Procurecon Asia: Evolution from Operational Procurement to Strategic Procurement

procurecon asia

At this time of year, the events season is well underway and many of us are already starting to think about applying what we’ve learnt to our 2016 activities.

I recently attended the ProcureCon Asia Conference 2015 at The Amara Hotel in Singapore. I wanted to share my pre and post event thoughts on Procurious.

The ProcureCon Asia conference is aimed at CPO’s and senior strategic procurement leaders within Asia Pacific. I was fortunate enough to have secured a pass to the event. This is third year the conference has run and my first time in attendance.

According to company’s website: “ProcureCon Asia has firmly established itself as Asia’s only gathering for global and regional CPOs and Asian heads of procurement actively engaged in the evolution towards full strategic procurement”.

This event is one of the more important dates on the Asian procurement calendar. Procurement professionals from across the region flocked to Singapore to network and listen to an impressive list of speakers.

I was personally looking forward to meeting new and old procurement colleagues and hearing from thought leaders on how our profession is progressing in Asia Pacific. I was particularly interested to compare how Asia stacks up against the rest of the world in terms of our procurement best practices especially given the technological changes driving business.

How did our region compare globally and what are the opportunities now and in the near future? What does it mean for procurement as a profession?

Developing Procurement Maturity in Asia  

The conference theme was about progressing procurement strategically in Asia (to reach 3rd generation procurement and beyond) and there were many workshops that discussed that in more detail. I had also seen various industry data to indicate that Asia Pacific was behind other regions in procurement maturity (e.g.)

Report from Procurecon Asia

Having been a procurement professional working in the technology and automotive sectors for many years and having led a number of innovation projects (i.e. regional Ariba and MSP rollouts etc.), I was aware of that there was some differences between the maturity of procurement functions in Asia vs. the rest of the world.

Asia has seen massive economic progress in the last decades with impressive innovation and developmental steps taken by many companies and countries. A lot of the conversations at the event focussed around whether procurement was maturing at the same rate as the rest of the Asian economy.

There are a great number of individual industry leaders in Asia and there is no reason why Asia cannot be seen as global leader across industries in future years. We just need to be clear around how to get there.

Maturity Requires Talent

I think one of the most important steps to achieving procurement maturity in Asia is the development of future talent. We need top talent to ensure we have an ongoing skill base our companies require and as a driver of innovation and high standards into the future.

I know CIPS has a development plan with thousands of new students enrolled in China, I am not sure about other countries? CIPS now has an office in Singapore, which is great. ASEAN countries definitely need more procurement graduates entering into our profession, as those countries will provide strong growth, both now and into the future.

Innovation is Critical to Success in Asia 

The path to procurement maturity is unique to each business and industry sector. All companies and entities are coming from different starting points and have different drivers and priorities. What is common to all procurement teams based across Asia is the need to come up innovative solutions to the regions unique challenges.

While there was some discussion and workshops covering innovation and disruption topics, I felt the event could have gone into a little more detail on these areas. Something to think about when it comes to themes for next year’s event perhaps?

Measuring Procurement Maturity in Asia 

Going forward, how can we measure regional progress in Asia as a whole? It was possible to get some gauge at the conference, but given the vast size of the Asia Pacific region, the event was a tiny sample size.

It would be good to be able to out measures in place that would us understand regional procurement development in Asia Pacific.

The Role of China 

There were many questions and discussions about China throughout the conference. What is happening within? Have they come to the end of the growth road with rising costs and what it means for our profession? All agreed China has many years of progress ahead still, along with many challenges. Second tier Chinese cities and regions are already beginning to grow and play a role in the complex China story. This will continue for many years to come.

In summary, the event was a great experience; there was an impressive line-up of speakers and a room full of regional and global colleagues in attendance, so it was well worth the trip just for that.

During my three days in Singapore, I was able to have many one and one discussions and understand how these Asian based procurement professionals were managing their challenges.

Sadly, a couple of days does not really allow the time needed to have deep discussion on many topics but I am sure everyone had personal takeaways and made many new contacts as I did.

