"Well? Is it working?" In the end, that’s the question we want to see answered for our chain projects. Are all our efforts to do business in an inclusive manner producing the results we are hoping for? And how do you measure those results? These questions might sound obvious, but the answers not so much.
What you don't measure, you can't manage or adjust. That is why it is important, when doing business in an inclusive manner, to establish suitable indicators and apply measuring instruments that map the performance of the business relationship.
The value chain projects Rikolto and Colruyt group have engaged in, revolved around more than just the business proceeds. The impact is also found at the level of the organisations involved. What new knowledge is generated? And does that knowledge also change the day-to-day practice of those organisations, bringing real change in the food system within reach? These are the questions we are looking at here.
The final impact of a chain project is largely determined in the initial phase. "We choose products that generate a sufficiently large volume for us as a retailer and that have a significant share in the producers' income," says Mieke Vercaeren of Colruyt Group.
"At the same time, we want to avoid a farmers' organisation becoming too dependent on one buyer," adds Joris Aertsens of Rikolto. "Our aim is to sell a maximum of 20 to 30% of the production to Colruyt Group.”
Not only do we want to avoid a chain project increasing rather than reducing the vulnerability of producers, we also want to avoid negative effects on the environment. "A tool we have developed for this purpose is a template for pre-study," says Philippe Toussaint of Colruyt Group. "It allows us to scan a number of possible ecological pain points: soil, water, natural resources, climate impact, biodiversity and landscape. Rikolto developed a specific detection list for rice, coffee and cocoa, based on the methodology of the Sustainable Rice Platform (SRP)".
On the surface, monitoring is focused on the proper functioning of the chain. We monitor whether production is going according to plan, how many farmers are involved, whether the proposed changes are on track at the level of the farmers and how sales are running in the shops.
"In order to map the progress of farmers' organisations in a standardised way, we have been using the SCOPE Insight tool for several years now," says Joris Aertsens. Rikolto helped to develop this tool, which has the ambition to be able to determine across different contexts what stage a farmers' organisation is at: Is it ready to enter formal markets? To apply for certification? Is the organisation bankable and therefore ready to take out a loan?
In some chain projects, targeted KPIs were specified, linked to the specific objectives of the project. In the case of chocolate from Nicaragua, there are indicators that measure the inclusion of young people (e.g. how much of the cocoa purchased comes from young farmers' plantations) and indicators for the application of climate-friendly agricultural techniques.
To make the inclusion of small producers measurable, Rikolto developed the Inclusive Business Scan a few years ago. On the basis of a large number of collected micro-experiences from farmers, the extent to which they feel part owner of the chain can be assessed. "In the chain projects, we have not yet applied this evaluation method in detail," says Joris Aertens, "but you can say that we have applied the core by analysing in evaluation meetings with the partners, based on concrete experiences, to what extent they experience participation and how this can be improved. ”
One of the challenges to increase the impact at chain level is to increase the volumes sold. "For chocolate from Nicaragua, for example, we are still below our ambition," says Karen Janssens of Colruyt Group. "In 2017 we bought 12 tonnes of cocoa, in 2019 we bought 16 tonnes. So it is evolving positively, although it remains a challenge to maintain sales in the shops. The most eye-catching is the quinoa from Peru, where we were able to increase the volume fivefold in 2020. ”
In addition to the results at product chain level, we also need to look at the impact of the chain projects on the organisations involved. That is where the 'higher' reason for their existence lies. In the first article of this series, we outlined how Rikolto wants to learn how to connect vulnerable farmers with modern markets. Colruyt Group sees the chain projects as a spearhead to make its own brands more sustainable and as a lever to structurally tackle problems such as poverty, child labour and environmental problems. Today, chain projects stand as a fully-fledged instrument alongside certification systems, specifications and the calculations of the ecological footprint.
