Singapore-based Olam International plays a key role in ensuring food security across six continents, its Regional CFO for West and Central Africa, Sujay Sarkar, telling us more.
INTRODUCTION
For most of history, the world has been focused on driving productivity to meet the increasing food needs of a growing population.
“In Africa, growing incomes combined with rapid population growth are fuelling food demand across the continent. Research shows that while food production has increased globally by 145 percent over the last 40 years, food production in Africa has fallen by 10 percent since 1960 despite the fact the continent still possesses 65 percent of uncultivated arable land. The continent’s capacity to become self-sufficient relies heavily on unlocking its agricultural potential.”
These opening words spoken by Sujay Sarkar succinctly highlight the imperative need to unleash Africa’s potential to produce more food.
As Senior Vice President and Regional CFO for West and Central Africa at Olam International, he is supremely well-placed to comment on the subject, Olam being a multinational agribusiness giant headquartered in Singapore and present on six continents.
It aims to reimagine global agricultural and food systems by focusing on three core areas – prosperous farmers and farming systems, regeneration of the living world and thriving communities.
“We have a direct and vested interest in tackling anything that could impact the future of agriculture,” Sarkar says.
“Our sustainable sourcing platform, AtSource, is a powerful tool in this fight as it crystalises our experience in managing social and environmental challenges, and gives us the data and insights to engage customers and partners to catalyse change together.
“By revealing where the community needs lie and where efforts can be prioritised, this transparency brings global food companies closer to the thousands of farmers in Olam’s supply chain.
“Long ago, we understood technology isn’t a panacea, but has huge potential to transform communities, and protect the environment for the better. For example, in Gabon we are using drones to map our plantations and survey thousands of hectares of high conservation value forest and buffer zones.
“At the same time, the Olam Farmer Information System (OFIS) is helping cocoa farmers in Ghana and Nigeria make data driven decisions on when to plant, when to spray, how much water to use and the optimum time to harvest. The same data is allowing Olam to track the environmental and social footprint of agricultural produce.”
Building relationships with smallholder farmers lie front and centre of Olam’s agenda.
It is estimated that smallholder farmers own and/or work on 90 percent of the world’s farming areas, making them the backbone of global food security. Ensuring they receive the best price for their produce is therefore critical, and Olam strives to achieve this in several ways.
First, it is facilitating reliable market access through decentralised buying models which eliminates the middlemen and delivers a greater value to farmers. Through its digital origination tool – Olam Direct – the company has been able to democratise price information and provide farmers with the insights they need to negotiate with intermediaries and buyers like Olam, and eventually decide when and to whom to sell their produce.
“Through supporting smallholders to establishing cooperatives, Olam improves their negotiation power with buyers as well as providing agricultural training through skills development, which helps farmers get the best quality and yield,” Sarkar adds.
“Across many of our smallholder farmer sustainability programmes, we pay – often in partnerships with customers – additional value to the farmer in the form of certifications and quality premiums, incentivising good quality and sustainable practices.”
A LEAP OF FAITH
Sarkar is a chartered accountant with around 20 years of experience in the field, his roles prior to joining Olam being based in India.
He joined the firm at the height of the global financial crisis just over a decade ago, pointing towards the resilience shown at Olam and opportunities for growth in Africa as key to his decision to not only change jobs, but also continents.
“Coming to Africa was a leap of faith for me in many ways,” Sarkar says. “It was a different continent, a completely different industrial segment of agri commodities and I would be part of a matrix reporting structure for the first time in my life. I had a young family and felt the time was ripe to get some international exposure outside my comfort zone.
“A decade later, I can confidently say it was probably one of the best decisions of my life. No matter what role, Olam teaches you to be a problem solver at heart and gives the operational freedom to grow, make mistakes and learn over time.
“In the last 10 years, I have lived and worked in Gabon, Cameroon, Cote d’Ivoire and travelled extensively across Africa in countries where we have our operations. The region continues to offer unmatched headroom for expansion.”
As Regional CFO for West and Central Africa, Sarkar provides financial, legal and tax supervision over all Olam businesses within these parts of the continent. Together with these teams, they ensure the company observes all local and international compliance requirements and runs its business in a fair and ethical manner.
This involves partnering with the business, logistics, and agronomy players to fully harness Olam’s digital capabilities to help bridge Africa’s infrastructural challenges, while delivering leading solutions for all stakeholders including local governments, suppliers, customers and service providers.
“This has helped us build long standing relationships with communities across countries and enhanced our ability to serve the diverse and demanding needs of our global customer base,” Sarkar adds. “I, along with rest of the Olam team, am a custodian of this partnership built over the years and we hope to build on this platform to continue providing food, feed and fibre to the planet in the years ahead in a sustainable manner.”
The company’s African roots stretch back to Nigeria in 1989, when it began helping farmers to export cashew nuts to India.
Fast-forward to today, and Olam stands as one of the region’s most significant agri investors, operating in 22 African countries through procurement, exports, imports, farms, plantations, and processing activities, as well as packaged foods manufacturing and processing.
This amounts to 2.7 million smallholder networks. Last year, in West and Central Africa the firm supported more than 590,000 farmers in 10 countries.
It is a huge operation, Africa being the only region where Olam produces direct-to-consumer brands with 39 major processing sites on the continent.