See you all there next year.

What’s In A Name?

If you want to become the top dog you had better change your name to Andrew…

What's in a name? Andrew comes top for UK bosses

As the ONS announces its annual list of most popular baby names for 2015, research from workwear manufacturer Stormline has revealed that when it comes to Britain’s bosses, there’s little variety and originality, as an homogenise collection of traditionally-named boys take up their seats in the UK’s board rooms for another day in the office.

The research shows that there are more men called Andrew than there are women running the UK’s top firms.

There’s a definite lack of diversity at the top, with the following seven names – Andrew or Andy, James, John, Peter, Ian, Mark or Marc or Richard  – representing 32 per cent of all UK bosses at top firms.

Just 6 per cent of Britain’s biggest 100 firms are women with bosses called Alison (Cooper, Imperial Tobacco), Melissa (Potter, Clarks Shoes), Lindsey (Pownall, Samworth Brothers) Theresa (T.J Morris), Anna (Stewart, Laing O’Rourke) and Veronique (Laury, Kingfisher PLC) representing female CEOs.

If you’ve got your eyes on running one of Britain’s biggest companies, it might help if you’ve got a traditional Hebrew (John, Ian) Greek (Andrew, Peter) or Latin (James, Mark) name. Your odds will also increase to better than 9/1 if you are a man.

Of the names on display in the 100 top board rooms around the UK, more than half (53 per cent) were one-offs; ranging from a Merlin, Jebb, Nicandro, Zameer and Pascal to Ralph, Jason, Nigel, Norman and Bob.

Men called Andrew currently bossing it in the UK’s biggest firms 

Andrew Witty – CEO, GlaxoSmithKline
Andy Hornby – Chief Executive, Gala Coral Group
Andy Harrison – CEO, Whitbread
Andy Parker – Chief Executive Capita
Andy Street – Managing Director John Lewis
Andy Long – CEO of Pentland Group (the Chairman is Andy Rubin)
Andrew Goodsell – CEO, Acromas Holdings (Saga Group & The AA)
Andrew Mackenzie – CEO, BHP Billiton 

Zameer (Choudrey, boss of Bestway Group), Jebb (Kitchen, boss of Bibby Line), Merlin (Bingham Swire, boss of Swire Group) and Nicandro (Durante, boss of British American Tobacco) make up the pick of most original boy’s names.

And although this survey is skewed towards the UK market, we’d be interested to learn what the name game is like elsewhere in the world. Can this oddity be repeated in your country?

National Coalition for Public Procurement formed in the US

A coalition for public procurement has been formed in the US.

Public procurement coalition formed in the US

Volunteers from three of the largest U.S. procurement programs for public agencies, educational institutions and nonprofit organisations have joined together to establish The National Coalition for Public Procurement (NCPP)

The NCPP will serve to drive best practices in public cooperative procurement, focusing on transparency, competition, integrity, auditability and process.

Marc Selvitelli (who will serve as NCPP’s Executive Director) said: “NCPP was founded on the belief that uniting customers and potential customers with national and regional purchasing organisations will ensure the most ethical and best business practices.”

NCPP’s founding organisations include the National Intergovernmental Purchasing Alliance Company, the National Joint Powers Alliance and The Cooperative Purchasing Network.

In addition to regular interactions with public procurement practitioners and contract purchasing organisations, NCPP will provide an independent forum for members to collectively address cooperative contract procurement concerns. Members also will have the opportunity to participate in advocacy issues with a united voice, and they will have access to a variety of resources to advance best practices in public procurement.

“A major factor in selecting SmithBucklin was its expertise in starting and managing a new organisation,” said Todd Abner, NCPP Chairman. “Additionally, SmithBucklin has substantial experience in managing associations that are active in procurement and supply chain.”

“It is a privilege to help launch NCPP,” said Matt Sanderson, Executive Vice President & Chief Executive, Business + Trade Industry Practice. “We look forward to helping establish NCPP as a powerful voice in advocating excellence in public procurement.”

