DEVELOPMENT EFFECTS OF AGRIBUSINESS INVESTMENTS Pilot study based on three cases in Nicaragua and Zambia

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Photos

Front page, page 25 and 33. Bellah Zulu, DCA Zambia

Page 17. IFU

Report Disclaimer

This report was commissioned by the Investment Fund for Developing Countries (IFU) and DanChurchAid

(DCA). The report has been prepared by Copenhagen Social as an independent assignment and the content

does not necessarily represent the views or opinions of the commissioning organisations.

November 2017. No copyright. We encourage the use and dissemination of the report, its contents and

recommendations.

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LIST OF CONTENT

Acronyms 3

Definitions and concepts 4

1. Executive summary 6

2. Introduction 7

3. Methodology 8 Limitations 9

4. Sustainable agriculture value chains and smallholder inclusiveness 10

5. Sustainability policies of IFU and DCA 13 Policies and practices of IFU 13 Strategies and guidelines of DCA 15

6. Case study – Ingemann Nicaragua 16 Involvement of smallholders 20 Identified impacts 22

7. Case study – Silverland Zambia 24 Involvement of smallholders 28 Identified impacts 30

8. Case study – Monze Diocese Zambia 32 Involvement of smallholders 33 Identified impacts 38

9. Relevant stakeholders for smallholder inclusion 39

10. Good practices and INSIGHTS 41

11. Development indicators 47

References 52

Annex 1 Semi-structured interview guides 54

Annex 2 International framework for responsible business 56

Annex 3 Sustainable development goals indicators 57 SDG 2 – Zero Hunger 57 SDG 5 – Gender Equality 58 SDG 8 – Decent Work and Economic Growth 59

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ACRONYMS

AIFRC Australian International Food Security Research Centre

B2B Business to Business

B2C Business to Consumer

CAW Community Agriculture Worker

CBO Community Based Organisation

CSO Civil Society Organisation

CSR Corporate Social Responsibility

DCA Danish Church Aid

DFI Development Finance Institutions

DIM Development Impact Measurement

ESG Environmental, Social and Governance

FAO Food and Agricultural Organisation of the United Nations

FGD Focus Group Discussion

FRA Zambian Food Reserve Agency

IFC International Finance Cooperation

IFU The Danish Investment Fund for Developing Countries

ILO International Labour Organization

MDDD Monze Diocese Development Department

NGDO Non Governmental Development Organisation

NGO Non Governmental Organisation

OECD The Organisation for Economic Cooperation and Development

OSAWE Own Savings for Assets and Wealth

PPP Public Private Partnership

ROI Return on Investment

SDG Sustainable Development Goals

SESE Sustainable Economic and Social Empowerment Project

SLIC Silverlands Livestock Improvement Community Program

SME Small and Medium Sized Enterprises

SRL Silverland Ranch Limited

UN United Nations

UNGC United Nations Global Compact

UNGP United Nations Guiding Principles on Business and Human Rights

USD United States Dollar

VGGT Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests

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DEFINITIONS AND CONCEPTS

Agro ecological production methods Agro-ecology involves understanding and working with nature to maximise diversified and resilient production. It focuses on a multi-system and rights based approach including environmental, social, economic and political aspects to create a truly sustainable food system. Agro-ecology covers a wide range of issues, and the methods and techniques must always be adapted to local conditions and opportunities in cooperation with communities and other actors.

Contextual risks Contextual Risks covers the range of overall potential adverse outcomes that may arise in a particular context and hence could impact a broader range of risks at programmatic and institutional level. The context will usually be a country or region but could for certain programmes also be a global thematic or political frame. External actors usually have very limited control over contextual risk1.

Contract farming and Out-grower schemes

Contract farming is the generic term that covers various types of contract between companies and farmers. Agricultural production is carried out according to a prior agreement in which the farmer commits to producing a given product in a given manner and the buyer commits to purchasing it. The vast majority of contract farming projects are out-grower schemes and the terms have become synonymous. Under one of the most common forms of contract farming, a centralised processor and/or packer buys from a large number of local farmers where products often require a high degree of processing. Another form of contract farming is a variation on the centralised model; here the company has a nucleus plantation estate but also buys from local small-holders2.

Cooperatives A cooperative is an autonomous association of farmers, who unite voluntarily to meet their common economic and social needs. Agricultural cooperatives play an important role in supporting small agricultural producers and marginalised groups such as young people and women. They empower their members economically and socially and facilitate farmers’ participation in decision-making at all levels, supporting them in securing land-use rights and negotiating better terms for engagement in contract farming and lower prices for agricultural inputs such as seeds, fertilizer and equipment3.

Corporate Social Responsibility (CSR) Social responsibility of an organisation is the responsibility for the impact of its decisions and activities on society and the environment through transparent and ethical behaviour that: i) contributes to sustainable development; ii) takes into account the expectations of stakeholders; iii) is in compliance with applicable law and norms; and iv) is integrated throughout the organisation4.

Environmental, Social and Governance (ESG)

Environmental, social and governance (ESG) refers to the three central factors in measuring the sustainability and environmental and social impact of and investment in a business. ESG factors are numerous and ever-shifting. They include climate change, greenhouse gas emissions, resource depletion, waste and pollution, working conditions, local communities,

1 Danida, Guideline to Risk Management, 2013 2 Action Aid, Contract farming and out-grower schemes, 2015 3 IFAD, Agricultural cooperatives: paving the way for food security and rural development, 2012 4 Definition from the new ISO 26000:2010 guidelines, published in October 2010

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health and safety, bribery and corruption, and tax strategy. The Principles for Responsible Investment framework has incorporated ESG factors into investment decisions, to better manage risk and generate sustainable, long-term returns5.

Smallholders Small farms that rely mainly on family labour are the backbone of agricultural production in developing countries. According to FAO four-fifths of the developing world’s food is produced on small-sized farms. Small, family-run farms are also home to the majority of people living in absolute poverty and half of the world’s undernourished people.

Sustainable Development Goals 17 Sustainable Development Goals (SDGs), which set out quantitative objectives across the social, economic and environmental dimensions of sustainable development — all to be achieved by 2030. The goals provide a framework for shared action ‘for people, planet and prosperity,’ to be implemented by ‘all countries and all stakeholders, acting in collaborative partnership.’

Value Chain A ‘value chain’ refers to the activities and organisational links that bring a product from conception to its end use and beyond6. Five steps in the value chain create value that exceeds the cost of providing its goods or service to customers. The five steps or activities are inbound logistics, operations, outbound logistics, marketing and sales and service.

5 https://www.unpri.org 6 Gereffi & Fernandez-Stark, Global value chain analysis: a primer, 2011

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1. EXECUTIVE SUMMARY

Investments in agribusiness have the potential to benefit smallholders and contribute to the Sustainable Development Goals (SDGs), but they can also challenge local development. How can we unlock their potential while avoiding the challenges? There is no easy answer, but this study provides a contribution to the debate. The study looks at the role of investors and agribusiness in contributing to the SDGs through smallholder-inclusive business models that improve smallholders living conditions by linking them to the agribusiness value chain. The study also identifies learned insights that can be shared between commercial businesses and aid projects addressing smallholder inclusiveness, to enhance development effects and contribute to the SDGs. The study demonstrates the potential effects on a number of development aspects as well as key challenges. Good practices and insights related to the inclusion of smallholder farmers are presented, with the intention being that these insights can be used to inform future involvement of smallholders in commercial and non-commercial investments, thereby enhancing the positive development effects. The study draws from the experiences of two commercial businesses, the business models of which are based on smallholder farmers’ inclusion in the value chain. The cases involve the cocoa sector in Nicaragua and the cattle sector in Zambia, documenting the benefits of smallholder inclusion in the value chain for both the smallholder farmers and the commercial businesses. The third case included in the study is based on aid projects focusing on economic empowerment in rural communities in Zambia. The aid projects use community social change and capacity building as the first step to enhance agriculture and entrepreneurial skills of smallholder farmers to access the market. Despite using very different approaches to smallholder inclusion, all three cases show positive impacts as well as challenges in the effort to create development effects for smallholders. The study identifies a number of aspects that are essential for how successful the smallholder inclusion is. These include the agribusiness’ long-term commitment to working with communities, strong relationships and high level of trust; providing strong value chain linkages; enhancing smallholder farmers’ knowledge and skills for changed agricultural production and a superior business mindset; and fair sharing of costs and benefits between the agribusiness and the smallholders. Strategic partnerships are the cornerstone for the realisation of the SDGs and essential for creating sustainable inclusion of smallholder farmers, ensuring that the smallholders gain the full benefits of their informal or formal relationships with commercial businesses. However, for such partnerships to be effective they must be build on in-depth knowledge of partner capacity, strength and clear division of responsibilities. Meetings with the companies, civil society organisations and communities has shown clearly that there are many experiences to be shared and insights to be gained from the different approaches that companies and CSOs choose for smallholders’ inclusion in the value chain. Companies could ensure stronger buy-in from communities, increased productivity and sustainability of their engagement when partnering with CSOs to address underlying social dynamics, ensuring equal participation and unlocking the capacity of smallholder farmers for improved value chain inclusion. CSOs working in communities for agriculture development and improved food security would benefit from partnerships with commercial businesses that could significantly enhance the smallholders’ access to market. Impacts, benefits and challenges identified in the study relates to a number of SDG indicators and provides suggestions for where to look for changes and which indicators to monitor in order to measure contribution to sustainable smallholder inclusion. Although the development effects presented in the study primarily relate to SDG indicators for Zero Hunger, Gender Equality and Decent Work, sustainable change for smallholders

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cannot be created without capacity building and social change. For investors wanting to document the development effects of their investments, indicators must therefore be selected across the SDGs to provide the full picture of both positive contributions and potential negative impacts on smallholders’ livelihoods and economic inclusion. Since the study represents three cases only, it is not representative for agribusiness investments in general and therefore not directly suited for upscaling. Instead, the presented insights should be seen as inspiration for agribusiness investments aimed at smallholder inclusion.

2. INTRODUCTION

With a growing global population and climate constraints in the agriculture sector, future food security is at risk. Investments in sustainable agriculture are therefore important, especially in poor and vulnerable countries where natural hazards, poverty and conflicts threaten the access to food. This study has been initiated by a partnership between the Investment Fund for Developing Countries (IFU) and DanChurchAid (DCA), to show how agribusiness projects can have an impact on local development in the communities where they are present, and how insights from the projects can be used to improve processes for ensuring smallholder inclusion in commercial agribusiness projects, where applicable. IFU is a state-owned DFI with the purpose of promoting industrial development in developing countries by facilitating investments in these countries in cooperation with Danish companies and investors. The mandate and the scope for IFU’s investments have been significantly broadened over the years, from a strictly tied fund in 1967 to an untied fund from 1 January 20177. IFU’s investments in agribusiness include a commitment to creating clear development impacts through sustainable economic growth, improved competitiveness, employment creation, smallholder inclusion and transfer of knowledge. Increased food production and food security is also one of the SDGs, and as such is covered by the objectives of the new SDG fund under preparation by IFU. However, while profitable agribusiness projects may generate a return for the investors, the question of how to assess and measure development impacts is more uncertain. There is an urgent need for research, as well as the compilation of experiences and best practices, to ensure that investments in the agriculture sector, supported by IFU and other DFIs, can show how they deliver positive results for the SDGs and local communities and, at the very least do any harm. DanChurchAid carries out its work with the objective “To help and be advocates of oppressed, neglected and marginalised groups in poor countries and to strengthen their possibilities of a life in dignity”. DCA sees agriculture as key to development, and supports increased agricultural production, other income-generating activities on both an individual and collective basis, access to government safety nets and increased influence on the use of resources as part of addressing ‘the Right to Food’8. DCA focuses on innovative methods and the use of technology to enhance and scale up production, diversification of crops and livestock and support to farmers in gaining access to land and markets. DCA engages in strategic cooperation with other institutions and private sector actors to promote job opportunities and incomes in rural areas.

