Working on a new approach to sustainability in smallholder-dominated supply chains

While that is a bit of a mouthful, the broad aims of the project are simple: to establish the potential for Innovation Platforms, or ‘IPs’, to provide the basis of sustainable value increases for small farming households in eastern Uganda and in Zambia.

Dr Gregg’s focus in this project is on smallholder-dominated coffee supply chains in Uganda. Coffee supply chains face considerable constraints to achieving sustainable and long-term value improvements. Firstly, due to the large numbers of small farmers it is difficult to attribute investments in quality to individual farmers. This creates a disincentive to individual farmers to invest effort and expense in improving quality at the same time that it makes it difficult for buyers to offer a premium (because it is difficult to robustly assess many small lots of coffee).

Secondly, in the case that prices can be improved for participating households, this often generates an incentive for intensification (higher intensity production) and extensification (production across a greater area of land). Given that environmental improvements on coffee farms are only loosely tied to prices received there is little price incentive for farmers to invest in environmental improvements but often a cost in terms of lost production or higher labour requirements. Thus, value improvements can generate incentives for environmental degradation in these supply chains.

So sustainable supply chain ‘upgrading’, or seeking to generate improved returns for all participants in supply chains, is hindered by some pretty serious constraints particularly in smallholder-dominated agricultural supply chains.

The work of Dr Gregg and the associated team in Uganda, including researchers from the World Agroforestry Centre (ICRAF), Makerere University, and Gottingen University, is focused on finding approaches to supply chain organization that jointly solve the quality-value problem and the sustainability problem. The research team has worked with the local LandCare Chapter to develop a baseline measure of agronomy and environmental quality for farmers within participating IPs. This baseline measure was developed with assistance from, Dr Patrick O’Connor, Associate Professor at GFAR and Chair of the National Landcare Network in Australia.

This week the team are beginning implementation of a test scoring system that seeks to reward farmers for their investment in environmental outcomes on their farms. Initially this is being undertaken using an auction-based coffee procurement method to provide information on the leverage that different pricing mechanisms have on generating intentions to adopt new practices. In the future the data generated here will inform the creation of the minimum incentives needed to generate behavioural change associated with environmental investments on-farm. The team are also seeking to develop the mechanism by which environmental incentives can be directly linked to market values for environmental outcomes on farm. For example, from consumer willingness to pay for environmental attributes in production and from the existence of current markets for carbon and potential emerging markets for biodiversity.