***This interview is an extract from the SAI Platform Annual Report 2020. Go to the Annual Report 2020.***
A sustainable, resilient, and thriving agricultural sector is at the core of our vision. The events of 2020, and specifically the impact from COVID-19, made it clear to us all what components of agriculture, food production and supply chains were critical to that resilience. Important questions were raised and discussed about the real meaning of resilience in agriculture supply chain management and how we can safeguard it for the future.
To address these issues, our Communications Manager Brigid Norde-McAleer presided over an online conversation between Hans Jöhr, former Corporate Head of Agriculture at Nestlé and Honorary President of SAI Platform, Shazia Hussenbux, Global Sustainable Sourcing Lead at Oatly and SAI Platform member and Ulrike Sapiro, Senior Director Sustainability and Sustainable Agriculture at The Coca Cola Company and former SAI Platform President.
Brigid: Ulrike, can I start by asking what resilience means to you and how it links to sustainability in agriculture and the agri-food supply chain?
Ulrike: Before COVID-19, we spoke about resilience in relation to what we saw as the slow, rolling but accelerating wave of climate change and its impact on the context in which we and our supply chains operate. At that time, resilience sat on three pillars for us. First, establishing how far we need to anticipate and adapt policies, regulation and economics in relation to reducing carbon emissions. It’s about preventing the tidal wave from hitting us. Second, preparing for the change that will happen anyway. Here the question is how we anticipate this by future proofing our sustainability programmes and supply chains to really stay ahead of the climate change curve.
Third, bouncing back from a crisis like a disaster, event, drought or a pandemic. Agri-food supply chains are really at the heart of these challenges, be it as a major carbon emitter or water user or in terms of productivity and community vulnerabilities. We’ve already seen these happen locally, but COVID-19 is a truly global crisis.
Brigid: Hans, what does resilience mean to you and how is it linked to sustainability in agriculture?
Hans: I agree with Ulrike that resilience is about anticipating and mapping out risks and ensuring continuity from farm to table. For me, it’s about developing new strategies, tools and instruments that can overcome disruption to manage these unexpected events or stress factors. Resilience is part of managing factors such as crop and animal diseases, climate change,
food safety, political risk and so on. We have to consider what tools we can use at farm
level. For example, micro-insurance for smallholders and financial support for production continuity as well as focusing on maintaining or regenerating soil health. Then we must expand our perspective from local to regional to international levels. With COVID-19, we have a clear opportunity to ask the simple question: how can SAI Platform contribute when it comes to resilience, robustness and continuity, and feeding our world?
Shazia: Oatly is a small company compared to Coca-Cola and Nestlé but, especially as we’re moving from very local to global value chains, we have to look at embedding resilience now. This means we must anticipate potential risks. To me, that means working with data which, if it’s the right data, is like the new oil. But that’s only part of it. I don’t think we can build resilience alone. Even if we identify the risks ourselves, we need to learn from and collaborate with other players. This is where I see the benefit of SAI Platform. Companies like Oatly will not only benefit through learning from existing best practices but also find the partners to drive initiatives towards a common goal.
Brigid: What were the immediate changes you had to make as a result of COVID-19 Shazia?
Shazia: It is surely fair to say that with an increased speed of growth, we need to get better at anticipating events and crises and maintaining business continuity. Basically, activities at different layers of the supply chain need to be implemented to build long term resilience.
Brigid: So, in this sense COVID-19 has been a stress test. Ulrike, what are the immediate changes you’ve had to make and the lessons you’ve learned?
Ulrike: One of the big lessons learnt has been to understand the connections between impacts on nature and human health. I credit SAI Platform with helping companies and members to understand this. I’m thinking in particular of the webinar with Jason Clay this year. COVID-19 made it clear that it does matter if, for instance, the Irrawaddy River Dolphin disappears. It could be a sign of something that’s going to affect humanity. This is a big learning point and something we need to take with us so we can do better. In terms of immediate effects, we had to reestablish protecting our people as a priority. We’ve also had to adapt considerably in other ways. For example, our routes to market have completely changed. Before COVID-19, we made a huge amount of our volume and profit from bars and restaurants. This has shifted to pretty much retail only, with more online commerce. There have also been changes in consumer demand. Early on, for example, our juice sales went through the roof while other products suffered. We had to work with suppliers to adapt to demand while navigating lockdowns, border closures and real disruptions to trade. This made it clear to us how much we need strong, connected supply chain relationships.
We, and other big companies, provided huge support to our supply chain to keep them resilient. Leveraging partnerships is key to enabling us to bounce back from the crisis. Then the question is: what have we learned that we can take forward? I’d say it’s all about not going back to business as usual, as much as we want to. We need to build on the work done by policymakers covering regulations, investment in new technologies and innovation to make sure we move to a new and better normal.
Brigid: Hans, could I have your views on interpreting the virus as a stress test as well as on what can and needs to be improved for the long-term?
Hans: I agree with Ulrike about overcoming disconnection in the supply chain. I see a clear disconnection even in the food industry, with people in companies not knowing where raw materials are coming from and how they’ve been produced. This year has been a tremendous wake-up call as people wondered why they’ve not been able to have things they’ve always taken for granted. This feeds the growing awareness of the need for resilience. People in companies are thinking about how they define resilience for each function in a company and part of the supply chain. It wasn’t the case a year ago. Another big insight is that companies like Nestlé are appreciating the benefits of sourcing locally, really knowing and supporting farmers.
