Blog Herman uit de Bosch – managing director FairMatch Support
‘Sellers markets and sustainability; the need for new instruments
Four and a half years ago we started FairMatch Support to create access to markets for producers in developing countries, as well as to create sustainable supply chains. We used codes and certification schemes to organise farmers and linked them to those markets that were interested in sustainable certified supply. So far we have been quite successful. Quite a number of farmers got certified and got access to specific markets in European retail.
Now a silent revolution is taking place. The market is changing rapidly from a buyers market into a sellers market in a range of commodities. Due to the upcoming middleclass in BRIC countries, more people can afford good food. In Brazil for instance, an upcoming new middle class of 65 million people has been counted. Demand is increasing rapidly.
There for, our work is changing from getting farmers to markets, into getting buyers well connected to farmers. This is creating new opportunities for farmers. Now there is a more genuine interest in their product with prices levels in which investing becomes interesting again.
What does that mean for sustainability? In fact there are huge opportunities for sustainable production systems, but the systems we have used so far to promote it have limited use in this changing environment. So far we used codes and certification systems based on requirements to fulfil external audits to get access to consumers. In an upcoming competitive sellers market this is deteriorating the already declining buyers position of the western hemisphere even more; why sell your product to the over demanding west if you can get same prices at less demanding markets?
We have to re-invent tools to stimulate sustainability, and combine it with the current necessities: productivity and quality improvement. Productivity has been low in developing countries due to decades of low food prices so investment in farming was not interesting. Due to that, low income, no access to schools, child labor etc. a lot of “non sustainable issues” were a logic consequence and part of the system.
We have to adjust the current certification systems into productivity improvement and quality improvement systems. Only that way we will stimulate sustainable production systems, increase the farmers income, so he/she can pay for school fees etc.
The companies that invest in those settings in relation to their supply chains, will probably be in a better position to compete. Because: at buyers level they create links that are interesting for both suppliers as well for themselves. ‘
Herman uit de Bosch, 21/10/2011