Sustainable Futures: Olam International
Farming is becoming less prevalent in developing countries, but it remains one of the world's most important occupations. How is agri-business Olam promoting sustainable and economical farming practices? Emily Andrews investigates
"There's so many colliding developmental issues that meet around food and agriculture," says Briony Mathieson, the global head of corporate and sustainability communications at Olam International. This puts Olam, an agri-business that operates from 'seed to shelf' in a potentially influential position.
In Olam's 25th year, sustainability is clearly central to its brand profile. But Mathieson says that sustainability has been prevalent in the organisation since its beginning, even if the actual word 'sustainability' was not in use. She says, "I would say that sustainability was important right from the very beginning. Even at that stage, for us to ensure that we had a long-term supply of products, we had to work with local communities." For Olam, being a sustainable brand means adhering to principles that will ultimately help to secure the future of the business and the wider industry.
Olam began as a trading company that invested in the necessary infrastructure for getting garmed goods, such as cocoa, coffee and cashews, from remote locations to ports. As it began to work more closely with the farmers that grew these products, Olam developed an ethos of giving back to the communities in which it operated. in 2005, after Olam moved to southeast Asia and was launched on the Singapore Exchange, the ethos developed into one of mutual benefit; the company’s contributions should always have a business benefit beyond any philanthropic motivation. This was the final step towards becoming a sustainable brand and business. Olam continues to expand upon this ethos with new initiatives that are intended to improve prospects for the entire industry, such as collecting data to help both smallholders and governments catalyse food production and thus make sure that everyone has access to the food they need to live a healthy lifestyle.
“I would say that sustainability was important right from the very beginning. Even at that stage, for us to ensure that we had a long-term supply of products, we had to work with local communities”
In 2010, Olam launched the Olam Livelihood Charter (OLC), its own certification, a set of guidelines which formalised its commitment to help support farmers in rural communities. With its own certification there was no more need for Olam to go through third party certifications, such as Fairtrade and Rainforest Alliance, with their associated costs.
The charter is intended to benefit the farmers and the manufacturers and suppliers alike.
The charter tackles a significant problem for Olam and other sustainable brands; while consumers want sustainable products, they are not always willing to pay the price for them, which means that the retailers are also less likely to purchase the product at a higher price. Mathieson says, “The classic manufacturers put the pressure on us, but we have to do the right thing by the farmer, that farmer needs a livelihood, so we end up slightly forced in that dynamic.” Abiding by its own certification allows Olam to cut costs. Besides, says Mathieson, “Third party certification is a transitory stage only until the growers themselves begin to adopt these practices as business as usual.”
There are now 350,000 farmers enrolled in the OLC and, in 2014 alone, Olam provided them with $186m in short, medium and long-term finance loans, at 0% interest, enabling them to invest in their futures. In developing countries, Olam also provides farmers with business training to help them get the best quality and highest yield out of their crops. By investing in farmers, Olam improves its brand reputation among them and increases the likelihood that the farmers will approach Olam with future business. The support also keeps farmers in the farming industry at a time when the profession is losing popularity due to the urbanisation of developing countries. It is essential for both Olam’s business, and for the wider agri-business industry, that farming remains a strong and economically-viable occupation.
Mathieson says, “We’ve made a difference in the agriculture sector because we’re at the farm gates, unlike our competitors, who are maybe 100 years old, and who are buying from middle men, or in ports or just from their desks in international offices.”
Within the food industry, it is only a matter of time before all businesses will have to take sustainability issues into account. In the oil and gas sector, the current, industry- wide model is non-sustainable, which will ultimately result in the shortage of a product that people rely on. Businesses in the food and agriculture sectors will have to change their practices eventually, and Olam puts itself in a good position by being among those who are taking the first steps.
Ultimately Olam’s modern sustainability objectives stem from one of the brands founding philosophies: to help the farmers that supply the goods and to serve both ends of the supply chain. In order to stay true to those defining brand characteristic, Olam needed to take sustainability seriously, and it is rising to that challenge.
