Uchita de Zoysa Speaks at the Private Food Governance Symposium in Munster

SYMPOSIUM ON PRIVATE GOVERNANCE IN THE GLOBAL AGRO-FOOD

Sessions on Private Food Governance and Farmers’ Well-Being

23-25th April 2008, Münster University, Germany

Wellbeing as a CSR Strategy for corporate Sustainability in Private Food Governance
(with a case study on diary industry in Sri Lanka)
by Uchita de Zoysa

Overview
The UN Secretary General has officially declared that the world now is facing a global food crisis. Hunger is on the rise and expect more global unrest. In this context the role private food governance will need to be looked at closely.
• In countries like Sri Lanka agriculture has been systematically down graded by the multilateral donor lead efforts for privatization, globalization and global resource governance agenda’s – making us from agricultural and food self-sufficient countries to dependent service providing nations.
• In this context multinational companies dominate the food governance as well as the consumer lifestyles in developing countries – even the SME’s who are the largest contributors to these national as well as global economies are being driven out as well.
• Sustainability has become a growing topic within multinational industry and business (but with a clear focus on corporate sustainability)
• Corporate Social Responsibility (CSR) has come into much focus as a tool claimed as “giving back to the society” – but so little given for a lot more corporate whitewashing and image building.
• In this sense “Wellbeing” of all stakeholders in the private food governance becomes a key strategy to be adopted in CSR programmes – creating greater opportunities for stakeholder determinations and benefit sharing in private food governance.

Introduction
The leading diary market shareholder in Sri Lanka (SL) assigned us to conduct their first ever CSR strategy planning. This is the first time that a Sri Lankan organization had been commissioned to conduct such an in-depth and scientific study on CSR, specially in the consumer products based industry.
• The company had little knowledge and appreciation on CSR and sustainability issues - six months of negotiation was made for a four month comprehensive research and planning project on CSR (18hrs/p/d x 7d/p/w x 4 months) plus 3 months launching later.
• Over two thousand five hundred (2500) milk farmers and their families supply milk – which accounts to just a mere 5% of the companies turnover.
• International company that imports and markets milk powder as the main diary consumption item in SL – which is an indication that we are a heavily dependent nation on diary (and powdered milk consuming is a low end wellbeing indicator)

Agreement
As the planning agency we established the following criteria for the project.
· The CSR Strategy is designed to achieve corporate sustainability the company.
· It also can provide a new approach to establishing dairy leadership acceptance amongst stakeholders.
· CSR should not be considered as a replacement of;
o commitment to ethical corporate behavior
o commitment to other stakeholders (consumers, farmers, suppliers, employees, government, interest groups, etc)
o responsibilities towards protecting the environment.
o covering-up any corporate deficiencies
o whitewashing image.
· Investment in CSR should be considered as an investment for;
o Enabling corporate sustainability
o Enhancing dairy leadership acceptance by stakeholders
o Creating positive business operational environment
o Displaying true commitment to wellbeing of the community and nation that enables profit for the company.
o Generating positive publicity and perception

Project Summary
• Extensive research was conducted through direct contact with farmers at homes, cattle sheds, milk collection centers and community gatherings. These contacts have been recorded on video as well to provide greater testimony to the reader on the status and opinions stated.
• The interviews with farmers and their families were conducted in detail to ascertain their aspirations and needs.
• Interviews with suppliers at the milk collection centers to ascertain the overall conditions of milk farming in the districts in focus and requirements for milk farmer community development.
• Recommendations are based on the information gathered from milk farmers, families, milk suppliers and milk procurement staff.