7 The Ministry of Foreign Affairs’ Strategy for The Investment Fund for Developing Countries (IFU) 2017-2021 8 DanChurchAid, International Strategy 2015-2018

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In line with SDG 17 on Global Partnership for Sustainable Development, IFU and DCA have taken the initiative to learn from their different approaches to agricultural development and identify new ways of cooperation as an initial step for a strategic partnership to address SDG 2, Zero Hunger. The purpose of this study is to review the impact of selected agribusiness investments with a focus on positive, negative, intended or unintended effects for smallholders (including the poor and most vulnerable) in the local communities. The study identifies effects on a number of indicators and clarifies potential contextual risks, challenges and opportunities. Based on the analysis, a number of good practices and learning insights from the case studies are presented which can be used to ensure that agribusiness projects have a positive development impact, thereby contributing to SDG 2 Zero Hunger, SDG 5 Gender Equality and SDG 8 Decent Work and Economic Growth as well as other SDGs.

3. METHODOLOGY

A desk review of project-related documents, policies of IFU and DCA, international sustainability framework and literature on smallholder farmers’ inclusion in the value chain was conducted. Site visits were made to Ingemann in Nicaragua, Silverland Ranch and Monze Diocese projects in Zambia. The site visits provided opportunities for visiting the facilities provided by the companies and the projects. Furthermore, interviews and focus group discussions were held with management, workers and staff, smallholder farmers in local communities and relevant CSO representatives.

Ingemann, Nicaragua

Silverland, Zambia Monze, Zambia

• Meeting with Ingemann management

• Interview with workers at Ingemann

• Focus group discussions with smallholder cocoa producers in El Cuá and Nueva Guinea

• Interview with community representatives in El Cuá and Nueva Guinea

• Focus group discussions with smallholder honey producers in Boaco

• Interview with community representatives in Boaco

• Meeting with SRL management

• Group interview with workers at the Ranch

• Meeting with Community Council including Council Chairperson, the Chief representative, extension services, veterinary services, district forest officer, district planning officer and bank representative

• Interviews with smallholder farmers using the Chuundwe community dipping facility

• Focus Group Discussion with smallholder farmers from the community of Mantanyani

• Meetings with MDDD management and extension officer

• Community meetings held: in Cheeba and Maiba under SESE project and in Kanchomba under the Youth project

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The interview questions guiding the process are shown below. A more detailed set of interview questions were developed for each company and the NGO cases based on their specific features.

• Did any risk/impact assessments take place, as part of the human rights due diligence process, in the project cycle (both ex-ante and ex-post)? If yes, to what extent did it include the situation of smallholders and local communities?

• What are the impacts (positive and negative) of agribusiness projects on local communities?

• What are the barriers and opportunities related to smallholders’ participation in commercial agribusiness projects?

• What are the major positive and negative developmental impacts of small holders’ participation in commercial agribusiness projects?

• What are the preconditions that need to be in place for smallholders’ inclusion in commercial projects?

• Which 3-5 key indicators of development effects could be used for monitoring in relation to agribusiness development effects and smallholder engagement (preferably aligned with SDG 2 and 8)?

• How does one best engage with smallholders in commercial projects?

• What is the best, and most cost-effective, method of organising work with a large number of smallholders?

• How can one optimise capacity building and value creation with smallholders?

• How can one design projects with scalable methodologies to accelerate local development?

• Do production methods, including agro-ecological methods, benefit smallholders?

• Assess the relevance, efficiency and effectiveness of networking with other actors e.g. CSOs (faith actors, traditional leadership, NGOs and CBOs), private sector and governments during project implementation.

Limitations

The study was undertaken over June - August 2017, with 3-5 days of visits for each of the case companies and the NGO projects. The study is based primarily on qualitative data through interviews and focus group discussion with a limited sample of smallholder farmers. The short time framework did not allow for the consultant to engage with the most vulnerable groups, who may have been left out of the interventions. This makes the study biased, since the consulted smallholders were all beneficiaries of the investments. As such the study should be seen as a pilot study, outlining positive and negative impacts, benefits and opportunities for the smallholder from agribusiness to inform future agribusiness investment. More thorough research is needed to comprehensively identify the challenges and opportunities in such a complex field with various stakeholders ranging from the most vulnerable groups to investors.

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4. SUSTAINABLE AGRICULTURE VALUE CHAINS AND SMALLHOLDER INCLUSIVENESS

According to the Food and Agriculture Organization of the United Nations (FAO)9, 80 percent of the farmland in Sub-Saharan Africa is managed by smallholder farmers, many of whom are increasingly burdened by smaller parcels of land and limited prospects for income generation. Few of these are commercial producers. In Latin America the smallholder sector constitutes 45 percent of the farmland; however, the smallholder sector in Latin America has a higher percentage of commercial farms accounting for 42%, whereas subsistence farming is only 3%10. Improved productivity and opportunity for smallholder farmers can be unlocked by expanding their access to markets, resources and agricultural inputs through global value chains. The transition from smallholder subsistence or semi-subsistence to a more commercial focus will require engagement with the value chain that connects agricultural producers to consumers via various incremental value-adding steps, such as product aggregation, storage, processing, distribution, wholesaling and retailing11. Linking smallholder farmers to modern value chains through contract farming is one of the rural development strategies being promoted to address the challenge of smallholders’ integration in markets. However, the conditions under which contract farming enhances smallholders’ prospects for inclusion in modern value chains is still debatable. A smallholder farm in the developing world is typically a family owned enterprise that produces crops or livestock on two or less hectares, although geographical differences exist, with smallholder farmers in Sub-Saharan Africa often holding less than two hectares whereas smallholder farmers in Latin America often hold 5 hectares12. Family members provide most of the labour and derive their primary means of support from the farm. Because smallholder farming is predominantly a household business, household dynamics and gender relations affect farm decision making. Men often make the major decisions about farming and crop marketing, especially when cash crops are involved, whereas women often manage their own plots, particularly for food crops.

Rural poverty is deeply rooted in the imbalance between women’s access to resources and their labour contribution13. A World Bank report14 shows that agriculture is a critical source for women’s means of subsistence in many developing countries and a key way of climbing out of poverty. Nonetheless, FAO studies15

confirm that women have more difficulties than men in accessing resources such as land, credit, inputs and services that increase productivity. In addition, FAO sees food security and family wellbeing as important reasons to protect or increase women’s access to and control of land and other productive resources, emphasising that women’s and men’s full and equal participation in agriculture and rural development is absolutely essential for eradicating food insecurity and rural poverty16.

A number of studies17 by IFC, FAO and Action Aid among others, have looked at smallholder inclusion and appropriate development models to tackle poverty and food security. The studies find that the quality and

9 FAO, Review of smallholder linkages for inclusive agribusiness development, 2013 10 IFAD, Latin America: The State of Smallholders in Agriculture, 2011 11 Australian International Food Security Research Centre, Smallholder Value Chains for Food Security, 2014 12 http://www.land-link.org 13 IFAD, Women in decision-making: meeting challenges, creating change, 2006 14 World Bank, Agriculture for Development, 2008 15 FAO, Coping with the food and agriculture challenge: smallholders’ agenda, 2013 16 FAO, Gender Action Plan 2002-2007 17 IFC, Working with Smallholders – A Handbook for Firms Building Sustainable Supply Chains, 2013; AIFSRC, Smallholder Value Chains for Food Security, 2014; FAO, Review of smallholder linkages for inclusive agribusiness development, 2013; and Action Aid, Contract farming and out-grower schemes, 2015

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productivity vary widely among smallholder farmers depending on their ability to invest in production, and that smallholder farmers face a variety of challenges18, including:

• Traditional cultivation methods

• Limited access to markets

• Largely unorganised

• Poor access to credit

• Poor soil fertility and limited water resources

• Changing weather patterns and water scarcity due to climate change

• Inefficient inter-cropping techniques

• Low literacy and numeracy

To overcome these challenges for value chain inclusion, some key conditions must be considered. The UN’s High-Level Panel of Experts on Food Security and Nutrition highlights the following conditions needed for smallholders and their organisations to benefit from value chains:

1. The value chain must be an inclusive process with the authorities, establishing a clear regulatory framework for contracts between farmers and firms to reduce the power gap

2. Secured land tenure is essential 3. The presence of farmers’ cooperatives and production groups must support smallholders in

contractual schemes by increasing their bargaining power and provide a structure to receive services such as finance and technology extension19

For agribusiness companies there are several potential advantages20 to working with smallholder farmers including the need to meet global food demand in a resource-scarce world. Contract farming provides the companies with access to land through smallholder farmers. Other advantages include minimising the risk of disease, pests or drought in the crops, as well as some crops being more suitable for smallholder production. The economic incitement is also an aspect as companies using contract farmers usually pay advances to farmer’s to cover inputs, whereas the full cost is only paid when the produce is delivered21. The smallholders also experience a number of advantages, as summarised in a study by Action Aid22:

• Inputs and production services are often supplied by the company

• Contract farming can introduce new technology and enable farmers to learn new skills

• Farmers’ price risk is often reduced, as some contracts specify prices in advance

• Such schemes can provide higher incomes for out-growers compared to non out-grower households, although not necessarily enough to take households out of poverty

• Contract farming can open up new markets which would otherwise be unavailable to smallholders

At the same time, a number of potential problems for smallholders in contract farming exist23. Contract farming schemes often exclude the poorest farmers, including farmers with no legal land rights and

18 IFC, Working with Smallholders – A Handbook for Firms Building Sustainable Supply Chains, 2013 19 UN, High-Level Panel of Experts on Food Security and Nutrition, Investing in Smallholder Agriculture for Food Security, June 2013 20 IFC, Working with Smallholders – A Handbook for Firms Building Sustainable Supply Chains, 2013 21 Technical Centre for Agricultural and Rural Cooperation, An introduction to Contract Farming, 2013 22 Action Aid, Contract farming and out-grower schemes – Appropriate development models to tackle poverty and hunger? 2015 23 DFID, Agriculture and the Private Sector, 2014

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subsistence farmers and women. Whilst contract farming seeks to enable smallholders to access value chains, research has found that this is only successful for 2-10% of smallholders24 and that only 5% have the resources and capital to integrate into such value chains25. A recent literature review conducted by the ACT Alliance26 found that linking small producers to large companies in value chains is potentially one of the most effective ways of upgrading domestic enterprises, facilitating the transfer of technology, knowledge and skills, improving business and management practices, and facilitating access to finance and markets. However, the study points out that integrating smallholders’ cooperatives into value chains dominated by large firms poses major risks and often leads to over-reliance on one customer. The risk is that the engagement is based on unequal and exploitative practices. Some of the main critics27 of contract farming are related to:

• Unequal power relationship (cheap form of labour)

• Contracts that are often been found to be inequitable

• Adverse gender effects

• Overspecialisation and unsustainable export-orientated agricultural practices

• The vulnerability of small-scale farmers to food insecurity

• Transformation of small-scale farmers into wage-earning agricultural labourers on their own land

For contract farming to work it has to be a “win-win” for both companies and smallholders. For smallholders the potential advantages include easier access to productivity-enhancing inputs, such as seeds, fertilizers and chemicals. Furthermore, the limited access to credit for agricultural activities places a restraint on smallholders. When companies provide inputs without payment until the crop is delivered, it removes smallholders’ need for credit. Furthermore, working under contract can provide smallholders with extension advice and access to land preparation services that may otherwise be unavailable28. For smallholders to invest in crops with a long growing period they need to be sure that there is a market for this crop, since they receive no income until the crops bear fruit. So when companies want to obtain a supply of this type of product contract farming is essential29. For many smallholder farmers, such investments are impossible without funding from a company, the government or access to credit. Even when such credit is available smallholders often become more indebted than they would if they followed traditional farming practices, even though in the long run they may be much better off30. A study31 based on reviews of different types of contract farming arrangements emphasizes that building trust between the company and contract farmers is essential for the process. Contracts will only work when both parties believe they are better off by engaging in them and for this to happen there must be an understanding of each others’ needs and challenges. This requires a willingness to collaborate and share information, implying that companies take initiatives to visit farmers and understand their difficulties, in order to address these with on-the-ground extension services, regular meetings and follow-up with smallholders. At the same

24 Vorley, B., Cotula, L. and M. Chan, 2012. Tipping the balance: policies to shape agricultural investments and markets in favour of small-scale farmers. IIED/Oxfam, London/Oxford 25 Seville, D., Buxton, A. and B. Vorley, 2011. Under what conditions are value chains effective tools for pro-poor development? IIED/Sustainable Food Laboratory, London/Hartland 26 ACT Alliance, Supporting small businesses in developing countries: which programmes work and why? 2016 27 Action Aid, Contract farming and out-grower schemes – Appropriate development models to tackle poverty and hunger? 2015 28 Technical Centre for Agricultural and Rural Cooperation, An introduction to Contract Farming, 2013 29 Ibid 30 Ibid 31 Ibid

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time contract farmers have to visit the premises of the companies in order to understand what the companies require in terms of product quality, delivery arrangements etc.32 Contracts must be clearly understood by the smallholders and should have some flexibility to allow for extreme events such as high prices on the local market or bad weather. Finally, contracts should allow for arbitration by an organisation or individual acceptable to both the company and the farmers.

5. SUSTAINABILITY POLICIES OF IFU AND DCA

Policies and practices of IFU

IFU has signed up to the UN Global Compact principles and promotes these principles. Through its investments IFU strives to create shared value by:

• “Respecting and promoting all basic human rights, including labour rights and occupational health and safety, and address adverse human rights impacts that the investment may cause or contribute to. This includes providing for or cooperating in the remediation of affected individuals and communities.

• Enhancing positive development effects, including creation of jobs and income, payment of taxes, contribution to government revenue, transfer of know-how and cleaner technologies, training and education, gender equality, community health and food security and other corporate social responsibility related activities.

• Securing good corporate governance and business ethics, including anti-corruption, anti-fraud, transparency and stakeholder engagement.

• Improving environmental performance through a preventive and precautionary approach that addresses environmental challenges, including climate change, loss of biodiversity and land use changes.

• Ensuring good animal welfare, including proper treatment of animals used in food production and for other commercial purposes and testing”33.

Since December 2015, UNGP has been referenced in IFU’s statutes, saying that the fund must use relevant international standards for sustainability and responsible investments based on intergovernmental agreements, including UN Guiding Principles for Business and Human Rights. The fund must continuously work to implement such standards in the fund’s investments and procedures. The same text is used in the Law on development cooperation (law no. 1741 of 27th December 2016) regarding IFU. Furthermore, IFU seeks to contribute to the SDGs and the UNGP in line with its legal mandate under Danish law.

According to IFU’s Sustainability Policy, identifying sustainable development effects is an integrated part of the appraisal process, and IFU expects its partners to share IFU’s aspirations regarding sustainability. IFU requires investees to comply with national regulations in the host country in which they operate and work towards implementing international standards, based on UN, ILO and OECD conventions, declarations, agreements and principles. Standards could include the IFC Performance Standards or other credible, globally or regionally recognised standards that encourage continual improvements. For each investee, international standards are defined as specifically and operationally as possible.

32 Technical Centre for Agricultural and Rural Cooperation, An introduction to Contract Farming, 2013 33 IFU, Sustainability Policy, 2014

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During the appraisal process, IFU’s policy states that ESG risks, impacts and mitigation measures related to each investment should be assessed, considering factors such as the sector, technology, location, host country regulations, climatic conditions and cultural issues.

This process should identify the significant issues that are relevant for the investee, and an assessment is made of the extent to which international standards are or will be implemented. An action plan with a reasonable time schedule to meet these standards and comply with IFU’s sustainability requirements is drafted as appropriate for each investee. The action plan must be approved by the project partners, including IFU, and is a condition for IFU’s disbursement.

In order to implement IFU’s sustainability policy, IFU requires investees to:

1. Operate in compliance with host country regulations 2. Comply with international standards for significant issues identified during appraisal 3. Adopt a written sustainability policy approved by their board of directors or similar governance body,

which is communicated to relevant stakeholders 4. Appoint a person with overall responsibility for sustainability, including the management of activities

and resources and delegation of tasks 5. Establish a system to ensure continuous improvement and implement sustainability decisions relevant

to the company size and sector as well as the environmental, economic, cultural and social context in which the activity operates

6. Promote sustainability issues in interaction with suppliers and business partners 7. Prepare an annual report that provides a status on sustainability issues, including the implementation

of the action plan, for discussion and approval by their board of directors or similar governance body. A copy of the report must be sent to IFU

IFU supports the Sustainable Development Goals, and has in 2016 identified ten goals where IFU investments have direct effect. These include Goal 1, 2 and 5 through the creation of decent jobs helping people escape poverty, promoting gender equality through economic empowerment, and for agribusiness investments a focus on food security, including smallholder inclusion.

Since 2016 IFU has worked to measure development outcomes using a set of indicators as part of the Development Impact Model (DIM). Indicators tracked for all investments include:

• Direct employees

• Female direct employees

• Youth direct employees

• Unskilled direct employees

• Tax contribution

For agribusiness investments, additional indicators were included in 2016:

• Annual turnover

• Area under cultivation

• Smallholder farmer inclusion aspects

• Smallholders supported

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Strategies and guidelines of DCA

DCA has engaged with the private sector for many years in various ways; as recipient of monetary donations in Denmark, as a partner in development programmes, and as a key target in DCA’s global advocacy work on land rights and responsible business. The private sector strategy was developed to enhance DCAs impact as a civil society organisation in Denmark and the countries in which DCA works in an effective and coherent manner. The point of departure for DCA’s direction is the increasing merger between the traditional divides of business and aid. The adoption of the SDGs demonstrates this development. The principles of shared responsibility to promoting sustainability, reducing inequality and preserving the world´s resources are core to the SDGs. Governments and multilateral organisations underline that the private sector can play an important role by mobilising long-term private finance and generating innovative technologies and business models to eliminate poverty and promote sustainable development. DCA sees sustainable economic growth as an important aspect of lifting people out of poverty, emphasising that development must include the poorest. A strong and vibrant civil society is a prerequisite for sustainable and inclusive growth. To promote sustainable development, new types of inclusive business models are required which build on local needs, respect for human rights and protection of the world´s natural resources. DCA seeks to play a role in local organisations’ business partnerships and advocating public and private entities to promote responsible business conduct. DCA has developed a set of CSR guidelines which lists the steps DCA should take to uphold this role and responsibility in practice, including through company screenings. Aspects of agriculture and sustainable livelihoods includes:

1. Improved, sustainable farming practices 2. Small scale farming and cooperatives 3. Use of new technologies 4. Introduction of new crops 5. Value chain development 6. Access to finance and micro credits

DCA believes that promoting a respect for human rights and Corporate Social Responsibility (CSR) are essential elements in achieving the goals in DCA’s Global Strategy (2015-2022), and to realising the overall vision of a world without hunger, poverty or oppression. CSR is therefore an integrated part of DCA’s private sector engagement in relation to DCA’s Business to Consumer (B2C) and Business to Business (B2B) strategies, as outlined in DCA’s Private Sector Strategy for 2015-2018. In this respect, CSR is understood as the responsibility that corporations take for contributing to, rather than becoming a barrier for social, sustainable development34.

34 GLOBAL CSR’s definition of CSR

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6. CASE STUDY – INGEMANN NICARAGUA

Nicaragua is one of the poorest countries in Latin America, with 46% of the population living below the poverty line. The shifting perspectives on property rights and resource governance has resulted in competing claims, undermining land tenure security, and limited investment in the agriculture sector35. Rural poverty is associated with limited access to land, with smallholder farmers on average cultivating 5 hectares36 and high a number of the rural population being landless. The cocoa sector in Nicaragua is under transformation. In the last six years both its planting areas and its production have grown considerably, making Nicaragua the largest producer and exporter of cocoa beans in the Central American region37. Cocoa is now planted on 12,276 hectares, on the land of 11,000 smallholder farmers38, most of them with areas of cocoa of less than 1.5 ha. The country’s cocoa production has historically been located in the most wooded zones of the country, such as Waslala in the North Caribbean Coast Autonomous Region and in the departments of Río San Juan, Matagalpa and Jinotega. Ingemann Food Nicaragua Ingemann Food Nicaragua is a family business of Danish origin that began operations in 2007, with support from the Danish government through the B2B Program. IFU made its first investment in Ingemann in August 2008 and the engagement is ongoing. IFU and the Danish Partner Ingemann Supply A/S are the only investors in Ingemann Food Nicaragua. Ingemann has 45 employees. The General Manager has overall responsibility for ESG issues, while the Quality Manager has the operational responsibility for ESG. Ingemann joined the Global Compact in 2011 and has reported annually to IFU and Global Compact. Ingemann has completed the UN Global Compact Self-assessment a number of times – most recently in 2015. The questionnaire includes questions related to all 10 Global Compact principles including human rights, however no formal human right impact assessment has been carried out. The company’s activities originally involved the production and export of honey. Ingemann is currently one of the main honey producers and exporter of certified honey in Central America, representing around 70% of the total export of honey from Nicaragua, with approx. 20,000 hives of its own. Around 650 smallholder beekeepers from the areas of Chinandega, León, Estelí, Jinotega, Matagalpa, Boaco and Rivas commercialise their honey through Ingemann. The smallholder beekeepers act as informal raw material providers for Ingemann, and there are no contractual agreements. Honey producers can sell to the company as long as they meet the established quality standards39 which are adequately analysed by the company’s laboratories. Ingemann offers producers provision of input through its apiculture centres and has 10 collection centres for the product located in the country’s main production zones, guaranteeing traceability from the producer to the export barrel. Participation in Ingemann Beekeeping Academy (2012-2013) has been an important mechanism for smallholders to join the value chain of honey production.

