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Olam international: Why Sustainable Rice?
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Nov 9th, 2016
Why Sustainable Rice?
Olam International Ltd
Olam Rice will
do
sustainability
not only
because it is
smart for
business but
because it is
the right thing
to do
25th April 2017
2. Global warming
Why we are doing sustainability
1
• Other impacts include rising ocean
levels, stronger weather events
(typhoons, floods), salinity levels
change
• Comes at the cost of other
commodities (e.g. wheat, corn cannot
be grown)
• CO2 and high temperature from global
warming affects rice cultivation
• Warmer temperatures theoretically shifts
rice cultivation north
• This shift will not be fluid and may affect
supply chains
3. Water risks
Why we are doing sustainability
2
• Risk of water stress coincides with rice-producing
regions, and will affect future production
• E.g. Damming of the Mekong
• E.g. Rising ocean levels change salinity of soil in
Ganges Brahmaputra delta in Bangladesh
• Rice production is
heavily dependent on
flood irrigation
• Relies on fresh water
from open water
sources (rivers,
aquifers, rainfall) to
maintain flooded
conditions
Source: WRI Aqueduct
4. Land degradation and soil contamination
Why we are doing sustainability
3
Soil Degradation (N, P, K)
Pesticide Residue
• According to the FAO,
some rice producing
regions are heavily
degraded or have
contaminated soil
• Chemical inputs from
conventional rice
agriculture can add to this
problem
• Aside from yield, food safety is always a
central concern
• Policies such as stringent pesticide
residue limits are increasingly
implemented to protect the consumer,
reflecting public priority/concern
Sources: FAO and Britannica
5. Supply & Policy Risks
Why we are doing sustainability
Population and Demand
• Population growth, especially in rice-
consuming regions, will boost rice
demand as a staple food (non-
substitutable)
• Risk of global hunger if supply cannot
keep up with demand
Shifting Ag policies
• Changes in national policies for rice
production will affect supply
Trade Policy Changes
• Trade Restrictions (e.g. sanctions,
bans)
• Quality Restrictions (e.g. increasing
residue limits
0
100000
200000
300000
400000
500000
600000
0
2E+09
4E+09
6E+09
8E+09
1E+10
1.2E+10
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
MetricTonnes(000s)
Population
Population and Rice Consumption
Population
Rice Consumption
6. What changed, why now?
5
• Reduced cost of education
(farmers, consumers)
• Rapid dissemination
of information/content
• Data collection is
accessible
Falling costs of new technology
• Improvements in income: Millennials
are smart and suspicious
• Credibility/transparency
and innovative business
practices are prized
Demographic changes
Policy Changes
Olam
• Engagement of
private sector
• Private sector can provide access to
markets and scale projects quickly
Rise of Public-
Private Partnership
• Wide footprint of
commodities and
geographies
• Unique ability to reach
small-holder farmers
and learn from prior
attempts • Gov’t policies steered
toward better practices in
consumption and production,
• Policy changes are reflecting voters’
priorities, value of selling visibilty
has increased
7. Olam follows WRI’s model for sustainable
development
6
• Define sustainable
solutions
• Develop monitoring
tools (OFIS)
• Develop programs to
improve farming
systems
• Form partnerships with
national government
and international
organizations
• Verify science in small
pilot projects prior to
scaling solutions
• Move tested
solutions to a larger
scale
• Improve rice
farmers’ livelihoods
8. Count It: Identifying Outcomes
Step One
Olam works with UN Environment and
IRRI through SRP to define steps
forward:
• Standards: Identify Outcomes (how
do we know when it is wrong and
what we should look out for?)
• Indicators: Monitoring and
Evaluation (how do we know if it is
working?)
70 members
Private, Governmental, CSO, NGO and
Farmers
Efficient Standards
8 areas, 46 criteria
Productivity, Food Safety, Water, Nutrients
and Pesticides, Biodiversity, Community,
GHG, Health and Safety, Labor Rights, Child
Labor, and Ethics.
12 Performance Indicators
Profitability, Labor Productivity, Yield, Food
Safety, Total Water Productivity, Nutrient-
Use Efficiency (N, P), Pesticide-Use
Efficiency, GHG Emissions, Health and
Safety, Child Labor and Women’s
Empowerment
9. Change It: Improving Outcomes
Step Two
8
Shared Vision: Improving farmer livelihoods
and the sustainability of global rice sector
1. Use SRP’s scoring system as a baseline
2. Change the practice: Joint investment and
collaboration in materials and baseline study
to make changes in current farming practices
3. Monitor the change: Olam introducing an IT
solution (OFIS) to verify or reject whether
outcome-based approaches require
edits/improvements
4. SRP is a process that requires collaboration
and innovation to determine a path towards
improving outcomes
SRP
Thai Rice Dept
Extension Services
Pilot Project in Ubon
Ratchathani
70 farmers in 1st year
GIZ
Training and Expertise
Olam
Supply Chain Management
10. Scale It: Incentivizing Outcomes
Step Three
To scale, Olam needs partners that will improve farmers’ livelihoods:
Olam Livelihood Charter