19 september 2008
Dutch lessons on shipping sustainable ginger from Sierra Leone
Although business interest in corporate social responsibility is growing, actual performance is lagging behind. In a 2007 survey of 400 CEOs carried out by McKinsey, 60 percent of respondents said their companies needed to improve global supply chain management issues to address environmental, social and governance issues, but less than 30 percent were actually doing so.
One of the case studies in this new publication focuses on the collaboration between Unifine and the Cotton Tree Foundation Ginger Enterprise (CTFGE) in Sierra Leone. Unifine is the third biggest player in the Dutch spice industry. CTFGE was set up in 2006 to create access to markets for 400-500 ginger farmers, mostly women. Dutch organization Cordaid provided a loan to cover start-up costs. In 2007, CTFGE shipped 40 tons of dried ginger to Rotterdam with a turnover of 55,000 US dollar. Unifine pays a top-end market price and adds a premium of 50 US dollar per ton for social investments in the farmers’ communities.
For Unifine the driving force to set up direct supply chain relations was the need for better quality assurance and full traceability in its supply chain. The quality of raw materials from developing countries is unreliable, while consumers and supermarkets increasingly want to know the origin of every ingredient in the food they buy. Unifine’s need to be competitive is a second driving force behind its partnership with CTFGE.
What are the results so far? One improvement is that Unifine’s quality assurance programme has secured the quality of its products. Unifine is aiming at 100 percent quality, and zero losses. As a result it has less production waste, fewer unwanted products, fewer recalls, and fewer complaints. A downside is that production costs have increased. Unifine spends around 100,000 euro more on audits than before. Other costs have increased too – for staff training on quality, along with storage and organizational costs: more staff are needed to sustain quality and traceability.
CTFGE did not make a profit in 2007. Its costs on transportation and management were too high, while its produced volumes were too low. Despite its losses, however, it generated income for 400-500 farmers and about 100 labourers.
One flaw in the pilot scheme is that farmers are not included in the chain. Value chain cooperation stopped at the level of the ginger collectors.
Drawing on lessons from cases like this, the book discusses the challenges to making sustainable procurement more mainstream and suggests ways in which buyers, suppliers, the public sector and support agencies can encourage it.P+ webtip: KIT Publications