Innovations to enable effective buyer-farmer engagement in commodity sectors: a case study from Indonesia
Firms that buy commodities from sectors dominated by smallholder farmers often need to support farmers, to raise productivity, improve quality, and ensure that production practices are sustainable. Providing blanket support to large numbers of smallholders is costly. It can result in firm’s investment being spread too thinly to be effective. Commodity buyers need to find smart ways of identifying and engaging with smallholders to ensure that support is targeted, manageable, affordable, and effective.
This case study examines the experience of the Sustainable Cocoa Production Program (SCPP), which worked through a public-private development partnership (PPDP) to improve production and build sustainable supply chains in Indonesia’s cocoa industry as it faced global and domestic challenges. Seven development organisations and eleven private cocoa buyers contributed approximately
USD 55m to the PPDP. SECO and Swisscontact were, respectively, the ‘lynchpin’ funder and implementing organisation throughout.
SCPP focused on establishing, strengthening, and sustaining four key market functions: farmer training, traceability, planting material, and finance. It trained 160,000 farmers, enabled the integration of 79,000 cocoa farmers into sustainable, certified supply chains, generating USD 927,000 of certification premiums, and increased smallholder yields by 52% and raised their incomes by 75%.
SCPP identified and developed two innovations that aimed to enable commodity-buying firms to identify and engage with farmers in a more focused, efficient, and effective manner: FarmNetX and Transformative Coaching.
FarmNetX is a decision-making tool to help sustainability managers improve the performance of their traceable supply chains by increasing the adoption of innovations and recommended practices among their primary producers. It supports data-driven strategies to transform traceable networks into trusted, innovation networks. It works by identifying key influencers in their farmer networks so that sustainability managers can focus their investments to upgrade these influencers, instead of the whole network.
Transformative Coaching (TC) helps firms improve their farmer coaching outcomes. It is a participatory coaching approach that recognises that farming is often family business and inseparable from the household. Farmers, their spouses, and other adult members of the household receive coaching. TC combines a performance coaching method called GROW (Goal, Reality, Option, and Way Forward) and a participatory method called GALS (Gender Action Learning System).
SCPP’s experience in promoting innovations to enable firms to consolidate and manage their supply chains, offers lessons that are applicable to other commodity sectors that rely on smallholder production.
- The combination of FarmNetX, to understand and harness farmer networks, with TC, to provide farmer support more effectively, presents a opportunity to enhance the efficiency of efforts to improve adoption rates among farmers.
- Opportunities are missed to use simple data analyses and metrics that can generate insightful information for decision making.
- With an incremental investment, commodity-buying firms can tap into the wealth of their existing farmer data and use it for more targeted, effective, and efficient supply chain upgrading.
- TC demonstrated that behaviour change among farmers could be more effectively induced when the underlying motivation and vision of households are addressed.
- A separation between procurement and sustainability departments can lead to missed opportunities to improve results for farmers and for the supply chain.
- Staff managing commodity supply chains have limited opportunities or capacity for analysis and experimentation.
- Commodity buyers can enlist specialised advisory services to fill this gap or build capacity in-house.