How Can We Better Manage Compliance Across The Supply Chain?

New research states that half of global firms have faced supplier non-compliance challenges.

Don't be the odd one out... comply!

2014 was a year marred by risk… Whether we’re talking about plentiful product recalls, compliance and environmental issues, or devastating data security breaches – it seemed supplier compliance management was never far from the spotlight.

Today, companies are increasingly being held responsible for the actions of their suppliers, thus breaking the long-held tradition of the buyer turning a blind eye. Ultimately the blame and consequences of the actions lay at the gates of both parties – forcing buyer and supplier to tackle tricky compliance issues head-on.

At the same time supply chains are growing larger, heightening both the impact and odds of non-compliance incidents. As a result companies, customers, NGOs, and regulators are rapidly stepping up their efforts to manage and monitor compliance across their suppliers. The expectation for companies to develop comprehensive supplier compliance policies,  along with regular audits and inspections to evaluate supplier compliance is a heavy cross to bear…

In order to gauge the challenges presented MetricStream conducted an in-depth survey that looked into the ways organisations across industries are managing, measuring, and monitoring supplier compliance. Respondents were made up of 100 supplier compliance and governance professionals from various industries.

The survey found…

The survey contains seven main areas of concern. We’ve highlighted some of key the findings below.

Non-compliance issues around management systems and documentation are widespread

The most common area of non-compliance was around management systems and documentation (59.5 per cent). This highlights non-compliance with a company’s internal documentation such as product specifications and quality policies; or, absence of systems and processes at the supplier’s end to ensure compliance with external regulations.

The other dominant area of supplier non-compliance pertains to Environment, Health, and Safety (EHS) standards (29 per cent). In the last few years, some of the world’s most reputed brands have been criticised after their suppliers were found to be violating environmental norms, or running factories that were unsafe and exploitative.  Companies will need to find ways to strengthen supplier compliance with EHS standards, keep pace with new regulations and guidelines in the field, and resolve or mitigate compliance issues before they occur.

Local laws are often overlooked

Only 43 per cent of respondents focus on local laws while drafting supplier policies. This could be a cause for concern, especially since local laws vary from one region to the next. For instance, the minimum age for employment in China is different from that in the US. If companies overlook these differences when drafting supplier compliance policies, they could face regulatory penalties.

Compliance information is only gathered when potential suppliers are being evaluated

Most of the respondents indicated that their organisations gather supplier compliance information either when evaluating a potential supplier (50 per cent), or while onboarding a supplier (26 per cent). Only 19 per cent of organisations gather supplier compliance information when adding a new product or service to the supplier’s portfolio.

To read the full findings you can download the report from here.

Procurious talks to Mark Lamb of CIPS Australasia

Procurious interviews the mastermind behind CIPS Australasia – Mark Lamb.

Mark Lamb CIPS Australasia

Ahead of the CIPS Australasia 2015 Conference on 17 Sept, Procurious posed some brain-teasers to Mark Lamb, General Manager – Australasia.

Are you attending? We’ve created a CIPS Australasia Group to gather all the discussion from the day and Awards.

This is what Mark had to say:

Procurious asks: This year CIPS is running with a common theme – ‘Raise your game, raise your voice’. What’s the idea behind this, what messages are you hoping to convey?

Mark Lamb: ‘Raise your game, raise your voice’ will cover the capabilities you need to get out of your comfort zone and face future challenges head-on. The world is changing at such a pace, this profession has to evolve with it. Individually we are challenging professionals to ensure they have the right set of skills to be fit for the future. In addition we want this profession to raise its collective voice and start shouting about our success, about the true value we bring and the real difference we make.

We recognise that people require many difference aspects from conference. It’s important we offer practical advice, as well as inspiration and insight to help advance the profession and for our delegates and members to achieve personal success. 

Procurious: Does more need to be done to promote, encourage and develop pathways into a procurement career?

