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Session 6.6 agribusiness reducing climate, water and community risks

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  • Businesses are increasingly at risk of “sustainability megaforces” – interconnected risks that will have unprecedented effects on business performance and profitability in the futureThese mega-forces include: climate change; competition for energy, land, water and material resources; population growth and migration; poverty and food insecurity; and ecosystem degradation. Food and beverage businesses will be directly and indirectly affected by a range of global trajectoriesKPMG, 2012. Expect the Unexpected: Building business value in a changing world.-------------------Based on our research findings, agribusinesses find water, climate, and community risks to be urgent, and best suited to piloting landscape approaches. Agribusinesses and food sector brand manufacturers are increasingly aware of sustainability risks. The interconnectedness of the water-food-energy-climate nexus is increasingly being recognized by business as requiring integrated solutions. In some cases, stability in key sourcing and operational regions may be at stake. World Economic Forum, 2011. Water Security: The Water-Food-Energy-Climate Nexus. Island Press.---------------
  • Out of the >100 cases surveyed, 27 were selected based on meeting the criteria identified above. From these 27 examples, we identify 9 general rationales for business engagement and 6 modes or tools to put these rationales into practice (see figure 1). Though our data gathering faced some limitations,6 as mentioned above, some general trends could be identified. As data table 1 (see appendix) shows, most cases have more than one rationale for business engagement. The most common identified rationales are: local community and operational risks, value chain efficiency and voluntary standards compliance. The first two refer to business concerns about supplies and sourcing areas. The latter two are generally more focused on supply chain and demand-side or market preference concerns. Businesses view these rationales as risks, and find ways to mitigate those risks through landscape approaches. These risk mitiga- tion activities (modes) tend to follow a pattern, based on the entry point for engagement, the risks and available options to mitigate those. In section III. we explore in greater detail the entry points for businesses to engage a landscape approach. Though we characterize ‘partnerships, multi-stakeholder dialogue, planning and management’ as a mode, it can also be considered as an enabling condition to a landscape approach, as it occurs to varying degrees in all modes we reviewed.
  • Replication in 3 additional geographiesConservation Coffee in priority landscapes for conservation in Peru, Colombia, Costa Rica & Panama
  • Engaged 23 communities, representing 236 farmers in coffee and carbon projectConserved 307.5 hectares and planted 210,258 treesProvided average of $100 / year in supplemental income to farmers via carbon market (average of nearly 27% of a participating farmer’s income)Developed Coffee and Climate Strategy for the Sierra Madre of Chiapas
  • Transcript

    • 1. Agri-businesses reducing climate, water and community risks: Landscape approaches in agroforestry systems Gabrielle Kissinger, Lexeme Consulting Lee Gross, EcoAgriculture Partners Presented at World Congress of Agroforestry 2014 New Delhi, India Session: Policy, innovation and global issues – Successful and scalable business models for agroforestry with quantified mitigation and adaption co-benefits
    • 2. This investigation builds on Reducing Risk (2013): 100+ 27 3 1 initiatives reviewed selected by criteria in-depth case studies: Olam: Ghana cocoa Starbucks: Coffee SABMiller: water synthesis report
    • 3. + Collaborators: Int’l Advisory Committee, 22 landscape networks & initiatives www.ecoagriculture.org or www.landscapes.ecoagriculture.org
    • 4. Businesses are increasingly at risk of “sustainability megaforces” Climate Change Poverty and Food Security Competition for resources Increasing demand KPMG, 2012. Expect the Unexpected: Building business value in a changing world.
    • 5. Address risks at scales
    • 6. Reducing risk through landscape approaches
    • 7. Reducing Risk Scoping Analysis: Modes and Rationales
    • 8. Objective: Tree crops appear to be well-suited to landscape approaches for reasons related to climate change and community/livelihood risks. Tree-based commodities may be more exposed to risks than other commodity types, and agronomic, commodity and supply chain conditions magnify those risks. Key research questions: 1. What is the value proposition of the landscape approach for agroforestry products, based on the case examples? This will provide insight on what rationales and modes are particular to landscape approaches involving tree-crop commodities (could be different from those observed more broadly in Reducing Risk) 2. To what degree do climate change and community/livelihood risks underlie company rationales to pursue a landscape approach?
    • 9. Analytical framework • Business risks/opportunities (avoided costs?) • Decision to pursue landscape approach- basis and strategic advantage (consequence or driver?) Business rationale Modes of engagement in landscape • Enabling conditions • Policy, structural, market considerations • Landscape approach attributes • How it sits in relation to core business activities • Value of engagement beyond the business unit (farmscale, product ) • Value of long-term benefits Value proposition
    • 10. Methodology Case study assessment, apply analytical framework, qualitative assessment of cases (quantitative data hard to get from businesses!) Criteria for case study selection: 1. Meets definition of a landscape approach as per Scherr et al. 2012. 2. Includes agroforestry production models (pre-existing or as part of intervention) 3. Is primarily driven by company/private sector motivations (inference is that landscape approach has value to the company and is part of the business case) 4. Provides enough information on the motivations and modes that company interests can be discerned
    • 11. Case study/project name Company 1 Olam/Rainforest Alliance Climate Cocoa Partnership for REDD+ Preparation Olam 2 Biodiversity and Cocoa farming, Ghana Armajaro, Bioversity, GeoTraceability 3 Applying Sustainable Cocoa Practices through Agroforestry in Community Forest Areas as a Tool for Achieving Biodiversity Conservation Outcomes - South Sulawesi, Indonesia Mars 4 Mars Cocoa Sustainability Strategy and "Vision for Change" partnership, Côte d’Ivoire Mars 5 Ensuring Best Practices in Cocoa-Agroforestry System for improved Livelihood and Sustainable Environment, Ghana John Bitar Co. LTD 6 Climate and Coffee: Mexico, Indonesia, Brazil Starbucks and CI 7 Reforestation in the Sierra Piura Café Direct, Cepicafe 8 Tea and yerba mate – Atlantic forest (Argentina and Brazil) GuayakÍ Yerba Mate 9 Coffee and food security in East Africa Nestlé, ECOM, Solidaridad 10 Coffee Farmer Resilience Initiative - Latin American La Roya (leaf rust) Root Capital
    • 12. Case study analysis • Discernable patterns in rationales, based on analytical framework elements? • What agronomic, commodity and supply chain risks or opportunities are companies responding to? • What modes are being applied? • Barriers to adoption (e.g. tenure in Juabeso-Bia, Ghana)? • Are the modes to address key risks that were part of company motivation to engage the landscape approach? If so, can infer there is a value proposition/return on investment (will likely not be able to quantify this!). • Assess the climate change and community/livelihood risks that underlie motivations.