“Our integrated rice farm and mill in Nigeria is helping to reduce the country’s reliance on imported rice,” Sarkar elaborates. “Our supply chain expertise and broad distribution network across Africa, complimented by government initiatives and favourable trade policies in recent years, have helped it progress as a hub of increasing manufacturing excellence.
“In our tomato and biscuit manufacturing in Ghana, we are focusing on nutrition and fortification which has also become key to feeding the African market. In 2018, Olam exceeded its goal of producing 40 billion servings of micronutrient fortified foods across Africa, manufacturing 44.5 billion servings.”
ANSWERING THE CALL
This year, of course, has been dominated by the coronavirus pandemic.
Not only are the health implications obvious and immediate, the socioeconomic fallout could spark what the UN is calling a hunger pandemic – it could double the number of food insecure people in low and middle-income countries by the end of 2020, unless action is taken.
The pandemic has created a shift towards consuming cheaper, less nutritious foods as households grapple with the multiple challenges of reduced income, supply chain disruptions and increased food prices.
Moreover, according to the World Food Programme July 2020 situation report, food insecurity is spiking and affecting livelihoods in West and Central Africa, with an estimated 57.6 million people to be affected in 2020, a 135 percent increase from previous estimates.
It is a big problem, especially as several countries are now also approaching their annual lean season when access to food is severely constrained and malnutrition rates peak.
Sarkar points to an Olam survey conducted in July 2020 with around 2,400 smallholder farmers growing cocoa, coffee, sesame, cotton, and other crops in Africa and Indonesia. The results showed that more than half are expecting to suffer shortages in basic food and nutrition due to movement restrictions, food price increases and insufficient stocks at home. Seven in 10 said their incomes had been reduced.
“The economic impact of COVID-19 has elevated the importance of food security and nutrition on our agenda,” Sarkar adds.
“We must avoid triggering any vicious cycle of reduced incomes, reduced consumption of nutritious foods, increased malnutrition, increased susceptibility to illness, or the continued spread of COVID-19 and its consequences. Olam recognises the key role it must play, especially in food supply chains like rice and grains, ensuring these staples continue to efficiently reach intended markets.
“Olam’s global teams are on the frontline supporting farmers and those in the communities where we operate. We are working with our partners and government authorities to support the global fight against COVID-19 and have committed over US$5.7 million in financial and in-kind donations for relief and essential healthcare for farmers and rural communities.”
Such funding has supported numerous programmes.
These include national public awareness campaigns and distributing World Health Organization advice via digital channels. In the Republic of Gabon, Olam built a quarantine hospital, while it has also distributed medical equipment and PPE such as ventilators, masks, gloves, and hazmat suits for health authorities and hospitals across the region.
It is distributing food packages to local authorities, frontline workers and rural communities, including 50 tonnes of grains in Gabon, six tonnes of rice to healthcare workers and their families in Cameroon, 30 tonnes of rice in Burkina Faso and two months’ supply of essential food items for an orphanage and children’s hospital in Senegal.
“We are also providing access to inputs and equipment such as seeds, fertiliser and tractors so that farmers’ liquidity challenges now do not jeopardise their ability to prepare and plant on time, helping to secure their livelihoods,” Sarkar says.
And securing livelihoods is what Olam will strive to achieve across all of its markets as it looks ahead to 2021.
It will be the second year of a newly structured Olam International, the company now operating as Olam Food Ingredients (OFI) and Olam Global Agri (OGA) in order to capitalise on key global consumer food trends and the growth in demand for food, feed and fibre in fast-growing emerging markets.
The move should help it to more effectively serve its purpose – to global agriculture and food systems around the world.
CASE STUDY: IVORY COAST
In rural Ivory Coast, the Sustainable Cashew Growers Programme (SCGP) links Olam directly with the farmers that supply the company.
Sarkar explains: “We are the only company participating in the entire value chain and in doing so, can gain insight into and respond to the social challenges faced by farmers and their communities.
“As part of Olam’s commitment through AtSource Plus, we carried out a comprehensive food security and nutrition study and surveyed 797 households in the SCGP to find out what kind of food they typically eat, how often they eat it, and where it comes from. The study found about 93 percent of households in the SCGP are food secure, meaning that, even during the low-resource months of the year, they can regularly access foods that give them adequate calories.
“But while these households are accessing enough calories, their diets are not very diverse. When it comes to women’s and children’s nutrition, the results were less promising. About 27 percent of women of childbearing age (15-49 years old) and only six percent of children aged six to 23 months are eating what they need to. Without adequate nutrients, women and children will not experience proper growth and development and are vulnerable to life-long consequences to health and productivity, which will affect future generations too.
“Key risks that may cause the food security situation to change were also identified. For instance, farmers primarily rely on their cashew earnings to access and afford enough food which increases their vulnerability to fluctuations in the cashew market. Insufficient food production is linked to several issues, including small portions of land being used to produce food. Within the last five years, 76 percent of households have converted land where they once grew food into cashew farms.
“Based on the study results, our cashew business is now working to reduce risks and improve the situation. In their AtSource Plus action plan, there are specific strategies, such as providing food crop support, livelihood diversification and nutrition education, to mitigate the food security risks and improve nutrition.”