Mark: CIPS has done a huge amount of work in this area – the Be a Buyer website has given us a great platform to help direct people and showcase the exciting opportunities this profession has to offer them. We also encourage members to do their bit and become advocates. We have packs and presentations available so volunteers can go and deliver their own workshops in their local schools and colleges. CIPS has also been involved in the UK to develop the current level 3 Advanced Apprenticeship in Procurement and there is work underway to extend that now to level 4.

Procurious: Have you noticed a change in the CIPS membership in recent years, are the skills being brought to the table different to those from 5, 10 years prior?

Mark: Skill sets are changing all the time – again this fits with the Conference theme. We have to stay relevant – react to the world around us or we will cease to be a success differentiator and have other functions move in to our space. So yes we do see skill sets change – hence the reason we regularly review our own syllabus.

Procurious: What do supply chains have to do to ensure they avoid another Nannas Berries scandal?

Mark: In order to avoid such scandals, we all need to look beyond the first tier of our supply chain and ensure we have clear visibility of the second tier and beyond. Many organisations report that they only have sight over the first tier – this clearly is no longer enough.

Procurious: Speaking of ‘raising your voice’ do you think social media can play an important role in (dare we say it) modernising the profession?

Mark: I’m not sure that I would say social media will ‘modernise’ the profession, I happen to think the profession is already moving forward at a lightening pace. However, social media is a crucial business tool that we can embrace and use to enhance our communications, our building of communities and contacts and sharing of information generally. As a profession, or world never stops – we work across continents and time zones, our suppliers can be based anywhere in the world – social media can connect us all.

Are you attending the CIPS conference on 17 Sept? Join the discussion and meet fellow delegates on our CIPS Australasia Group page.

Understanding The Chinese Yuan And The Fluctuating Economy

 

Down, down, up. The revaluation of the Chinese Yuan…

The revaluation of the Chinese Yuan

About five years ago I stopped ‘doing’ procurement and starting writing about it.

One of the very first pieces I ever wrote was for Procurement Leaders. The article focussed on the impact the value of the Chinese currency (the Yuan) has on supply chains and more specifically the role that the Chinese government has allegedly played in manipulating this exchange rate for the benefit of its economy.

Manipulation 

China has, in the past, been accused of deliberately altering the value of the Yuan in order to make its products appear cheaper and thus more desirable in the export market. The strongest opposition to this practice has come from the US, who feel this manipulation has adversely impacted domestic suppliers as many American’s elect to buy cheap Chinese goods over US made products.

The US have also claimed the currency manipulations are anti-competitive and highlighted they have hindered the progress of US firms in China. By having a weak Yuan in relation to the US dollar, companies like Apple, that price in USD, found it more difficult to compete in the Chinese market with local suppliers who could produce a similar product at a lower price.

Despite the fact the value of the Yuan is not subject to market forces, but rather, is set by a team of economists, China has always maintained that its currency was fair and not been deliberately manipulated.

The debate continues

Jump forward five years and the value of the Yuan is once again making the front page of global business newsfeeds. Last Monday (August 10th) The People’s Bank of China announced it would make a ‘one time correction’ to the value of the Yuan.

This action, and accompanying confusion, sent global currencies into a spin. The Yuan dropped 2 per cent against the US dollar in a day.

Despite announcing only a ‘one time correction’ to the Yuan, The People’s Bank of China announced a further devaluation of the currency on Wednesday of last week. This caused analysts to fear that China’s wavering economic performance may be worse than they initially thought. Commodity prices and share values have continued to drop on the news.

To add further confusion to the situation, on Friday (August 14th) the central bank opted to raise the value of the Yuan against the dollar. The Bank has come out and stated “the market will play a bigger role in exchange rate determination.” Perhaps they were keen to show the value of the currency can go up as well as down?

For the time being, it appears Chinese goods will continue to be relatively cheap compared to the rest of the world. Some analysts have predicted that a flow of cheap Chinese made products will flood foreign markets (haven’t they already?) The uncertainty of over China and its currency is also likely to cast a continuing shadow over the tumultuous global commodity markets.

