Category Archives: Supply Chains

Supporting Farmers Affected by Climate Change through Better Business

This past June OXFAM published a discussion paper entitled: “Climate Change Risks and Supply Chain Responsibility“.  The paper explores the role that trade businesses can and should play in supporting the primary producers of raw products in adapting to the effects of climate change.  The paper highlights three case studies and uses them to formulate a list of positive actions that companies can take to help small producers and strengthen supply chains in the face of increasingly drastic weather patterns and natural disasters.  The three examples used are Starbucks and coffee production in Colombia, Marks & Spencer and cotton production in Pakistan, and The Body Shop and sesame production in Nicaragua.  Although each study contains a concrete example of recent climatic changes that have directly affected at least one season’s production, only the case study of The Body Shop included direct input from individual producers.  In fact, many of the actions suggested by OXFAM are drawn from the example of organized sesame farmers in Achuapa, Nicaragua.  The five actions identified in the report are:

  • Raise awareness and understanding of adaptation within the business
  • Ask producers about current climate trends and impacts
  • Build longer-term and more stable relationships with suppliers
  • Support community development and environmental sustainability
  • Work through existing institutions, including governments

Within these five actions, several specific suggestions are drawn directly from the example of cooperatively produced sesame in Nicaragua – such as working with cooperatives of producers, supporting reforestation and diversification efforts, and raising awareness about the often unseen and unpaid contribution of women in the production chain.  In reviewing the case studies highlighten in the paper, the SBN can add two additional characteristics of the Body Shop’s sesame supply chain that are examples of resilience in the face of climate change and increasing risk in production:

Small Producer Land Ownership: The case example of the cotton industry in Pakistan discusses the devastating impast of flooding in 2010 and 2011, which destroyed nearly 20% of the national harvest and affected 20 million people.  The paper explains that the financial burden of the flooding disproportionately affected small-scale farmers because a high percentage of them rent land from large land owners.  After the damage these tenant farmers forced to uphold their rent despite a destroyed crop, assume all the work of clearing and restoring the lands, and are most likely exempt from any government assistant money that is handed out to landowners only.

In Nicaragua, the land reformation that came as a result of the Sandinista Revolution in 1979 has resulted in a high rate of land ownership among small farmers.  The short term financial burden of destructive climatic events are still felt and assumed by producers, however the long-term advantages of land ownership include incentives for reforestation, better soil and water management, access to government assistance, and stability of production yields and quality.  Business supply chains could express support for national and local policies that help small scale producers gain access to land and mortgages, and help link farmers with sources of financing to facilitate land purchases.

Small-scale Producer Control of the Supply Chain: Although OXFAM’s paper recognizes the fact that the Nicaraguan sesame farmers were able to mitigate the financial impact of harvest loss because they provided oil rather than raw product, the ability for businesses to support organized farmers in gaining control of the supply chain is missing from the list of possible actions companies can take.  The example of sesame oil sales to the Body Shop shows that while both yeild and quality in the producer cooperative were negatively affected by heavy rains in 2010 and 2011, the negative financial impact to the region was mitigated by the cooperatives ability to purchase sesame from affiliated producer cooperatives and honor their sales contract with the Body Shop.  Companies who wish to build longer-term and more stable relationships with their suppliers can directly support organized small-scale farmers with financing and technical support to help them gain control of the supply chain, resulting in more resilient producer communities and a more consistent product.