SEATTLE — For David Croft, global sustainable development director with drinks brand Diageo, one major way to reach the U.N. Sustainable Development Goals (SDGs) is by better connecting global companies and smallholder farmers in Africa. Through a stronger connection, smallholder farmers can gain access to reliable customers for their products, and their customers like Diageo can source local ingredients for local products. These are usually at a lower cost than sourcing them in global markets.
A major aim of the SDGs is to end poverty around the world by 2030. Reaching that goal will mean improving the lives of smallholder farmers who account for three-quarters of the world’s poorest people. In Africa, that is more than half a billion people.
For them to prosper, they need to improve the productivity of their farms, which are still well below the world’s average for food per hectare. Then they need to get what they produce to market.
One way to solve both problems for smallholder farmers is for them to work collaboratively with global corporations operating in Africa, especially what are called Fast-Moving Consumer Goods companies. Diageo — a global leader in alcoholic beverages with brands like Smirnoff, Johnnie Walker, and Guinness — is one such companies.
In Africa, Diageo produces local beers like Kenya’s Senator Keg. The company prefers to use locally sourced raw materials including barley, sorghum and cassava for its local brands. Croft says there are three reasons for this:
- It helps to insulate the company from foreign exchange rate fluctuations that it would be exposed to if it sourced globally.
- It gives the company confidence in the consistency of what it is buying.
- It appeals to local consumers. For example, Ethiopian consumers like to know their beer is made with Ethiopian barley, Croft says.
Diageo’s current goal is to source 80 percent of its agricultural materials locally by 2020. Croft says he expects Diageo to well exceed that goal since the company already sources 75 percent of materials locally.
To assure access to local agricultural materials, Diageo provides reliable contracts to smallholder farmers, and it provides them assistance in growing their crops. That is how global companies and smallholder farmers in Africa can connect.
Diageo trains farmers on good agronomy, helps them secure credit to buy seed and fertilizer, and assists them in mechanizing their work. For example, arrangements are made for favorable terms with John Deere in Kenya. “They get the right piece of equipment for their size of the farm and skilled people come and use it,” says Croft.
Diageo also provides farmers access to affordable crop insurance, which, as Croft notes, gives farmers a measure of security if they experience an adverse problem. The results of all this collaboration between one of the world’s leading global companies and smallholder farmers in Africa? “Some of the work that we’ve done doubles their yield per hectare,” Croft points out.
The goal, says Croft, is “…that the whole is greater than the sum of the parts. That’s beneficial from our point of view at Diageo for sure. But it’s also beneficial for the small holder and their role in their communities. I know that our supply chain will grow and prosper if those very small communities and those individual farmers also grow and prosper.”
In short, connecting global companies with smallholder farmers in Africa can create a virtuous circle that benefits not just the global customer and local farm but also the larger community of which they are a part.
– Robert Cornet