Supply Chain Disruption and Risk Mitigation in Tianjin Explosion

Two enormous explosions ripped through the Chinese port city of Tianjin last week, killing 112 people, hospitalising hundreds and leaving thousands of local residents homeless.

Explosion in Tianjin, China. Reuters

 

While nothing can be compared to the tragic loss of human life, businesses look set to have to deal with major disruptions to their supply chains, with logistics issues for some and significant loss of goods that were at the port when the explosions occurred.

Safety Fears

The blasts, which occurred in a warehouse storing hazardous chemicals, were large enough to be seen from space and also register as seismic activity in Beijing (over 75 miles away). Investigations have been started as to the cause of the explosions, but are being hampered by safety concerns at the site.

Residents in a 3km radius were evacuated on Saturday after it was found that sodium cyanide was present at the site. The volatile powder can be fatal if inhaled and, when mixed with water or burned, produced hydrogen cyanide, a highly poisonous gas.

Business Impact

The current situation, as well as the inability to get people on the ground at the port, has made it difficult for businesses to quantify the losses they have suffered. Tianjin is the world’s 10th busiest port and China’s largest hub for the import of vehicles, which means organisations will be dealing with the future impact as well until the port returns to full capacity.

Mitsubishi have estimated a total of 600 cars were damaged in the blasts, while Renault and VW have also stated that they have lost cars that were being stored in warehouses at the port. Toyota has suspended production at two of its Chinese facilities for three days due to logistics issues caused by disruption to port services.

And it’s not just auto-manufacturers that are affected. The port also handles large quantities of metal ore, coal and steel, with Australian mining giant Rio Tinto stating that shipments had been disrupted, although no products had been damaged.

A number of Chinese technology organisations have also reported interruption to operations. Tencent, Liepin and 58.com were among the companies with facilities within the blast radius and are returning operations to normal wherever possible.

Analysts estimate that the incident could generate total insurance losses of between $1-1.5 billion.

Risk Mitigation

While situations as extreme as this are fairly uncommon, disruptions in the supply chain are something that organisations need to deal with on a regular basis. Around China, shippers and maritime logistics organisations have begun to route freight through other ports, while others have begun to look at using airfreight.

Having good contingency plans in place for your supply chain allow you to cope with the unexpected risks and outcomes. Scenario planning can be used to reduce uncertainty and mitigate risks. You can get some good tips for that here.

From identifying alternatives methods of transportation to creating supplier panels to ensure continuity of supply for critical items and engaging openly with stakeholders, there are a number of options open to organisations to allow them to adequately deal with disruptions in the supply chain.

You can keep track of potential risks through a variety of tools, including the BSI Risk Index and the CIPS Risk Index. These organisations will publish research based on the indices that can help to shape organisational strategies for the mitigation and management of risk.

You can also always check out the eLearning available on Procurious for a selection of free videos on risk and crisis management, which should help you build a foundation in the understanding of the topic.

Is your organisation impacted by the situation in China? Do you have any great risk mitigation tips you can share with your peers? Let us know or get involved on the Procurious community.

If you haven’t had time to check out the big stories in the procurement and supply chain space this week, here are some of the main headlines.

Calais crisis: freight costs could rise ‘significantly’ 

  • Unless the ongoing crisis at Calais is resolved, freight prices could rise significantly in the next few weeks according to Rhenus Logistics UK. The company said the operational impact that French strikers and migrant incursions at the port were having on the UK’s import and export trade was concerning.
  • Managing director David Williams said drivers were resigning from the route due to the stress of getting through the port, and the risk of fines because of stowaways. “The decision by drivers to step away from this route has already seen a number of freight businesses introducing surcharges of between 1-2 per cent,” he said. “The rise in costs, due to increased fuel bills, man hours and required rest break, is now becoming a very serious issue for the logistics industry.”
  • Separately, global supply chain consultancy Crimson & Co warned that the continuing disruption at Calais highlighted the need for UK businesses to review their risk strategies. The firm said exporters and importers across the UK were reporting losses and were being forced to either find alternative but more expensive routes or stop deliveries altogether.