35 http://www.land-links.org/country-profile/nicaragua 36 FAO, The economic lives of smallholder farmers, 2015 37 VECO-COSUDE, Situación Actual de la Cadena de Valor de Nicaragua. Proyecto Gestión del Conocimiento de la Cadena de Valor de Cacao en Centroamérica, 2016 38 Ministerio de Economía Familiar MEFCCA 39 Quality is determined by indicators such as humidity (max. 18%), flavour and HMF (indicator of the freshness of the honey)

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In 2013 Ingemann moved into the cocoa sector with the acquisition of Xoco S.A. Following the takeover of the portfolio of more than 300 smallholder farmers and the subsequent approach and understanding of the smallholders’ situation, it became clear that the cocoa sector suffered from a lack of technical and business understanding. Ingemann’s previous experience in building capacity for beekeeping among smallholders was used to address these shortcomings.

A Cocoa Academy was established and implemented over 2015-2016, drawing from the experiences with the previous Ingemann Beekeeping Academy40. The initiative was to benefit smallholder cocoa producers41 by providing them with technical training to improve their productive activity and productivity, targeted to the existing weaknesses in the cocoa sector, including:

1. Low yield caused by insufficient technical understanding on behalf of the producer 2. Lack of availability of adequate inputs such as agro chemicals and fertilizers developed for cocoa 3. Unreliable and expensive local testing solutions for soil, water and foliar42 4. Insufficient access to working capital

40 Ingemann Beekeeping Academy was established and implemented over 2012 - 2013, training 557 smallholders in beekeeping and honey production 41 Small growers are defined as producing on 0.5 - 3.5 ha, whereas medium growers produce on 3.5 - 7 ha 42 As part of the program Ingemann established a laboratory for soil testing

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5. Generally poor financial management 6. Short-term focus in decision-making

As Ingemann does not have investments in fine cocoa plantations, the business model is based on the production of cocoa among smallholder farmers. The business strategy has therefore been to promote the establishment and development of the crop with the smallholders, i.e. the first link of production, with the company assuming the processing and commercialisation of the product. Ingemann combined four elements to create optimum conditions for the small and medium cocoa growers to increase their productivity; i) Cocoa Academy to enhance knowledge of crop management; ii) established laboratory to identify specific needs of each farm; iii) availability of specialized products and input for an optimum production of cocoa; and iv) facilitation of financing to be reimbursed upon harvest of the cocoa. The Cocoa Academy involved the following aspects:

• 200 producers to participate over 24 months

• Modules included both technical (theoretical and practical) and business aspects

• Ingemann’ s Code of Conduct shared as part of the curriculum

• A complete manual drafted for each module and given to participants

• Implementation of the theoretical material supported by a monthly visit from the technical team

• Training held in cooperation with the local cooperatives, strengthening the relationship between the smallholders, the cooperatives and Ingemann

• The involvement of the cooperatives emphasises the relevance of the cooperatives for the smallholders. The training of the cooperatives technical staff reinforces the long-term sustainability of the cooperatives

Training was conducted in the communities, with 20-25 men and women in each group. Participants were tested before and after the training to verify knowledge level and enhanced capabilities. Experiences from the beekeeping production43 and the Cocoa Academy’s efforts in targeting existing shortcomings in the cocoa sector suggest that a significant increase in production due to maturity of the tree crop could be expected. Such an increase would directly transfer into farmer income.

Production cycle

Expected Yield (Kg) Expected farmer income (USD)

2013/2014 10,000 27,500

2014/2015 35,000 96,250

2015/2016 95,000 261,250

2016/2017 170,000 467,500

Source: Application for financing the Ingemann Cocoa Academy

The tables show the expected results of the Cocoa Academy as estimated by Ingemann prior to implementation. The actual results of the implementation 2014-2017 will be validated through a consultant analysis later in 2017. However, monitoring of the actual effects have shown a higher yield during the first two fiscal years (2013/2014 and 2014/2015), whereas the volume produced in the latter two has been lower than expected due to severe draught, which has strongly affected the agricultural production in Nicaragua,

43 The Beekeeping production shows that for each dollar invested in the production by the smallholders, they received more than three dollars in increased production during the period 2012 – 2014

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including the yields of cocoa. The negative production yields did not translate into lower income due to the steadily growing cocoa market price. The expected income was based on the assumption of USD 2.75 per kg cocoa, whereas the actual price has been higher and for the coming years is expected to reach USD 3.64 per kg. According to the finance application, Ingemann expected the Cocoa Academy to improve the farmer's income by 15% and thereby roughly ensure the smallholders their return on the investment by the end of 2017. According to the monitoring of farmer income, it is still expected that farmers will meet their ROI in 2017. Additional improvements expected from the cocoa production scheme include:

• Upgraded farm practices acquired through the training program will help maximise the production potential of each farm introducing agro-ecological practices

• Access to financing44 for agrochemicals will support this economic development even further

• Basic management tools to help them administer their money

• Increased awareness about the environmental impact of cocoa production and techniques to mitigate these negative effects

• Understanding by the farmers of the CSR policy of Ingemann and their stand on e.g. the use of child labour

Source: Based on information from Ingemann

The cocoa value chain has a high degree of gender division of labour. Women are mainly involved in developing the functions of nurseries, cocoa bean fermentation and drying and sub-products, while activities

44 According to information provided by the producers and Ingemann, the producers have not received funding for agrochemicals, although it was an expected result. What currently exists is an agreement between Ingemann and PROFYSA (a private company) in which, through a formalized alliance, PROFYSA provides a discount on agrochemicals for smallholders linked to Ingemann

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involving maintenance and harvesting are done almost exclusively by male heads of family or by hired labour45. It should be emphasised that women’s participation in the value chain is often limited by their domestic household responsibilities. In other words, the cultural paradigms of ‘gender roles’ interfere with greater participation by women in the value chain of both products. Nicaragua’s legal framework is favourable to women and according to the World Economic Forum (2016 Global Gender Gap Report), Nicaragua is in tenth place in gender equality among the 144 countries measured. Nonetheless the country is facing a gap between formal equality and substantive equality. Despite the existing legal framework, women continue to face vertical and horizontal segregation in the productive sectors due to the lack of specific policies that would make the legal framework operational, especially in the private sector. Specific instruments are lacking that would strengthen their access to different links of the value chain with equal rights, decent jobs and equal remuneration to men, which would lead to a contribution to economic growth and thus to poverty reduction. Ingemann is currently drafting a gender equality policy. According to information provided by Ingemann, the company employs 45 workers, including 30 men (67%) and 15 women (33%). The women are mainly employed in the administration and the nurseries, although some work in the processing plant. A woman was employed as coordinator of the Academy and also provided training on financial aspects of the cocoa production whereas the agro-technical trainers were men, as was the team providing technical assistance to smallholders. Data on the attendance percentage of female smallholder farmers in the Cocoa Academy could not be obtained. An estimation based on the Ingemann baseline, interviews with key personnel and the participant lists in the Academy suggested that women’s participation in the Academy did not exceed 20%, although more women were invited for participation. With the cocoa production increasingly affected by climate change, Ingemann has taken steps to establish an early warning system, strengthen communities coping mechanisms and make smallholders more resilient to climate change. Through a strategic partnership established in 2016 with the Nicaraguan NGO Centro Humboldt and the international development agency Christian Aid, Ingemann will engage with smallholders to collect climatic and phonological information and to train and advise smallholders in how to adjust their practices accordingly. The aim of the initiative is to reduce risk of climate change impacts and secure honey and cocoa production.

Involvement of smallholders

According to Ingemann, 288 smallholders are in a commercial relationship, which is legalized and formalized through a long-term contract, for the production of fine cocoa. The mechanisms of involvement in the value chain include:

• Promotion of the growing of fine cocoa and creation of alliances with agricultural cooperatives where these exist, for the inclusion of smallholders in the cocoa production

• Signing of a contract with the smallholders

• Supply of the six varieties of fine cocoa plants which Ingemann promote

• Training of smallholders through the Cocoa Academy

• Provision of technical assistance on the smallholder farms, including crop management: pruning, shade management, fertilization, pest and disease control

45 Escobedo Adriana, Cadena Productiva de Cacao en Nicaragua, Proyecto Cacao Centroamérica, 2010.

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• On-farm collection of the production, which is advantageous for the smallholders as they don’t have to transport the production themselves

• Payment to the smallholder

During the community meeting and interviews, several smallholders mentioned that they had not received a copy of the signed legal document, and that the original contract was currently in the hands of Ingemann. It would seem that this unclear situation for the smallholders relates to the contracts originally being signed with Xoco, which was only later bought by Ingemann. However, the poor practices of Xoco is now negatively impacting the relationship, since the smallholders’ trust in the company is affected. In terms of agro-ecological practices, it was verified that the importance of the environment and the promotion of some agro-ecological techniques were effectively shared with the smallholders as part of the crop management modules, alongside recommendations on protecting and preserving the natural resources, the water, soil and forestry environment through e.g. contour planting, soil and water conservation works, and avoiding fires and contamination of the bodies of water. It should be noted that with respect to the establishment of contour planting and soil and water conservation works such as dikes and irrigation ditches, some smallholders said these are not being put into practice. According to the smallholders, conservation works require an investment, whether by hiring workers or in time and personal effort, that they were not able to make. Considering that cocoa is a shade crop, efforts have been made to promote agro-forestry systems by establishing additional trees in the cocoa plantation. Promotion of fine cocoa In the initial stage, the Xoco Company promoted the crop in different areas of the country by contracting technicians as sales promoters. The main function of these technicians was to promote the cultivation of fine cocoa through campaigns involving the sale of cocoa plants produced in the company’s nurseries. As part of this campaign to promote the cultivation of fine cocoa, relations and alliances were created with agricultural cooperatives, negotiating agreements to promote the establishment and development of the crop. These cooperatives are mainly in the municipality of Nueva Guinea in the South Caribbean area of the country. Strategic alliances with cooperatives Through the alliances with cooperatives, the smallholders associated in these organisations accepted the productive proposal of fine cocoa promoted by Xoco and the allied cooperative, for which they signed contracts and assumed the debt for establishing the crop. The contracts were signed before Ingemann acquired the company and basically represent the amount corresponding to the purchase of plants of grafted fine cocoa varieties. According to the baseline data of the project, 70% of the smallholders received credit for the crop. The contractual commitments by the company include i) guaranteed purchase of the fine cocoa production, ii) guaranteed price for the production of fine cocoa, 20% above the price established on the New York Stock Exchange; iii) guaranteed purchase of the entire production volume, independent of whether it is large or small quantity; and iv) collecting of the fine cocoa harvest at the farm. The contractual commitments by the smallholders include selling the entire fine cocoa production to Ingemann for the plantation’s useful life46 including adequate management of the crop to an agreed quality.