Critical Observations
• Research revealed that the company has not provided any support to improve the quality of life of farmers and their families who supply milk to the company.
• The general status of the milk farmer community indicates that the process of milk procurement is based on minimum payment to the producer and maximum profit margin making by selling to the consumer. This applies to all dairy companies operating in the country.
• Milk farmers were clearly unhappy about the lack of any benefits provided, as they exclusively supply to the company. They believe that milk farmers are exploited and that the company does not care for their wellbeing.
• The most critical of the non supportive role of the company as a corporate were the suppliers managing the district milk collection and supply centres. They believe that the company lacks caring for the farmer community. This is due to lack of understanding of the ground realities. They also they complain of a lack of a grievance hearing system.
• The 2500 plus farmers that is categorized as “the company Farmers” do not seem to be treated as part of the the company family. The livelihood levels of a majority of these farmer families are at a sorrowful low level for the company to proudly display as “the company Farmers”.
• the company as a corporate with high ethics, seem to have failed in providing a fair deal to the farmer community. the company clearly has fallen short of their responsibility towards creating better quality of life of the company farmers and their families.

Needs Identification
Key farmer community needs include the following;
· Cattle-shed development assistance
· Fodder/Grass land development
· Quality cows breeding and distribution project
· Cattle nutrition and veterinary mobile units
· Transport facilities
· Health clinics for farmer families
· Schools development for farmer children
· Veterinary and dairy education scholarships to farmer families
· Micro credit for livelihood and dairy development

Farmer Levels Identification
• Level 01 farmers: Low motivation, subsistence farmers
– Status: 1-2 cows, No or small plots of land available for grass, Low income households
– Recommendations: Needs welfare and capacity building support for livelihood and fresh start in milk farming. Priority is to stop dropping-out of industry and to firmly re-establish them in the level 01 category. A percentage of this category can be guided to level 02.

• Level 02 farmers: Subsistence farmers
– Status: 3-4 cows, Small to medium sized plots of land (up to 1acres), Low income households
– Recommendations: Needs welfare and infrastructure development support to enable healthy income and better quality of life. Harnessing the maximum capacity through capacity building and encouragement within the exiting category is the priority. A percentage of this category can be guided to level 03.

• Level 03 farmers: Self-motivated entrepreneurial farmers
– Status: 5-12 cows, Medium sized plots of land (1-4 acres), Low to middle income household
– Recommendations: Needs development support to maximize the available infrastructure and self-motivation. Guiding them to the maximum capacity within the category should be the focus, as a majority may have obstacles to beyond level growth potential (eg; limited land).

• Level 04 farmers: Potential SME model farm owners
– Status: 12+ cows, Medium sized plots of land (5+ acres), Middle income households
– Recommendations: Needs financial and technical assistance to move from entrepreneurial farming to professional farm owner status. This would be an ideal small milk farm model to be developed with minimum cost and commitment of the company. These model farms could provide high PR value to corporate image of the company.

Stakeholder Identification
• Main stakeholders of project planning and implementation will include the following
– the company milk farmers and families
– the company Milk farmer associations and cooperatives
– the company milk collection center suppliers
– District authorities and organizations related general administration, dairy development, poverty alleviation, health, education, etc.
– National authorities and organizations related general administration, dairy development, poverty alleviation, health, education, etc.
– the company milk procurement and collection staff
– the company CSR core group, corporate affairs
– the company Wellbeing Foundation

Conclusions
• Implementation of the CSR programme has been delayed due to issues of milk pricing and management changes etc.
• Changing corporate culture to more understanding, compassionate, giving and responsive to true needs of stakeholder and issues is a painfully slow, frustrating process.
• The process requires lot of integrity and patience both maintained along with knowing when to push as well.
• CSR is a concept with loose definitions and too much flexibility for misinterpretation.
• We adopt corporate sustainability planning which essentially places stakeholder wellbeing at the centre and implement action programmes using various CSR projects.
• This way we try to confront the ‘trickle down” attempts and show them win-win solutions within a corporate sustainability path (eg: financial profitability in lifecycle management, cleaner production, resource efficiency etc. as well as potential PR benefits with key stakeholders resulting in overall corporate profitability.
• The key to CSR success is if stakeholder wellbeing is fundamentally established in the progrmme and also if corporate sustainability is aligned with national to global sustainability paths.
• While the CSR strategy and programme planning is vital, implementation still needs to go through continuous monitoring, improvement, vigilance on the impacts on the beneficiaries – as “giving back” by business still has to be proven by-and –large where profitability exceeds any morals or values in corporate governance.
• This stands true to private food governance as well.