Read more at Supply Management

Apple confirmed to be working on self-driving car

  • Apple is working on a self-driving car project, and may have made more progress on the car than previously thought, according to documents seen by the Guardian. The UK newspaper said it has seen correspondence between Apple and a high-security test site near San Francisco, regarding a test location.
  • Apple is rumoured to be working on a self-driving car, apparently under the code name ‘Project Titan’ and has held meetings with automotive manufacturers and recruited engineers in this field, but the test site communication is the first confirmation of the project.
  • The Special Project group at Apple had contacted the test centre, GoMentum Station, a former weapons testing facility. It has over 20 miles of paved roads and streets for testing, and is still guarded by the military, offering a high degree of privacy and security.
  • Tim Cook, CEO of Apple has reportedly met with executives from a number of car companies recently, including Fiat-Chrysler, and it has also hired engineers from Tesla Motors, Mercedes-Benz, and electric car battery maker A123 Systems.

Read more at Arabian Supply Chain

Cutting out the middleman – milk price row

  • Consumers are being urged to boycott supermarkets and buy milk direct from farmers, to ensure producers receive a fair price. More than half a century after their heyday, local milk producers are back in fashion. After a collapse in the price they receive from retailers and processors for their milk, dairy farmers – who protested in large numbers over the past week – are turning to selling their milk directly to consumers.
  • While the number of dairy farmers in the UK continues to fall, from 200,000 in the 1950s to fewer than 10,000 today, a growing number are now cutting out the retailers and middlemen and once again offering up their milk locally.
  • It marks the revival of market that was lost with the emergence of refrigerated lorries and supermarkets in the second half of the last century. The use of milk as a loss leader by supermarkets to draw customers in made it impossible for a locally based dairy market to compete. But consumers and caterers are now being urged to boycott retail milk and buy direct from farms to help struggling dairy farmers receive a fair deal.
  • Although retailers and milk processors blame the falling price of milk on global markets, dairy farmers say they are being unfairly affected. They say supermarkets sell milk too cheaply as part of their price wars, and that farmers don’t receive a fair proportion of the final retail price.

Read more (and view the milk infographic) at The Guardian

Infor Buys Supply Chain Management Firm GT Nexus

  • Enterprise software firm Infor Inc. has agreed to acquire cloud-based supply chain management firm GT Nexus Inc. for $675 million, the company said Tuesday, as business solution providers race to accommodate the changing needs of supply chain executives.
  • New York-based Infor, which is one of the world’s largest suppliers of enterprise resource planning, or ERP, software, helps companies including aerospace, technology and pharmaceutical companies to track various components of their business. Oakland, Calif.-based GT Nexus provides cloud-based services, or software hosted on the remote servers, that allow companies to manage inventory and orders, and help companies communicate up and down the supply chain.
  • GT Nexus facilitates more than $20 billion in payments between buyers and their suppliers across 90 countries in eight currencies, according to a Tuesday release. Clients include Adidas AG, Caterpillar Inc., Deutsche Post DHL, A.P. Møller-Maersk, PfizerInc. and many manufacturers and retailers.
  • The deal comes as more companies are relying on technology to better manage, and gain more visibility, into the various functions within their supply chains, from sourcing to distribution. Sales of supply chain management software grew 10.8 per cent in 2014 to $9.9 billion.

Read more at The Wall Street Journal

New report raises alarm of modern slavery in supply chains

Tackling slavery in supply chains

The latest Risk Index Report from BSI identifies China, India, Vietnam, Bangladesh and Myanmar as the five highest risk countries for human rights violations.

The report highlights the significant rise in organisations breaching international human rights regulations over the last quarter as key Asian economies adapt to tougher economic conditions.

Rising labour costs in China have led companies to diversify their supply chains into other high-risk countries that now account for 48 per cent of global apparel production, 53 per cent of global apparel exports, and 26 per cent of global electronics exports.