46 The smallholders say the valid contract period is 30 years, but the information from Ingemann refers to 20 years. It should be noted that the consultant did not have access to any contract for review purposes

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Capacity development 48% of the total number of contracted smallholders participated in the Cocoa Academy. Given the time that has passed and the nature of the crop, it is not yet possible to see the implementation of what was learned in the Cocoa Academy in the field and more specifically in the production results, but it is important to note that the smallholders interviewed found the training had a positive impact on their level of knowledge and their ability to manage the crop. Technical assistance The technical assistance provided by Ingemann initially involved visits to the farms by the technician assigned for each zone, but it was noted that many smallholders did not put the technician’s recommendations regarding crop and pest/disease control management into practice. As a consequence, it was decided to change the technical assistance scheme to a community based model. For the management of the company, the challenges still remain, however. Interviews with smallholders suggest that they see the technical assistance as valuable and consider it a positive and necessary aspect for developing their productive activity. Sale of fine cocoa plants and collection of cocoa beans Ingemann offers fine cocoa plants of the six varieties they promote for sale to smallholder farmers, independent of whether or not they have participated in the Cocoa Academy training. Ingemann collects the fine cocoa production from the smallholder farms. This is a major support to smallholders, since transportation of their production would otherwise be a challenge. The field technician for each zone is in charge of monitoring the maturity level of the plants on each farm and reporting to the company, programming the collection day and the work route for each zone. Payment of smallholders The smallholder turns over the production of fresh fine cocoa beans covered in mucilage, which are then transported to the Ingemann agro industrial plant, where the fermentation and drying of the bean is done to later establish the yield of dry beans. This process can take from a month to a month and a half. Once the yield in dry beans is established, the corresponding payment is made to the smallholders. The payment to the smallholders is made through a banking or financial entity or multi-service cooperative present in the given municipality.

Identified impacts

The following impacts and challenges have been verified through FGD and interviews with smallholders in the municipality of El Cuá, department of Jinotega and the municipality of Nueva Guinea, South Caribbean Autonomous Region. Positive Impacts /Opportunities

1. Increased level of income for smallholders (SDG indicator 2.3.2). The productive results of fine cocoa in the municipality of El Cuá has not reached the expected levels according to information provided by interviewed smallholders, but given the agro-ecological conditions and soil

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characteristics of the zone, results are being obtained that permit foreseeing that the crop is slowly responding to the proposed expectations. In this regard, the company is collecting the harvest, the debt is being paid and the smallholders are receiving some additional income for their household.

2. Improved environmental preservation (SDG indicator 15.1). In the training modules developed in the Academy of Cocoa, guidelines were provided for caring for and protecting the environment, although an agro-ecological model as such was not promoted47. Nonetheless, the growing of fine cocoa represents the establishment of an agro-forestry system with a direct positive impact on the environmental conditions in the communities by constituting a reforestation process that with adequate management involves preserving and conserving the natural resources and the environment, such as water, soil and forest. While the crop is currently in the development process, the vegetative results of the crop in the area of El Cuá offer expectations that forestry systems represented by the cultivation of cocoa will develop and mature permitting environmental benefits.

3. Creating employment opportunities (SDG indicator 8.5). The development of the fine cocoa crop in the communities has generated employment in the agriculture production, with temporary job generated on the smallholders’ farms during peak season for activities such as pruning, shade management and harvesting of the cocoa beans.

Challenges/negative Impacts

1. Negative production results for cocoa (SDG indicator 15.1 and 4.4). According to the smallholders in the municipality of Nueva Guinea, the productive results of cocoa are negative given the agro-ecological and soil conditions, resulting in an estimated 50%48 loss of plants; in other words, these smallholders have lost the investment they made in the establishment of cocoa. This negative impact could largely be attributable to: a) soil studies not being carried out, despite being recommended by technical specialists, for the establishment of the cocoa crop, and specifically addressed in the corresponding module shared with the smallholders; b) the Cocoa Academy having started after the crop was established in this zone; c) although each smallholder with a contract received more than 35 individual visits from Xoco/Ingemann technicians, many of the recommendations were not implemented, resulting in increased mortality and yields lower than expected.

2. Difficulties of smallholder to meet the financial payment plans (SDG indicator 8.3). The production of cocoa has not fulfilled the expectations that were originally established. In many cases this is due to the lack of investments from the smallholders, who have had to prioritise their funds for farm management between short-term returns (corn, bean, coffee already in production) and cocoa (which will only produce in the future). According to the smallholders, the productive proposal of fine cocoa, initially made by Xoco, indicated that from the second year the crop would enter the production stage and the production obtained by a five-year period would allow the payment of debt related to the initial investment in the crop. A technical specialist interviewed mentioned that cocoa is characterised by a minimum flowering period of two years, reaching full maturity only after eight years. According to the consultations, Xoco did not establish demonstrative plots with the varieties of cocoa it was promoting in the different zones where it promoted the crop. The productivity obtained so far varies in the different zones, with levels as predicted in El Cuá and Bocay, whereas the production level in Nueva Guinea is lower, due to the agro-ecological and soil differences

47 Definition used from Ley de fomento a la producción agroecológica u orgánica en Nicaragua – Ley no. 765 ‘Agro-ecological production: productive process where local resources are maximized and the synergy of processes at the agro-ecosystem level, uses practices that favour its complexity, adopting biological control and organic nutrition in an optimal way in the management of the production system or the farm’ 48 Percentage estimated by the smallholder farmers interviewed

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between the two zones. Despite the differences between the zones, the financial proposal presented to the cocoa producers was not adjusted to the productive reality of the crop in the different zones. This means that the smallholders were obliged to pay the financial commitment before the crop reached its peak productive period.

3. Decrease in the payment capacity of local cooperatives (SDG indicator 8.3). The above also affects the local cooperatives, as the productive results have affected the quality of their portfolio as credit cooperatives due to the smallholders’ limited payment capacity. Another aspect is their image and credibility with the smallholders and the communities, given their promotion of the crop in the zone for smallholders to invest in a crop that has not given the expected productive results.

4. Lack of transparency of contracts (SDG indicator 16.7). The relationship of the smallholder farmers with Ingemann is formalized by a contract, but some smallholders said they do not have a copy of their contract, which has had a negative impact on the confidence the smallholders and the communities have in the company.

5. Low level of women’s participation (SDG indicator 5.5). The lack of a gender equality policy addressing issues in the work with smallholders could constitute a barrier to promoting greater participation by women in the value chain.

6. Insecure land tenure (SDG indicator 1.4). The insecure land tenure in Nicaragua significantly impact smallholders’ incentives to invest in new production schemes and shifts in crops such as cocoa with a long maturity period. The lack of secure assets also impacts smallholders’ access to finance and means that they have little or no access to formal credit.

7. Lack of human rights due diligence. Since no structured human rights due diligence has been conducted, the company is not able to address human rights risks and opportunities through a proactive and strategic approach. A proper human rights due diligence process would help ensure that the company is aware of all current and potential impacts that their operation may have on human rights, including smallholders with whom they engage. Knowing the potential impacts will assist the company in putting a proper process in place for avoiding and mitigating these.

7. CASE STUDY – SILVERLAND ZAMBIA

Zambia is a rural low-income country with widespread poverty. Some 80% of the rural population makes a living through subsistence farming on customary land, with smallholder farmers cultivating on average only one hectare per household. Despite the 1995 Land Act which allows conversion of customary land to state land with private leaseholds interest, 80% of the land is held through customary tenure through administration of traditional leaders49. The livestock sector is one of the key economic sectors in Zambia with a Gross Domestic Product (GDP) contribution of 7.4% in 201050, and accounts for about 35 percent of the national production. The beef sector is segmented between standard beef produced by smallholder farmers under generally a low intensity production system, and high quality beef produced primarily by commercial farmers and fattened in feedlots. Cattle production is increasing in Zambia with an annual increase of 7.5% and a projected production of 4,984,909 cattle in 201651, but despite this growth the cattle density in the country continues to be low.

49 http://www.land-links.org/country-profile/zambia 50 Ministry of Agriculture and Livestock annual report, 2010 51 IAPRI, Zambia Agriculture Status Report 2016, 2016

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A recent report by the World Bank shows the huge potential for developing Zambia’s beef industry identified poor disease control as the main reason for Zambia’s low cattle density and its ability to sustain cattle production52. Silverlands Ranching Limited Silverlands Ranching Limited is part of the SilverStreet Group, which is a leading investor in the agricultural value chain. The Group is based in the UK but have businesses across six countries in Sub-Saharan Africa in a range of crops and across the value chain, the Silverland Ranch being one of approx. 15 agribusiness investments. The SilverStreet Group has more than 30 investors, among which these are three DFIs, namely CDC Group (UK), Finnfund and IFU. Furthermore, three Danish pension funds and a couple of Church organisations are among the investors. Silverlands in Zambia has an established ESG system, with an ESG manager based in Lusaka, who holds overall responsibility for ESH issues. The HR manager at the Silverland Ranch has the operational responsibility for ESG at the ranch. Annual reporting on ESG performance is prepared by SilverStreet including status on ESG management system implementation, identified annual ESG review actions and status on responses to prior Environmental and Social Action Plans. No formal human rights impact assessment has been carried out.

52 World Bank, What Would it Take for Zambia’s Beef and Dairy Industries to Achieve their Potential? 2011

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Silverlands Ranching Limited (SRL) is comprised of two contiguous farms, the Forsythe Ranch (19,000 ha) which was purchased in 2013, and a further strategic acquisition of the neighbouring Happy Rest Farm (1,692 ha) in 2015. The strategic acquisition (the Happy Rest Farm), borders the national highway to Livingstone and provides direct access to the Zambian market. The combined land area is over 21,000 ha located in South-Western Zambia, in the Zimba District of Zambia. The Zimba area is regarded as the best location for commercial cattle farming in Zambia with high quality ‘sweet veld’ grazing and the ideal climate. SRL is an integrated cattle and cropping business employing around 300 people on either a permanent or temporary basis. The cattle business consists of a ranching division that breeds and fattens animals on natural and irrigated pastures before supplying animals to the intensive feedlot division. The feedlot division obtain animals from the ranch as well as smallholder farmers, which are then fattened before being sent to the abattoir. The intention is for the feedlot division to supply the abattoir with enough cattle to make a profitable business. The supply of cattle from smallholders is therefore a strategic and integrated part of the business model, and critical for the business success. The cropping division supplies the internal feedlot with raw materials for the animal feed and also produces a cash crop for external sales. The addition of fodder production has allowed an increase in the herd density on the ranch. Purchases of sunflower cake and maize are also made from the smallholder farmers to add to the feedlot division.