    • 13. Starbucks: risks in key sourcing areas • Operational risk in future supply: climate change impacts + farmers moving away from coffee production • Importance of healthy coffee farming communities and landscapes Business rationale Mode of engagement • Partnership with CI • Solutions forged with stakeholders, com munity and governments • FinancePES, strategic loans for business development • Mitigating operational risks in supply and key sourcing areas • Leveraging capacity and expertise through partnership with CI Value proposition
    • 14. Starbucks and Conservation International: Coffee in Mexico, Indonesia and Brazil Operational Risks • Price volatility due to market dynamics. • Declining production and yields due to climate change and aging farmer demographic Reputational Risks • Environmental risks related to deforestation, greenhouse gas emissions, water use and quality • Community risks associated with farmer income and livelihoods, including food security
    • 15. Starbucks and Conservation International: Coffee in Mexico, Indonesia and Brazil Present state of optimal areas for Arabica coffee, Sierra Madre de Chiapas
    • 16. Starbucks and Conservation International: Coffee in Mexico, Indonesia and Brazil Optimal areas expected for Arabica coffee in 2050, Sierra Madre de Chiapas Source: Chiapas Gobierno del Estado. 2011. Estrategia del Sector Cafetaleropara la adaptación, mitigación y reducción de la vulnerabilidad ante el cambio climático en la Sierra Madre de Chiapas. Analysis and maps above by CIAT, 2011.
    • 17. Starbucks and Conservation International Modes: • Supply Chain Interventions  C.A.F.E. Practices • Regional Producer Support Interventions • Payments for Ecosystem Services  Chiapas voluntary forest carbon: 5,042 tCO2 sold at an average price of $9/tCO2e
    • 18. Starbucks and Conservation International Payments for Ecosystem Services licy Eng
    • 19. Starbucks and Conservation International: Coffee in Mexico, Indonesia and Brazil VALUE: • Increased understanding of critical issues facing coffee supply currently and in the future. • Fewer surprises to undermine investments in supply chain development and regional producer support. • Ability to achieve and report on results at a concentrated scale. CHALLENGES: • Different language than that used by companies. • Timelines for investment in landscape approaches is years (8-15 yrs in Mexico and Indonesia), yet business planning is < 5 yrs. • Lengthy and non-integrated commodity supply chains do not lend themselves to landscape thinking. • Requires looking at multiple commodities to maximize resiliency of the landscape and communities. • Difficulty calculating a direct ROI to the company on the investment due to external factors. • Requires long-term commitment to sourcing area to justify investment.
    • 20. Cocoa: Sector-wide risks Mixed production potential due to pest, disease and soil fertility Source: Mars
    • 21. Challenges in current cocoa supply chain Source: Mars
    • 22. Landscape risk: cocoa Source: Mars
    • 23. Mars: modes to address risk • Climate, yields, inputs and farm gate prices are all important determinants of supply and price risk. Solutions: • Competitiveness (price, productivity) • Intensification (germplasm, fertility) • Crop diversification (farmers cultivate multiple crops-- agroforestry) BIGGEST AREA OF NEED
    • 24. Climate Cocoa Partnership for REDD+ Preparation, Ghana Description: Olam, in partnership with Rainforest Alliance, is piloting a landscape approach to mitigate business risk in their cocoa value chain through a novel program in Ghana emphasizing cocoa agro-forestry production systems, certification and REDD+ Goal: to ensure that the climate-friendly farm level practices are escalated and replicated to a landscape and forest management level Hypothesis: that the resilience of the cocoa production systems increases with increasing forest cover of the surrounding lands and within the cocoa farms themselves Partners: Olam International Ltd., Rainforest Alliance, Ghana Forestry Commission …..Timeline: 2011 - 2013 Timeline: 2011-2013
    • 25. Olam: Rationale for intervention • Reputation: opportunity to be a first-mover company to bring climate friendly cocoa to the market; • Community concerns: income opportunities from carbon markets for farmers by increasing carbon stocks; • Value chain efficiencies: 1. option to build resilient supply chains when farmer communities sensitized and starting to understand the concept of managing a landscape as opposed to managing farms in a sustainable way. 2. opportunity to break the link between cocoa production and deforestation ; • Reduce operational risks due to climate concerns and resource security; • A learning exercise to change and improve corporate programs.
    • 26. Olam: modes of intervention • GAP training based on SAN Standards • Forest and Landscape Governance • REDD+ activities • Sustainable Forest Management including Agroforestry Systems • Small and Medium Scale Forest Enterprise Development
    • 27. Thank you! Gabrielle Kissinger Principal, Lexeme Consulting gabrielle@lexemeconsulting.com