session 6.6 agribusiness reducing climate, water and community risks
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Agri-businesses reducing climate, water and community risks: Landscape approaches in agroforestry systems
Gabrielle Kissinger, Lexeme ConsultingLee Gross, EcoAgriculture Partners
Presented at World Congress of Agroforestry 2014New Delhi, India
Session: Policy, innovation and global issues – Successful and scalable business models for agroforestry with quantified mitigation and adaption co-benefits
This investigation builds on Reducing Risk (2013):
100+ initiatives reviewed
27 selected by criteria
3 in-depth case studies:
1 synthesis report
Olam: Ghana cocoaStarbucks: CoffeeSABMiller: water
www.ecoagriculture.org or www.landscapes.ecoagriculture.org
+ Collaborators: Int’l Advisory Committee, 22 landscape networks & initiatives
Businesses are increasingly at risk of “sustainability megaforces”
KPMG, 2012. Expect the Unexpected: Building business value in a changing world.
Climate Change
Poverty and Food Security
Competition for resources
Increasing demand
Address risks at scales
Reducing risk through landscape approaches
Reducing Risk Scoping Analysis: Modes and Rationales
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?
Analytical framework
• Business risks/opportunities (avoided costs?)
• Decision to pursue landscape approach- basis and strategic advantage (consequence or driver?)
Business rationale
• Enabling conditions
• Policy, structural, market considerations
• Landscape approach attributes
• How it sits in relation to core business activities
Modes of engagement in landscape
• Value of engagement beyond the business unit (farmscale, product)
• Value of long-term benefitsValue
proposition
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
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) areas
Root Capital
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.
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 landscapesBusiness
rationale
• Partnership with CI
• Solutions forged with stakeholders, community and governments
• Finance- PES, strategic loans for business development
Mode of engagement
• Mitigating operational risks in supply and key sourcing areas
• Leveraging capacity and expertise through partnership with CI
Value proposition
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
Starbucks and Conservation International:Coffee in Mexico, Indonesia and Brazil
Present state of optimal areas for Arabica coffee, Sierra Madre de Chiapas
Optimal areas expected for Arabica coffee in 2050, Sierra Madre de Chiapas
Starbucks and Conservation International:Coffee in Mexico, Indonesia and Brazil
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.
• 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
Starbucks and Conservation International
Modes:
Starbucks and Conservation InternationalPayments for Ecosystem Serviceslicy Eng
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.
Cocoa: Sector-wide risksMixed production potential due to pest, disease and soil fertility
Source: Mars
Challenges in current cocoa supply chain
Source: Mars
Landscape risk: cocoa
Source: Mars
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
Hypothesis: that the resilience of the cocoa production systems increases with increasing forest cover of the surrounding lands and within the cocoa farms themselves
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+
Climate Cocoa Partnership for REDD+ Preparation, Ghana
Timeline: 2011-2013
Partners: Olam International Ltd., Rainforest Alliance, Ghana Forestry Commission …..Timeline: 2011 - 2013
Goal: to ensure that the climate-friendly farm level practices are escalated and replicated to a landscape and forest management level
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.
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