Source: Based on SRL Intervention Proposal 2016

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A small-scale farming program has been established known as SLIC (“Silverlands Livestock Improvement Community Program”) as a ‘hub-outgrower’ model, which provides cattle dipping services and is currently impacting around 14,500 animals per month while the changing lives of the communities around the farm and furthermore creating a reliable source of cattle for the value chain. Through rehabilitation of community dipping stations and provision of basic veterinary care, the program encourages smallholders to bring their livestock for dipping, deworming and vaccination services offered at a small fee. Another aim of the program is to promote income generation for smallholders through the sale of cattle to the feedlot. The feedlot can provide a sustainable market for smallholders and through the program, the company purchases excess steers from the smallholders for fattening. Part of the training provided to farmers during dipping activities revolves around educating them to develop a mindset from wealth preservation to income generation, i.e. commercialisation of the livestock sector. SLIC is critical to the success of SRL and is separately managed under its own division. SLIC is tasked with (i) improving animal health in the communities; (ii) improving animal genetics in the communities; (iii) sourcing high quality animals from communities, for both direct slaughter and feeding stock; and (iv) sourcing maize and sunflower from communities. Additional benefits from the interaction with the communities is that it has minimised bush fires and theft at the Silverlands ranches. For SRL, the benefits of SLIC are the sourcing of standard commercial direct slaughter and fattening stock with good profit, creating a disease-free zone around the SRL and ensuring an important food source and trading commodity. The goal in 2017 is to purchase approx. 1,000 head of cattle. During 2018-2020 it is envisaged that the SLIC program will expand dipping services to some 30,000 head of cattle per month and purchase approx. 4,500 head per annum from smallholders’ communities. Some 15 demonstration plots, introducing drought resistant crops such as yellow maize and sunflower, have been established throughout the area and are generating interest amongst smallholder farmers. The program has commenced purchasing sunflower cake from the communities. The sunflower cake is used as one of the main protein constituents in feed mix. The company has set a target of 400 tonnes for 2017-2018 and it is anticipated that this can be achieved with increased planting as well as the introduction of sunflower seed cake presses for use by the communities. It is hoped to expand this program during 2017 and 2018 by establishing satellite grain storage facilities along with sunflower presses, which will be serviced by SRL on a weekly basis. SLIC is supported by the Zambian NGO Musika53, which specialises in building value-added commercial relationships between companies and smallholders that integrate the provision of information and technology adoption and provide confidence and long term incentives for smallholders to invest in their farming business. Surveys of SLIC smallholder farmers and their cattle were undertaken by Musika including surveys of existing cattle, a detailed herd survey of a sample of households herds including health aspects, sales and veterinary practices, and a socio-economic survey of a sample of SLIC households, including income, health and household diet. The SRL intention is to move up the value chain into a beef processing business and further develop a market for drought resistant crops. The business value chain is being developed by establishing a feedlot. Further

53 Musika is a non-profit company owned by six key Zambian agriculture-related institutions, namely; Zambia National Farmers Union (ZNFU); Golden Valley Agricultural Research Trust (GART); Grain Traders Association of Zambia (GTAZ); Indaba Agricultural Policy Research Institute (IAPRI); Zambia Seed Traders Association (ZASTA); and Bankers Association of Zambia (BAZ)

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expansion of the SLIC program is essential to ensure scale is achieved as well as a sustainable supply of cattle for the future beef processing facility. Silverlands employs 202 permanent workers and 99 casual workers (less than 6-month employment). Approximately 50 families have moved to the area from e.g. Lusaka and live on the ranch. Three-quarters of the workers are from local communities. Interviews with workers and communities shows that the majority of the workers are smallholders with limited production resources (1-5 cattle and a small piece of land under cultivation). These smallholders are struggling to make a livelihood from their farming activities and therefore seek employment at the Ranch, some of them were already employed by the Forsythe Ranch. Workers say that they have few cattle at their homesteads, which they take to the dipping stations and thereby benefit from the SLIC activities.

Involvement of smallholders SRL are in the process of building commercial relationships with smallholder farmers. Although the number of smallholders that have sold their cattle to the SRL feedlot is only approx. ¼ of the expected capacity, smallholders in 14 communities are using the dipping facilities, thereby improving the health and quality of their cattle. The mechanisms of involvement in its value chain include:

• Providing community dipping services, vaccination and training related to animal health

• Providing a market for traditional cattle by developing a feedlot

• Promoting drought resistant crops which are purchased as input for cattle feed

• Establishing trial plots and providing extension support for the crops they promote

• Setting up input and storage facilities at existing trade stations accessible to communities

• Payment to the smallholder farmers for cattle and crops

The communities manage the dipping stations through committees with up to 10 members including a chairman, vice chairman, secretary etc. The committee takes responsibility for organising the dipping process, allocating different responsibilities and tasks to community members to ensure that the dipping is carried out in an effective manner. Access to community dipping stations Seven community dipping tanks (formerly established by the government) have been rehabilitated and reconstructed. An additional seven new community dipping stations (spray races) have been established with a total of 14 communities now having access to weekly dipping of their livestock. As of August 2017, 770 farmers are bringing their cattle for dipping at the 14 stations with a total of 14,500 cattle accessing the facilities. The number of cattle that smallholders bring varies greatly among households, ranging from four to 100, with an average of around 20 cattle per family. The dipping is organised by committees, the Headmen are not committee members, but will act as mediators in cases of disputes. A SLIC employee is responsible for mixing chemicals, formerly a challenge in the communities, and ensuring that facilities function so the dipping is effective. The presence of the SLIC employee provides smallholders with access to knowledge and provision of training on animal health, sickness and treatment at the dipping stations, as well as provision of vaccination programs against blackleg and anthrax. The smallholder farmers say they lack confidence in the government vaccination program which they find ineffective and expensive, and therefore prefer to use the vaccination program provided by SLIC.

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The initial cost of rehabilitating or constructing community dipping stations has been borne by SRL, whereas the costs of operating the dipping stations are shared with the communities. Smallholders pay a small fee per cattle they dip. This amount is primarily used to cover the cost of the chemical used for the dipping, with excess funds used to maintain the facilities. Communities are primarily managing the stations through the community committees, with SRL covering the cost of SLIC employees, whereas capital items such as vehicles are provided by Musika. The cost sharing model is beneficial for all partners, with the smallholders saying that the price for dipping is lower than the expenses they would otherwise have for spraying their cattle manually. Recently, two additional communities have approached SLIC to be included in the dipping services, and currently one dipping station is under construction. The second community is outside the current operating areas yet has been inspected for assessing future cooperation. Access to feedlots for community cattle The established feedlot system for traditional cattle has provided the smallholder farmers with an alternative market for their cattle. The price that farmers receive for the traditional cattle when sold to the feedlot is higher than what they would get from selling to the existing abattoir in Zimba, since it represents the added value that the feedlot provides to the traditional cattle and the expected higher slaughter prices in the end. The feedlot is available for all communities around the 200 km2 ranch. One of the challenges of scaling up the intake of cattle in the feedlot is awareness in the communities. With the establishing of the feedlot in 2017 farmers have started to bring their cattle for sale into the feedlot. The SLIC target is 1000 families in order to draw the attention of the communities as a valuable option. Promotion of drought resistant crops SRL is promoting yellow maize and sunflower seeds among communities with the incentives to sell the crop to Silverlands for cattle fodder. Community meetings have been held in order to promote the crops. Trial plots have been established and extension staff have been deployed into communities to promote the production of these crops. Currently, SLIC is establishing input and storage stations in cooperation with Musika, by putting up physical structure facilities at five trade stations. By inviting commercial fertilizer and seed companies to use these facilities, SLIC is engaging with commercial entities to ensure, on a commercial basis, the availability to smallholder farmers of appropriate fertilizers and correct varieties of seed for sunflower, sorghum, millet, yellow and white maize. The next step is to create appropriate storage facilities in the communities from where products can be collected. An oil seed pressing facility is currently being established to serve the smallholders in processing their sunflower seed to produce sunflower oil for consumption as well as sunflower cake, which is a key ingredient in stock feed rations and will be sold to SRL. FUTURE PLANS:

• Extending the dipping facilities to include 28 sites by end of 2019

• Establish an abattoir which will increase the number of cattle that Silverlands can buy from smallholder farmers, and also increase the prices that they can pay for the cattle, given that it will

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be directly linked to the market. SLIC wants to use the abattoir as a transparent showcase for smallholders to show them the difference between healthy and less healthy cattle, and the direct link to price that the farmer receives per kg, as well as to raise awareness of how to increase health in the farmers’ herds

• The community cattle are a key source of cattle supply for the SRL feedlots and abattoir, and it is hoped that they will create a market for the purchase of up to 4,500 SLIC animals per year

• Establish a Farmer’s Information Centre and operational hub from where all operations can be based and relevant information be disseminated, including a learning facility providing training for selected community farmers, thereby creating a peer educator program to further extend the positive impact in communities

Identified impacts

The following impacts and challenges has been verified through FGD and interviews with smallholders in the communities of Chuundwe and Mantanyani.

Positive impacts

1. Improving calving and mortality levels within community herds (SDG indicator 8.2). The dipping facilities have led to control of corridor disease in SRL surrounding communities. The halt in animal deaths is helping the smallholders to build healthy cattle herds and has significantly increased their number of cattle. Whereas farmers with larger herds of cattle are already selling to the SRL feedlot, the smallholders with less cattle are using the improvements in animal health seen through dipping to build their herd.

2. Access to knowledge (SDG indicator 4.4). The presence of SLIC employees at the dipping stations has provided smallholder farmers with easily accessible knowledge and awareness regarding animal health, feeding and livestock management. Interviews with smallholders show that this has led to increased knowledge sharing among farmers in the different communities.

3. Access to sell cattle to the feedlot (SDG indicator 8.2). The prompt and accurate payment for the cattle is key to smallholders when bringing their cattle to the feedlot. According to the SLIC program manager the connection and good relation to the local bank has been essential for providing prompt payment for smallholder farmer services. The smallholder farmers receive a higher payment from the cattle they sell off to Silverlands’ feedlot than when they sell the cattle directly to the abattoir in Zimba.

4. Creating a market for drought resistant crops (SDG indicator 2.3). The promotion of yellow maize and sunflower, which have a higher drought tolerance than conventional maize crops, means that smallholders are able to diversify their crop production. Smallholder farmers typically grow white maize, which has been promoted by the government for years. However, as there is no market for white maize, the farmers are experiencing difficulties in buying inputs for next year’s production. Creating diversification of cropping in the communities also means that smallholders increase their food security, as the crops can be used not only for sale but also for home consumption, with better nutritional qualities than the traditional white maize which is relatively poor nutritionally. A readily available market for yellow maize and sunflower will lead to less farmer dependence on the Zambian Food Reserve Agency (FRA), which concentrates exclusively on purchasing maize from smallholders at low prices, leading to a much diminished market for crops other than white maize.

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5. Creating a secondary industry within the communities (SDG indicator 8.3). The production of sunflower cake, which is a key ingredient in stock feed rations, is done by way of extracting the oil to create sunflower cake. The sunflower oil, which is a by-product in this process is extracted for human consumption. The SLIC sunflower cake processing provides smallholders with different options: i) to sell their sunflower to the processing for cash payment; ii) to provide the sunflower seeds to the processing facility in return for the extracted sunflower oil; or iii) for communities with a sunflower oil press to sell the sunflower cake.

6. Creating employment opportunities (SDG indicator 8.5). The primary production of cattle at the Silverland Ranch provides access to employment for unskilled workers of which many are poor smallholders from surrounding communities with few production resources, and who are struggling to make ends meet.

7. Improved food supply and improved household economy (SDG indicator 2.1 and 2.3). The promotion of sunflower and yellow maize is improving households’ nutrition as a result of a broader spectrum diet. At the same time access to a market for both crops and cattle is positively affecting opportunities for improving household income, which in the longer term may contribute to poverty alleviation in the area.

The following challenges/negative impacts have been brought up by smallholders and/or SRL.

Challenges/negative impacts

1. Access to water (SDG indicator 6.4). Two of the fourteen smallholder communities that are part of the dipping program are experiencing limitations in the availability of water for e.g. dipping, which use on average 3.7 litres per cattle, and watering of their herds during the months October - December. The limitation of water availability is because it is naturally a very dry area, which is exacerbated by climate change and not directly linked to the dipping activities. However, water is the limiting resource determining the number of cattle that can be managed in the communities and a challenge for sustainable livestock management in Southern Zambia.

