who have projects that improve their social impact in sourcing from smallholder producers. The projects must either minimise risk for the smallholders, empower women in the supply chain or improve conditions for workers. They must also support our sustainable sourcing objectives.

Since ELF was launched in 2015, it has funded six projects, covering a range of crops. In Côte d'Ivoire, ELF has supported a project to help cocoa farmers grow maize in order to diversify their incomes (see the Spotlight above). And in Comoros, we worked with growers and pickers of Ylang Ylang, which we use as a fragrance in some of our Personal Care brands. Launched in 2017, the Comoros project worked with one of our suppliers to ensure a better representation of women in the supply chain and to help them to get a higher and more stable income. The 250 women involved received training in sustainable agricultural practices. They were also able to build their knowledge in areas such as literacy and numeracy, entrepreneurship and family planning. Access to a health insurance scheme and income diversification activities were other key elements of the initiative.

We're seeing results from projects funded by ELF that have been through their evaluation stage. In India, a programme with one of our suppliers supported a network of gherkin growers with farmer education, climate-smart agricultural practices, and family nutrition and hygiene guidance. In Haiti, a focus on income diversification and gender empowerment underpinned a project working with around 450 vetiver growers and their communities, which concluded in 2018.

Spotlight

Lipton tea farming

Ensuring a future for tea, and women tea-farmers, in a changing climate

In Kenya, tea is critical to the smallholders who grow it and to the wider economy. And Kenyan tea is critical to our business, as the world's largest tea company, with household brands that depend on the taste and quality of the tea leaf grown in a country where we have both owned tea estates and worked with smallholders for a long time.

But Kenyan tea harvests are highly sensitive to climate change – which means that we need to support programmes that will make tea smallholders in the country, and their crop, more climate-resilient.

The Enhancing Livelihoods Fund is supporting a ground-breaking programme, working with the Kenya Tea Development Agency Ltd (KTDA) and the Ethical Tea Partnership, to build that resilience and empower smallholders economically, with a specific focus on the 60% of the workforce made up of women.

Developed in 2019, the programme will trial drought-resistant tea clones. It will focus on 200 women tea farmers and provide them with access to finance and skills training for tea clone development and income diversification. Two trial centres will support the programme, which will also provide climate-smart water-harvesting tanks to support farmers’ income diversification in other crops.

In 2019, we worked with the Potsdam Institute for Climate Impact Research to assess the risks of climate change to black tea yields globally, and in individual countries. While we found that the overall risk to Unilever of direct climate change impacts on black tea is relatively low, there are risks specific to each country where it is grown. There are also risks to vulnerable communities who may be impacted by climate change and we will develop individual action plans to address them. We describe the findings of the analysis in our 2019 Annual Report & Accounts.

More details of our work with tea smallholders are described below and in the sustainable tea section of this report.

This work contributes to the UN Sustainable Development Goals

  • No Poverty)
  • Climate Action)
  • Partnership For The Goals)

Better lives through tea

Our tea brands – such as Lipton, Brooke Bond and PG Tips – have worked with tea growers and smallholders for generations. It isn't surprising, then, that some of our most mature smallholder farmer programmes are in the tea sector – or that this is where some of our most ambitious plans for improving social impact are currently focused.

We're convinced that tea can create better lives – for tea workers and smallholder tea farmers. For our business, that means respecting and valuing tea workers and smallholder farmers, and working to improve their health and financial security while protecting and nurturing the land they work on. We describe our programmes in detail in the sustainable tea section of this report.

One of our key programmes for smallholders is our work with partners to implement ‘Healthy Diets for Everyone in Tea Communities’, which aims to improve the diet and hygiene of 300,000 tea workers and smallholder farmers. The partnership includes the Global Alliance for Improved Nutrition (GAIN), the Ethical Tea Partnership and tea companies.

It builds on the success of the Seeds of Prosperity programme, another partnership which helped more than 300,000 people by addressing the fact that disease and malnutrition are as much a barrier to smallholders' livelihoods and productivity as issues such as agricultural practices and routes to market.

Building on the successes of sustainable agriculture

Sharing sustainable agricultural best practice, with the aim of improving yields and quality, has driven much of our work with tea smallholders over the years.

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 over 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 run by KTDA.

As with other sectors in 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.

Working with smallholders on sustainable palm oil

Smallholder farmers play an important role in palm oil production. According to RSPO, they represent 40% of all global production. The majority of the palm oil we buy is grown in Malaysia and Indonesia, the biggest producing countries worldwide. But many smallholder farmers face issues in terms of productivity, profitability and sustainability. These can include land tenure, poor agricultural practices and a lack of access – both to finance for good seeds for replanting and to markets.

We aim to support farmers by sourcing or buying RSPO 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 the importance of smallholder farmers in the palm oil industry.

More to do

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 continuing to broaden out our activities beyond improving agricultural practices, in areas such as access to finance, income diversification and resilience to the effects of climate change.

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