The latest BSI Risk Index report warns that efforts by Asian governments to boost their economies are having the unintended consequence of allowing child labour abuses to become more present in supply chains. Also highlighted were proposed changes to labour laws that may incentivise firms to restructure as “family enterprises”, making it easier to employ under-age workers in a country where 4.4 million children are already put to work. Two thirds of child workers are found in agriculture (69.5 per cent), and 17.5 per cent in industries such as garment manufacturing.

The Quarterly BSI Risk Index is based on intelligence from BSI’s Supply Chain Risk Exposure Evaluation Network (SCREEN) tool. The tool identifies major CSR concerns, such as brand protection risks and changes to global regulation including the US legislation aimed at eliminating forced child labour, EU draft conflict minerals law, and the UK’s Modern Slavery Act.  All of which relate directly to complex supply chains worldwide and can subject an organisation to prosecution if their suppliers exploit human rights.

Those companies found in breach (legal repercussions notwithstanding), will also have to worry about brand reputation and the compromise of consumer trust. The latest generation of consumers, millennials, are focused on buying from ethical and responsible businesses, thus highlighting the increased importance for organisations to adopt a supply chain risk management program and implement risk-based sourcing strategies.

Modern incidents of slavery

 

Likewise the ability to ascertain country-level threats provides the needed intelligence to filter risk to underpin a socially compliant and responsible supply chain. On this very subject Mike Bailey, EMEA Director of Professional Services, BSI commented: “Some organisations underestimate the damage that can be caused by not adopting and enforcing ethical practices across their supply chain. Command and control from the centre means nothing if it is not rigorously monitored and enforced. For too long, extended supply chains have obscured ethically questionable practices, tools such as SCREEN highlight country level corporate social responsibility risks helping increase visibility and awareness, and enforce a responsible and ethical supply chain.”

Mike continued: “Organisations can no longer turn a blind eye to the actions of their suppliers. The laws we are seeing today may only apply to larger firms, but they set a benchmark for the industry and smaller organizations will be forced to comply to work with the larger companies, by default. Products assembled or services provided by child labour or depending on minerals from conflict zones have no place in the modern world.”

Premium payments are empowering cocoa farmers in Brazil

Under the Cargill Cocoa Promise, the livelihoods of cocoa farmers are being improved.

Empowering Brazil's cocoa farmers

In 2014 a total of $19 million was paid to farmers in Cote d’Ivoire, Brazil, Cameroon, Ghana and Indonesia, bringing the total to $44 million paid to date under the Cargill Cocoa Promise. The premiums, which are achieved by farmers for selling their UTZ, Rainforest Alliance and Fairtrade certified cocoa beans, are funded by confectionery and food manufacturers and retailers and are positively supporting the ongoing development of a sustainable cocoa supply chain.

Premium payments for certified sustainable cocoa are not only helping with meeting the growing demand for sustainably sourced cocoa and chocolate, but continuing to make a significant contribution to improving the livelihoods of cocoa farmers and their communities.

“Premium payments and cocoa certification remain a valuable catalyst in making progress toward a sustainable cocoa supply chain,” said Taco Terheijden, Director Cocoa Sustainability at Cargill – a provider of food, agriculture, financial and industrial products.

“We are proud to be part of this process and to see the positive developments in the sector. Not only are cocoa farmers and their communities benefitting from higher incomes and better health and education, at the same time manufacturers, retailers and consumers can be confident about where their cocoa is coming from and how it is being produced.”

The premium payments are made to certified farmer cooperatives with 50 per cent going directly to individual farmer members, and the remainder being invested in projects by the farmer organisation to boost productivity, farm development and benefit the community. The premiums are an incentive to adopt good agricultural practices and directly support improvements to make a positive difference to local communities.

Demonstrable progress can be observed  in Cote d’Ivoire, where a first of its kind public-private partnership between the Conseil du Cafe-Cacoa, Cargill and CARE has enabled 14 farmer cooperatives to use their premium payments to access additional funding.  With this they have built 11 new schools and three new health centres – teaching over 1650 children and providing access to healthcare for 25000 people.