2. Need for continued focus on increasing awareness on animal health (SDG indicator 4.4). Despite ongoing training by SLIC employees, it is a continuous challenge to ensure that the smallholders understand the necessity to continuously dip their cattle in order to keep their herd healthy. Especially when starting the dipping in new communities, there is a tendency for smallholders to stop attending the dipping once they experience that their animals have stopped dying. In this respect the presence of SLIC employees at the dipping station and the establishment of a Farmer’s Information Centre is important contributions to raising community awareness.

3. Sustainable level of cattle in the communities (SDG indicator 15.1). An analysis of the number of cattle that can be sustained by the natural environment is essential to avoid depletion of natural resources through grazing in common areas and exhausting water resources. Additional mechanisms to avoid increasing the number of community cattle beyond the level of the SRL market for purchase of cattle needs to be considered.

4. Potential negative environmental impacts (SDG indicator 15.1). The increased use of chemicals for dipping, increased land area under cultivation which may place fertile soils under pressure, and increased use of fertilisers may negatively impact the natural environment.

5. Low level of women’s participation (SDG indicator 5.5). Livestock production is a male dominant production activity with the effect being a low level of female participation, both as employees at the ranch and as primary beneficiaries in the cattle value chain. However, the increased focus on the

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promotion of drought resilient crops may mean that the number of women participating in the SLIC program will increase.

6. Use of common land under customary tenure (SDG indicator 1.4) The smallholder farmers’ dependence on common resources under customary tenure impacts smallholders’ access to finance and means that they have little or no access to formal credit. For smallholders using the resources for livestock, the tenure enhances the risks of overexploitation of common resources in communities where all smallholders are dependent on the livestock for their livelihood.

7. Lack of human rights due diligence. Since no structured human rights due diligence has been conducted the company has not been able to address human rights risks and opportunities through a proactive and strategic approach. A proper human rights due diligence process would help ensure that the company is aware of all current and potential impacts that their operation may have on human rights, including the smallholders with whom they engage. Knowing potential impacts can assist the company in putting the proper process in place for avoiding and mitigating these.

8. CASE STUDY – MONZE DIOCESE ZAMBIA

The Monze Diocese Development Department (MDDD) Zambia implemented two smallholder projects in Southern Zambia, supported by DCA, in the period of 2010-2015. DCA’s support to MDDD is managed by the joint Country Programme (JCP) office in Lusaka, Zambia funded by DCA/Norwegian Church Aid/Christian Aid. The partnership between DCA and MDDD as a key partner has developed over many years and involves project related support as well as a continuous support for organisational and capacity development. Recent focus has been on the transition from traditional livelihood projects towards a more economic empowerment approach that emphasises market access and value chains.

The Sustainable Economic and Social Empowerment of vulnerable and marginalised rural communities in Southern province, SESE (2010-2012) targeted 33 communities covering four districts - Mazabuka, Siavonga, Gwembe and Sinazongwe in Southern Zambia. Three inter-related sub-objectives were carefully chosen to enhance a synergetic effect of contributing to poverty reduction and improved livelihood among the poor and vulnerable, HIV and AIDS affected and infected and disabled in the rural communities. The specific objectives were:

1. increased empowerment of rural communities to hold local authorities, leaders, the church and other CSOs accountable through awareness, advocacy and resource tracking

2. increased capacity of Monze Diocese and other stakeholders to empower and represent communities

3. improved equitable access to food and adequate nutrition of rural women and men through sustainable agriculture production and income generation

The Value Addition and Self-Employment for the Youths project (2013-2015) with the objective “to contribute to self-employment among rural youth through competency strengthening in agriculture, value addition and marketing by 2015”. The project includes the four communities of Kanchomba, Namakube, Chompa and Chiyobola. The specific objectives were:

1. empower youth with entrepreneurial and value addition capabilities 2. increase production output of youth farm enterprises 3. increase market access for youth value added and other products

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Communities selected for the program are all vulnerable and marginalised in remote areas, chosen based on being ‘vulnerable but viable’.

The communities are organised in community committees with 7-10 members. Both men and women are represented in the committees, and one of the communities has a woman as committee chairperson. These community committees are structured with a chairperson, vice chair, secretary, treasurer and a number of committee members. The committees are responsible for organising community-based activities and ensuring knowledge sharing among community members. Savings groups have been established among the women in the communities and governed by separate savings committees. In both communities visited as part of the SESE, men have established their own savings groups based on the positive experience from the women. Community youth groups were established for the youth project with its own separate youth savings group. The youth group visited had 18 members age 22-34, and was organised in a similar way as the SESE committees, with a chairperson leading the group’s activities.

Involvement of smallholders

The mechanisms of including smallholder farmers in commercial value chains include:

• Increasing empowerment of communities and building a community governance structure

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• Capacity development and skills enhancement on conservation farming methods, livestock management, the concept ‘Family as a development unit’, OSAWE and marketing and sales of produce

• Providing structures e.g. processing equipment such as a solar power vegetable dryer, peanut butter processor and solar powered water pumps

MDDD has taken a two-stage approach to the program, focusing on empowering the communities through awareness raising and capacity building, and only introducing the agricultural equipment and livestock program when communities have the capacity to change agricultural production and market their products. Empowerment The SESE project has established community committees in 33 communities, whereas the youth project has established four community youth groups in Kanchomba, Namakube, Chompa and Chiyobola in 2014. The initial stage was focused on raising awareness and empowerment for establishing of community governance structure. The introduction of the concept ‘Family as a development unit’ in communities has been instrumental in sensitising households to the need to work together to improve agricultural production, ensure food security and improve household income. The concept has helped women become part of the committees, with virtually equal representation. Women interviewed in the communities say they have been given a voice, are now attending meetings and openly express their opinion. Both men and women agree that they are now able to work together and share information within the households, and help community members who need assistance with their cropping or livestock. Decisions on selling livestock are now made jointly in the household, with full disclosure of the financial aspect. The introduction of this concept has significantly altered the gender and age based roles within the households. One male member of a community committee described the men’s former participation in household tasks and agricultural production: “if he is not drinking – he is fishing, or preparing to go for a funeral – or attending a meeting that is unclassified”. Community members agree that households are now making joint decisions and including the children and their youth in the planning. Furthermore, households are experiencing less conflicts within the households, and benefit from husband and wife being able to share knowledge and advice with each other on productive practices. Domestic violence has dropped dramatically as it has become socially unacceptable in the communities. The ‘Family as a development unit’ has helped create unity of sharing tasks and benefits, as one community member puts it: “sharing instead of dividing”. One of the communities has taken the initiative to establish a committee responsible for the mentoring of young girls. This committee addresses issues of sexual and reproductive health, focusing on reducing teenage pregnancies and child marriages. Other communities in the area have taken notice of the initiative and asked for the women’s advice in establishing similar programs. The youth program has helped empower the youth in the communities and given the youth a role to play in the agricultural production. The youth group visited mentioned that since acquiring their new knowledge and skills, many of their parents are now asking them for guidance on how to use sustainable agricultural methods and market their products. Similarly, the parents are wanting to set up savings mechanisms and have founded their own group, with 10 savings groups being formed among elder community members, based on the experiences of the youth.

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Capacity development Both the SESE and the youth program focus on capacity building as a prerequisite for sustainable implementation of the improved production schemes, processing and value adding and product sale. Aspects of resource governance and advocacy on land rights and boundary disputes, human rights and basic adult literacy and numeracy education were all part of the community capacity building program. Training of the youth was provided to ensure effective agricultural production. The training included agro-ecological processes for the cropping, functional skills on how to operate the vegetable solar drier machine and peanut butter making, livestock management including feed and health control, value adding processing technologies, marketing and sales of products. The youth group mentioned that they had no proper knowledge and great difficulties in meeting their daily needs before the project started. Similar training was provided by the SESE project, initially with training on agricultural practices of cultivation, including use of rotational shifts and planting of fruit trees. Training included community based training in livestock (cattle and goats) scheme establishment and livestock management, including the value of animals as an asset that contributes to household strategies in case of drought. Furthermore, one of the visited communities, which was located at a riverbank, was trained in the use of irrigation, introducing pumping water from the river. Training of community-based volunteers as Community Agriculture Workers (CAW) acting as peer educators and agricultural counsellors among community members was integrated into the SESE capacity building program, and forms an important aspect of the continuous transfer of knowledge in communities. Agriculture produce and processing Community gardens have been established in communities as part of the youth program. Gardens are grown by the group to produce fresh vegetables for consumption and immediate sales to the nearby communities and wholesaling to traders. A benefit from the gardens are the variety of vegetables (onions, cabbage, tomato, sunflower, beans and maize) that are grown, which has improved the nutrition among the youth and their families often including small children. The groups are using the agro-ecological methods in which they have been trained, including applying compost manure from their livestock and only preparing the land that they are actually planting, in order to avoid the rain washing the topsoil away. The youth group has been trained in adding value to their crops and provided with structures/equipment e.g. a solar power vegetable dryer, solar power water pumps and peanut butter processer. They dry cabbage to improve their own food security and sell the surplus to surrounding communities. The youth group also sell services to non-members, who for a small fee gain access to the processing equipment, reinvesting the income in the production of groundnuts. The youth group has made an agreement with a local shop to sell the peanut butter they produce. Whereas the youth project is focusing on community gardening, the communities under the SESE project are using the knowledge and skills in the field cropping. Using the agro-ecological methods has helped them improve the yield that they receive, while the livestock component has made it possible for households to expand the areas that they crop. One of the yield-boosting methods being introduced by conservation agriculture is the use of deep rip lines instead of conventional ploughing to prepare the soil for planting. By not tearing up all the soil, moisture is better retained even when rains are poor and fewer fertilizers are

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needed. The communities’ plans include increasing the land under cultivation primarily with sorghum, millet and groundnut, as well as their garden vegetables of cabbage, rape and tomato to sell locally. However, access to water is the limitation to increased production. One member of the community mentions that the current borehole is approx. 50 metres deep and not climate resilient. In some communities, solar driven water pumps were installed in communities, increasing water security and reducing the time spent on fetching water. The established water points are used both for domestic purposes and for the livestock. In one community the introduction of irrigation has led to the community being able to grow maize off season, as a second crop. In 2015-2016 however drought affected the irrigation component, with difficulties experienced in pumping water at the time of planting. The livestock component also impacted negatively on the irrigation, as cattle would break through the fences and try to eat the crop. Therefore the community sees their main challenge in establishing the right balance between cattle and the irrigated crops. Grain banks to bulk crops have been introduced to reduce post harvest loss. The community committee takes stock of the contribution from individual farmers. The intention is that households can draw from the grain bank in case of food shortage. From the sale of maize, they have bought input, seeds and fertilizers to distribute in the community. The inputs are delivered to the farmers based on credit and repaid upon harvest. Communities are now moving into looking at their production from a business perspective and will collect the harvest from farmers, store it and sell it when the prices are higher. Livestock pass-on scheme The projects include a livestock component, where communities are provided with cattle and goats as part of a pass-on scheme. After receiving training in livestock management, including detecting and treating diseases, the communities received a number of cattle and goats, which were distributed among the smallholders. The smallholders receiving livestock each receive two cattle or four goats, and will pass on the calves and goat kids to another household once they are born. As part of the youth project, the visited youth group were given 48 goats, which were distributed among the members who had no productive resources. Other members who already have goats are applying the management skills on their existing herd, thereby benefiting from the program. Once the distributed goats give birth to goat kids, these will be passed on to other members. The SESE project has an established cattle pass-on scheme. The two communities visited were given 20 cattle and one bull, with 10 households in each community receiving two cattle each as the first beneficiaries. These households had been identified by MDDD based on their capacity to raise the cattle after the training. One of the communities visited said that to date (August 2017) 20 households out of the total of 40 households in the community had received cattle through random selection. The mortality rate among the cattle has decreased since the project started because of the training that farmers received, which means that they now know how to identify and treat diseases. Communities have expressed their satisfaction with this scheme, which has provided households with a survival strategy for mitigating drought through their livestock, which they can sell when needed.