There was no disruption to Nestlé’s Farmer Connect Programme, which connects the company directly to farmers. Helping farmers become and stay resilient in their production systems protects your supply chain and ensures continuity. Consumers are also increasingly wanting locally produced food.
Brigid: Shazia, you’re nodding at this.
Shazia: I was reflecting on what Ulrike and Hans said about consumer interest in where their food is coming from. People already want to know more about the impact of producing and bringing it to their table. The pandemic has accelerated that trend. It’s our responsibility to guide more people in this direction. For example, as Oatly grows, so does its supply chain and the underlying complexity, and with that comes a greater need to understand exactly what’s happening along the supply chain. This will not only help manage risks but also build resilience and tap into new opportunities and innovations.
Brigid: So, would it be fair to say comparing the pandemic with the climate crisis is a little like comparing chalk and cheese? Hans, how is the pandemic different from the climate crisis?
Hans: It’s another, totally different, category of risk. Climate change is still about mid- to longterm impact. COVID-19 is right here, right now.
Ulrike: I agree it’s a different kind of risk. But COVID-19 is showing us what we’re capable of in tackling climate change. Before the virus, we were all looking at the data and saying ‘Yes, we should do something but it’s so hard’. Now we know that businesses and governments can move fast when they need to. To Shazia and Hans’s point, now we know we can, and should, be aware of where the ingredients in our food come from, we can communicate this to consumers with transparency. This knowledge is extremely valuable when it comes to looking at climate change afresh.
Brigid: Looking at farmers as primary producers, how can they become more resilient and how can companies and farmers help each other?
Hans: It’s really about what we can all do together. I think you have to start with the bigger picture: what is a resilient mid- or long-term food system composed of? What should we focus on? Then you drill down to the farm. This comes back to what we’ve emphasised with SAI Platform – good agricultural practice and proven quality assurance. We look at the pain points, start to eliminate critical processes that are no longer acceptable and promote climate smart and regenerative agriculture. Then we drill down, crop by crop, production system by production system, region by region. SAI Platform is in a very strong position here. We’re out in the fields so we know what’s going on. We have the outreach to change the processes of millions of farmers and the supply chains of our members.
Ulrike: How to make farmers more resilient is the heart of the matter, right? Here, I agree with Hans that SAI Platform is in a great position to help. Although all food companies have a different approach to their supply chain, they can come together with suppliers and arrive at a common point of view as to how to create resilience along with more productivity and income. Our role is to leverage our position, to support farmers and suppliers from the demand side while driving change. The second big challenge will be for all of us to figure out what to grow. Climate change means that, for example, we won’t be able to grow coffee in the same areas
we do today. We know that corn production in the USA and alfalfa in the south-west of the country, crops that are water intensive, will not be possible in the long-term. How we do we adapt together? There’s a systemic change we need to move towards.
Brigid: And Shazia?
Shazia: In November I was part of the SAI Platform International Executive Programme on Sustainable Sourcing and Trade and I realised that Oatly doesn’t have a close connection with our farmers. A French farmer who was part of the Programme, who’s driving a lot of sustainability issues, said something along the lines of ‘Ask us what we need from you. How do you want to collaborate?’ Although I’m new to the food industry, sometimes I feel companies are pushing through initiatives and requirements without asking or talking to farmers or being out in the field with them. It appears to me that there’s no one size fits all. After all, they’re the people who know their land and crops and what they want to achieve. It should be a two-way process. And how can SAI Platform and its members help support them and make them more resilient?
Brigid: You’re not alone in saying that you feel distant from the farmer, Shazia. Farmers also tell us they feel distant from companies.
Hans: You’re absolutely right, Shazia. Every farmer’s situation is different, and you can’t normally compare one with the other. No matter how much we attempt to standardise quality, ingredients from farms that go into products will always be slightly different. Brand gurus miss the point a little when they emphasise consistency. But, while we can’t and shouldn’t be overly concerned with consistency as long as we have quality, we should help train farmers on the big issues such as biodiversity. While making sure that everything we do is very local and married to the skills and competencies of the farmer. We should also be helping farmers to respond to consumer demand, acknowledging the trend away from animal proteins towards vegetable.
Brigid: I agree, the average consumer definitely wants to know more about where their food is coming from. Can I ask one last question: what do you think have been the opportunities arising out of everything we’ve faced this year?
Hans: Home consumption went up tremendously because restaurants were closed. People had more time to think about food. This gives us an opportunity to educate them which will, in turn, strengthen responsible brands.
Brigid: And for you Ulrike?
Ulrike: The first opportunity I see is to capitalise on the in-your-face realisation that scientific predictions relating to environmental change affecting humans are not science fiction. They’re forecasts and should be treated as such. The idea that COVID-19 is a Black Swan that could never have been foreseen is just wrong. Pandemics have been on the global risk register for years, but we ignored this. I take it as a positive sign that there have been plenty of new insights and real guidance on how to take action coming through this year. If I can beat my own drum, Coca-Cola and WWF published the Rising to Resilience report in November 2020 that explored how to build resilience through water stewardship and guidance on climate for business based on practical examples of our work in Central America that I feel offers practical help. We’ve also seen suppliers and processors innovating, coming up with new tools and using data effectively.
Brigid: And finally, Shazia?
Shazia: One thing that’s grown as a result of COVID-19 is digitalisation, for example e-commerce, not just on the consumer side but with farmers as well. The question is how can we leverage that data to be more transparent and open in everything we do and empower consumers in their buying decisions?
Brigid: Thank you all very much. I’ve thoroughly enjoyed our conversation and found it really informative so thank you once again for your time today.