Regional focus is needed to put sustainability promises in to practice

By Nathan Gray contact

- Last updated on GMT

Regional focus is needed to put sustainability promises in to practice

Related tags: Cocoa, Supply chain, Supply chain management

When it comes to putting sustainability promises in to practice, it is vital that industry understands the key issues that affect different regions, says Job Leuning of Cargill.

Whether your business is in cocoa, coffee, sugar or palm oil; sustainability is high on the agenda for many firms dealing with commodities and global supply chains. However, true sustainability needs the effort and cooperation of all of the players in an industry and a more regional focus on key issues, according to Job Leuning, head of Cargill’s cocoa operations in Asia.

Speaking to FoodNavigator, Leuning said that the regional complexity of the cocoa supply chain means there can never be a one-size-fits-all approach to sustainability.

“In reality every region has a different system. There is not a single country where you can say ‘here the supply chain is similar to in another country’,”​ he explained. “So in every country we have programs that are specific to that supply chain or to the farmer’s environment.”

The cocoa supply chief told us that when it comes to sustainability efforts in the Indonesian region, for example, the industry faces a range of different challenges when compared to other cocoa sourcing regions such as Africa.

“In the Asian countries, the major problems are cocoa pod borer insects and a pest called VSD (vascular streak die-back),”​ he commented. “Those are two pests that Africa doesn’t have, but that are having a major impact on the yields in Indonesia.”

He added that there are also key differences in other sustainability and ethical issues surrounding cocoa, such as child labour – noting that in Indonesia, child labour is ‘not an issue at all’ - and so there is less focus on such programs in the area.

Leuning also noted that while the cocoa crop had been slowly increasing in Indonesia from the 1980’s onwards – with a peak in production in around 2005. Since then, however, crop yields have declined.

“From that perspective, there is a need to invest in sustainability in order for farmers to continue harvesting and managing their cocoa crops – and not to choose another crop.”

“That is probably the biggest problem for Indonesia at the moment,”​ he said. “The yields per farmer are lower than what they were five or ten years ago, and therefore the competitiveness of cocoa as a crop is not considered that highly by farmers.”

Cocoa competitiveness

The Cargill manager explained that despite cocoa farmers in Indonesia receiving a relatively higher price for their crop than African counterparts, there remains a ‘push’ for farmers to shift towards the production other commodities such as palm oil and corn – which can be seen as more lucrative.

“In general the Indonesian farmer gets a much higher price than the African farmer, because the tax pressure is a low lower compared to the Ivory Coast and Ghana,”​ he explained. “So in terms of financial situations, the Indonesian farmer is better off than most African farmers, which makes him somebody who has a lot more choice and ability to choose another crop.”

He added that many of the regions palm oil producers have start up programs – such as seedling programs - that are aimed at attracting new farmers in to palm oil production, while the increase in meat consumption in the region has led to surging demand for corn to be used as feed.

“There is a lot of pressure on farmers to choose other crops.”

Farmer focus

While current sustainability efforts remain lower key in the Indonesian region compared to Africa – Leuning told us that the firm is actively looking at the best methods to help farmers and communities.

“Often, the best start is to help current farmers increase their yield and help them to become more successful,”​ he said. “Farmer’s training [to help increase yield] is usually the most immediate support that you can give.”

“The community support and the long term sustainable development – which are the other two pillars of our cocoa promise – are steps that we usually take in the next phase.”

Leuning explained that work to help farmers increase yield is also vital to stopping further decreases in cocoa harvest in the region, “and to possibly turn it around.”

“Our programs are initiated in Sulawesi,”​ he noted. “Over time, with the learnings that we get from those programs, we will grow the programs in to a larger scale in order to grow the crop and get connected to more farmers – because this also helps your own sourcing model.”

“Now that we are starting up our factory, there is an opportunity and a need for us to invest more in to sustainability activities to help the farmers there as well.”

Sustainability in practice

One of the biggest challenges facing Leuning, however, is putting the ideas of sustainability, and learnings from previous programs in to action in a new region.

“In any program, there are always challenges. They are virtually always different,”​ he said.

“The challenge in Indonesia that we face is that there are no structures where farmers are already organised already – which means that if you want to run a program that is efficient and reaches a lot of people, then it is already a challenge just to organise the farmers in to certain groups that make it workable.”

This is a challenge that is vital to working in the Indonesian region, but that is not present in other areas, he noted.

“In Ivory Coast to a certain extent they have a co-op structure already in place, and you can use that structure to start your programs,”​ Leuning said. “Following all of our programs around the world, we have become more and more experienced in how to deal with these problems.”

“Nevertheless, when you come to a new area there are challenges to overcome.”

Industry cooperation

In order to overcome these important, yet regional challenges Leuning said that a more concerted and cooperative effort is needed from the whole industry.

“Usually there is a lot of talk about commitment, but it is not always the case that all of the industry puts their money where their mouth is,”​ he told us.

“If there is a fair amount of coordination then that would strengthen the individual programs.”

“Those discussions are ongoing between the top cocoa and chocolate companies.”

Related topics: Market Trends

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