The impact of the collaboration must therefore certainly also be sought in the new knowledge that has been built up within the organisations involved. This is undeniable. "Where in 2005 it was still very new for Rikolto to work directly with a company, it is now evident in every project, for all our colleagues worldwide," says Joris Aertsens. "Whether in Belgium, Vietnam, Nicaragua or Tanzania, we now have in-depth collaborations with retailers and processors everywhere. The pioneering work with Colruyt Group was the seed from which that competence grew. ”
In 2005, it was still very new for Rikolto to work directly with a company; now, it is evident in every project, for all our colleagues worldwide. Joris Aertsens Rikolto
The same goes for Colruyt Group. The capacity to set up close long-term partnerships with chain partners led to numerous new initiatives, also in Belgium. "Think of the collaboration with Belgian apple growers around the introduction of a new variety," says Mieke Vercaeren, "or the cooperation with dairy farmers, cattle farmers or potato growers for more transparent chains with alternative price mechanisms. "Other retailers are now also entering into direct partnerships with farmers' cooperatives. "Look at what Lidl is doing for its Way to Go chocolate bar in collaboration with Rikolto and farmers in Ghana," adds Joris Aertsens.
This knowledge was built up both formally and informally. "In the first instance we learned by doing and gradually learning", says Karen Janssens of Colruyt Group. "One step at a time, we have poured those lessons into processes, performance studies and evaluation systems. In the future, we will be able to build in an even more structural reflection mechanism in order to deal more consciously with the accumulated knowledge.”
For its own staff, Colruyt Group created a publication based on this article series. You can browse through them online via Issuu: Dutch - French - English.
Furthermore, the impact of the chain projects can be increased by allowing the experiences to flow more widely within the group. "Now the knowledge is primarily with the sustainable sourcing team and some of the purchasers who were involved," says Philippe Toussaint. "But there are many other purchasers who have ideas and potential to develop a chain. ”
"It is now our ambition to set up structural actions to involve all our purchasers", says Mieke Vecaeren. "If we can combine the new knowledge of the chain projects with the know-how of all our purchasers, we are only at the beginning of what is possible. This reflection and documentation exercise is a step towards realising that ambition. ”
1. The project must have added value for each chain partner.
This does not have to be the same for every partner. For some, the added value resides in the process, for others in a more secure sales channel. But without a clear 'win', there is no motivation to persevere on difficult moments.
2. Ownership and leadership must be reflected at all levels of the chain.
From the retailer to the farmers' organisation: you need people who have authority within their organisation and stick their necks out. You should at all times avoid that the whole business only depends on 1 or 2 people, because that makes the project vulnerable.
3. Coordination and exchange are crucial.
Coordination and exchange largely determine the dynamics of the project. Coordination of the chain itself is best done by retailer. Coordination of activities at the production level is best left to the party that supports the farmers' organisation (Rikolto, Solid, Enabel,...).
4. The producers' organisation must be strong enough for exports.
This requires meticulous coaching. You should also beware of a too rosy presentation of the state of affairs on the producers' side. The drive to create a new sales channel sometimes leads to too much optimism.
5. Ensure shared understanding about the positioning and added value of the product.
Farmers need to understand how their product is brought to the customer and that there must be a market. Retailer buyers need to be aware of the conditions in which farmers work and the concerns they face.
6. Constantly build an atmosphere of trust and openness.
Personal contacts are the engine of trust. A physical kick-off moment speeds up this process considerably. In addition to the many informal contacts to take care of operational matters, it is best to set up a number of formal meetings each year in advance, in order to evaluate the broad outlines.
7. Start with a clear business case.
A thorough performance study that systematically identifies strengths and pain points makes it possible to avoid starting a shaky business purely out of conviction. There must be a "business case" for all partners.
8. Learn to work with external funding to finance innovation.
Many "pre-competitive" investments cannot be financed from the market. Fortunately, there are financiers - such as IDH and the Belgian Development Cooperation, Enabel - who can help. Funds that have a link with one of the chain partners, such as Collibri Foundation at Colruyt Group, can also play this role.
9. Work step by step towards scaling up.
We learned new things in each and every value chain project, because there is no ready-made recipe. Learn with limited volumes. Once it's running smoothly and confidence is good, things can go fast. In the chain project around the quinoa from Peru, the volume increased fivefold after 2 years.
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