Food companies are under increased pressure to deliver healthier products. Small farmers across the world are having a difficult time making ends meet. And everyone is worried about food security and the future of farming during this time of rising food prices and climate volatility.
One organization focused on bringing opportunity to farmers in Latin America is the Inter-American Development Bank (IDB), which has worked on sustainable development projects throughout the region since 1959. One of IDB’s programs is the Opportunities for the Majority (OMJ) Initiative that organizes, promotes and finances businesses that bring together privately owned companies, local governments and communities. One of the countries in which the IDB is working is Mexico, where local farmers are able to secure credit in order to grow profitable crops. And one company participating in the project is PepsiCo, which has committed to purchasing sunflower oil sourced from these farmers.
During the BSR Conference earlier this month, I had the chance to talk with Beth Sauerhaft, a senior manager for environmental stewardship at PepsiCo. Sauerhaft explained that as Pepsi’s Mexico division searched for healthier ingredients for its snack foods, sunflower oil became a more attractive option. Importing the oil was too expensive from even neighboring countries, so the company started to explore the benefits of working with small farmers.
Despite the massive amount of produce exported from Mexico to its North American neighbors, most large farms are still concentrated in the northwestern area of the country in the state of Sinaloa; many farms are still small, and the agrarian reforms of decades ago have a ways to go to improve life for more farmers and their families.
Eventually the partnership between IDB and PepsiCo Mexico will result in 50,000 hectares that will provide enough sunflower seeds to generate 40,000 tons of sunflower oil. According to PepsiCo’s Sauerhaft, the company will purchase as much as US$52 million worth of sunflower oil over the next seven years from at least 850 farmers. PepsiCo and the IDB will also provide money for training and micro-loans through local bank Agrofinanzas, which will allow farmers to purchase needed materials including irrigation equipment and fertilizer. Most of the farmers, who previously were relegated to growing low yield and unprofitable crops, will be in the central Mexican states of Jalisco and Durango.
PepsiCo finds itself having a role in the sunflower’s reemergence as a lucrative crop in Mexico. The crop has a 4,000 year history in Meso-America, but currently is only grown on a few farms for snacks, cut flowers and decorative purposes. The oil will be used in PepsiCo Mexico’s snacks that are part of its Sabritas and Gamesa brands. If this program succeeds, look for more food companies to view the IDB-PepsiCo partnership as a model for including small farmers in the supply chain while offering healthier snacks and more sustainable food to its customers.