In the early months of the coronavirus pandemic, plenty of press was paid to empty store shelves and disruptions in the global food supply. The impact on smallholder farmers within the agricultural value chain was less widely reported, but arguably even more severe: In a July survey of 2,400 smallholder farmers growing cocoa, coffee, and other crops in Africa and Indonesia, 70 percent reported having less income than usual, and over half said this affected their ability to feed themselves and their families.
As restrictions on the movement of people and goods drove down commodity prices in many parts of the world, farmers were forced to sell their wares for less. Those same restrictions coincided with planting seasons for staple crops in regions including sub-Saharan Africa, resulting in more lost income for farmers. Missed planting periods also carry potentially grave food security concerns in areas like sub-Saharan Africa and Asia, where smallholder farmers grow around 80 percent of the total food supply.
Multinational supply chains also rely on the goods these farmers sell — meaning large food and beverage businesses can play a role in helping farmers cope with the impacts of the pandemic, while shoring up their own commodity supplies against future risk. This sweet spot of mutual benefit is the focus of a supply chain partnership announced earlier this month.
Launched by Root Capital in collaboration with Keurig Dr Pepper, the U.S. Agency for International Development (USAID) and Ezrah Charitable Trust, the new partnership is focused primarily on resilience — now and into the future.
Called the Feed the Future Partnership for Sustainable Supply Chains, the program will provide financial support and advisory services to small agricultural businesses working in key commodities, particularly those owned or led by women. Collectively, these businesses represent 150,000 farmers in 12 countries across Africa, Latin America and Indonesia.
The team at Root Capital, which invests in small agricultural enterprises that support smallholder farmers, saw the impact of the pandemic in these communities early on. "With the onset of COVID-19, the ability of small and growing businesses in the agriculture sector to provide critical employment, continued income generation, protection of vulnerable ecosystems and essential services to rural communities has never been more vital," Willy Foote, founder and CEO of Root Capital, said in a statement. "From Peru to the Democratic Republic of Congo, these enterprises are under enormous strain. Yet, with support, they have met the challenge head-on — not only maintaining their business operations, but also protecting both the lives and livelihoods of their farmers and employees."
For large consumer goods companies, supporting the small agribusinesses in their supply chains is not only the right thing to do, but it's also a smart business move that can help to avoid future risk.
"By leveraging our longstanding partnership with Root Capital, we were able to quickly pivot to support those in our supply chain most vulnerable to the threats of COVID-19 and ongoing challenges such as climate change and food insecurity," Monique Oxender, chief sustainability officer for Keurig Dr Pepper, said in a statement. "Our contribution to the Partnership for Sustainable Supply Chains is an extension of our deep-rooted commitment to partnering with our coffee growing communities to improve livelihoods and safeguard the future of coffee and will help to support business continuity and resiliency for our coffee suppliers."
Over the next three years, the partnership will provide tailored advisory services to small agribusiness participants and give small grants to farmers and their communities. Additional financing will be provided through flexible credit via patient loan terms, interest rate relief and debt forgiveness for enterprises most at risk, complemented by a $35 million loan guarantee from the U.S. International Development Finance Corp. "With this financial support, businesses can continue to serve, and buy from, vulnerable smallholder farmers in their communities," a USAID statement on the partnership reads.
The program builds on the Partnership for Sustainable Coffee, a three-year collaboration between Keurig Dr Pepper, Root Capital and USAID that supported sustainable livelihoods for 330,000 smallholder coffee farmers and their families.
Image credit: Root Capital via Keurig Dr Pepper