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Savings groups for continued agriculture investment The establishment of savings groups and provision of training on agribusiness, entrepreneurial skills and running a savings and loan scheme using the OSAWE54 methodology is an integrated part of all community programs. One of the visited communities mention that they have been learning about savings since 2013, but the savings group only became operational in 2015 when they were ready to set up the savings scheme. The group consisting of 20 women, have been able to make savings of 1,000 USD. The savings groups are giving out small loans with an interest rate to members, the payment period usually being 30 days. The women do not allow men to borrow, as they say the men do not pay back what they have borrowed. The savings group have inspired women to seek other income-generating activities. The women have started gathering wild berries and are producing rice mats for sale. They have also bought fish from the nearby lake and sold them in urban areas with a profit. The training has made them aware of new opportunities and how to pursue them. One women said that she had invested her money in goats, which she had later transported to the Copperbelt for sale into Congo. Others have used savings to pay school fees for their children or to buy chickens, goats, cattle or seeds. The saving schemes are encouraging people to save in order to have sufficient resources for future investments in their agriculture production. The opportunity to invest in seeds is positively impacting women’s agricultural production. Before the project they would only plant seeds from their own previous harvest, causing low yields. Now they buy seed and experience higher yields. At the same time, they are able to plant more land from less than 1 ha to a minimum 2 ha, because they can buy seeds and have animal draft power, thereby increasing the number of hectares that they can crop. The women say they benefit by keeping the savings together as a community, helping the families to save instead of spending. The success of the women’s savings groups has inspired the men to set up their own savings group. The youth group has recently started to make savings, and have currently saved 800 USD. They hope to inspire others to become members of the group. They have used the savings to buy chickens as a common investment, to boost the group economy for future investments. The resources are shared and when they sell something, the income is channelled back into the savings group. When asked about their motivation, one of the members said: “Our parents did not have the capacity to send us to school so we want to build a better future for our own children”. FUTURE PLANS: As a continued focus on enhancing the capacity of the communities under the SESE and the youth program, an increasing business development focus is planned through the Economic Empowerment: Market Systems and Entrepreneurship Project 2017-2018, targeting 1,040 households in 26 communities. This continued program focuses on capacity development in entrepreneurship, marketing and market systems, strengthening community governance structures, cooperatives and establishing community savings and credit schemes.

54 The Own Savings for Asset and Wealth Creation (OSAWE) methodology is based on a small group of individuals – typically from 15 to 30 – that save together and provide credit and basic insurance services to their members from these savings

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Identified impacts

The following impacts and challenges has been verified through FGD and interviews with smallholders in the communities of Cheeba, Kanchomba and Maiba.

Positive impacts

1. Creating empowerment and cohesion in the households and communities (SDG indicator 16.7). The introduction of the ‘family as a development unit’ concept has created significant positive social change, decrease in domestic violence, improved decision-making regarding productive resources including sale of livestock, and increased women’s participation in community meetings and their opportunity to be heard. Empowerment, especially of women in the SESE and the youth in the Youth project, has led to better functioning communities, with increased knowledge sharing and e.g. the youth being able to act as agricultural advisers to the elder farmers.

2. Linking the communities to the market and developing a business mindset (SDG indicator 4.4) has led to new initiatives by community members, e.g. women exploring business opportunities through the sale of crafts, wild berries and livestock.

3. Establishing savings schemes leading to increased investment opportunities (SDG indicator 8.3). Savings are being invested in agricultural input, leading to increased food security and household income. The visible benefits of the women’s and youth savings schemes has inspired others, who are now establishing their own savings groups and seeking advice from the women and the youth.

4. Significant increased average household income (SDG indicator 2.3). The SESE project baseline of household level income of less than 1 USD per day to the project evaluation documenting a raise to approx. 3 USD per day on average. The communities attribute the increase in income to agricultural activities, gardening and selling of assets such as livestock. The youth groups have established community youth group gardens from which they are able to wholesale and sell to the local market. Additionally, sales of processed and value adding peanut butter and preserved vegetables play an important role in increased income among the youth.

5. Significant increase in food security (SDG indicator 2.1) ranging from 100% to 900%55, this increase is experienced in communities where only 20-30% of the households were food secure prior to the SESE project. Focus on capacity building has facilitated this change. Animal draft power means they can now crop larger areas; whereas before most households only used ½ ha, this has increased to 3 - 4 ha. Additionally, the enhanced knowledge of better agricultural methods, including ecological awareness, has improved the agriculture practice, leading to higher yields. In one of the communities the women said that before project implementation they would usually run out of food in May/June, leaving households to look for wild food in order to meet their basic needs and the most vulnerable to beg for food.

Challenges/negative impacts

1. Capacity for changing livelihoods (SDG indicator 4.4). According to MDDD some of the poorer and most vulnerable households simply do not have the capacity to change production methods and gain the full benefit of the initiatives. The projects are using the concept of ‘vulnerable but viable’ for

55 SESE final evaluation report, 2013

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choosing the smallholders to work with e.g. for the cattle pass-on scheme. It is difficult to say whether those most vulnerable will benefit indirectly from the projects.

2. Challenges in changing mindsets (SDG indicator 4.4). Community members said that they had difficulties in changing their mindset and ensuring that they were pulling in one direction as a community for the long-term goal. Some married women experienced difficulties in participating in e.g. the savings groups due to social norms, but continuous information sharing and the visible benefits convinced their male heads of households that they should participate. Some of the men said that they initially found it difficult to capture the concept of ‘family as a development unit’ and start working together for mutual benefits.

3. Sustainable level of cattle in the area (SDG indicator 15.1). Importance of establishing the right balance between livestock and cropping, as communities are struggling to keep the livestock from destroying fences and eating their crops.

4. Access to water (SDG indicator 6.4). Communities in Southern Zambia are generally experiencing declined access to water due to drought caused by climate change. This poses a threat to expanding agricultural production, both land being cropped and the level of livestock in the area.

5. Need for additional marketing and entrepreneurial skills (SDG indicator 4.4). Although communities have taken the initiative to bring different products to the market for sale, there is still a need to improve their capacity to negotiate fair prices, to enhance their marketing skills and their knowledge of the full value chain, skills that make smallholder farmers more independent and able to access the value chain on their own terms, one example being a community where women were able to identify the market for cattle at the border to Congo and transport their cattle there, but unable to negotiate a fair market price for their product once brought to the market.

6. Use of common land under customary tenure (SDG indicator 1.4). The smallholders’ dependence on common resources under customary tenure impacts smallholders’ access to finance and means that they have little or no access to formal credit, increasing their difficulties in investing in new agricultural production schemes. Additionally, the use of common resources increases the risk of overexploitation and different productions schemes competing over resources.

7. Lack of human rights due diligence. Since no structured human rights due diligence has been conducted as part of the project preparation, MDDD is not able to address human rights risks and opportunities through a proactive and strategic approach. A proper human rights due diligence process would help ensure that the current and potential impacts on smallholders are known. Knowing potential impacts would assist MDDD in putting in place a proper process for avoiding and mitigating these impacts.

9. RELEVANT STAKEHOLDERS FOR SMALLHOLDER INCLUSION

The three cases show that involvement of external stakeholders is critical for the success of the smallholder farmer inclusion. A proper consultation process for interested stakeholders is an important first step for identifying potential common interest and synergies that could be enhanced through cooperation and partnerships. Engaging in strategic partnerships where partners’ strength is supplementary, with clear division of roles and responsibilities, will benefit the smallholder inclusion and improve the business. Smallholder farmer, cooperatives or farmers’ organisations The case of Ingemann shows the benefits of both the company and the smallholder farmers of working through cooperatives. The approach provides a number of benefits for the smallholders, leveraging their

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negotiation capacity for product sale as they negotiate by volume, increase their access to credit and possibilities of buying wholesale inputs. While Zambia does not have a long tradition of cooperatives, it is estimated that 374 active organisations and cooperatives exist in the cocoa sector in Nicaragua56. The Nicaraguan Chamber of Cocoa Growers of Nicaragua (CANICACAO) is an umbrella organisation of 16 cocoa producer cooperatives and organisations in Nicaragua, including a total of 2,148 smallholder farmers with a total planted area of 2,929 hectares. For companies, engaging with cooperatives and farmers’ organisations provides easier access to larger number of smallholder farmers. Government institutions The cases of Ingemann and Silverland show the need to cooperate with government institutions. In the case of Ingemann a number of government established dipping stations were rehabilitated by the company, in agreement with local authorities such as planning and community development departments. Involving or cooperating with local government extension services and veterinary services are important in efforts to build up the capacity of smallholders for improved production, whether through the introduction of agro-ecological methods or raising awareness in communities of animal health. As shown by the SRL case, although in principle there should be no conflict of interest, there are potential inherent disputes when a company takes over services that should rightfully be provided by local government institutions and an underlying critique of the lack of quality services provided to communities. Engaging with authorities at an early stage can help minimise the negative effects of such potential tension. Research institutions and training partners Established training institutions may have tried and tested methodologies for effectively developing the agricultural knowledge and skills of smallholder farmers. The Ingemann case showed difficulties in creating lasting changes in practices among smallholder farmers. Bringing in an acknowledged training partner may strengthen the smallholders’ capacities to improve their productive results. Similarly, when companies set up their own training facilities based on a specific established need, consultation with research and training institutions can provide valuable insight into existing good practices for capacity development, an example being the Nicaraguan Institute of Agricultural Technology (INTA), which together with the World Food Programme has developed a training model to facilitate the consolidation of technical knowledge to smallholder farmers, using field schools and a learn-by-doing methodology, in parallel with demonstration plots. Financial institutions The cases show that access to finance and access to effective payment methods are essential for smallholder inclusion. Efforts to establish cooperation with financial institutions with a strong local presence is essential for the provision of flexible payment agreements that ensure effective mobilisation of smallholder farmers. The aspect of insurance has not been addressed by the cases but is increasingly important for communities faced with the effects of climate change, unpredictability of production yields and a high initial investment in changes in production schemes.

56 VECO-COSUDE, Situación Actual de la Cadena de Valor de Nicaragua. Proyecto Gestión del Conocimiento de la Cadena de Valor de Cacao en Centroamérica, 2016

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Commercial entities The three cases identify a number of commercial entities that are part of the value chain both upstream and downstream, and are important players in ensuring positive impacts for smallholder farmers. Engaging with such entities, formally or informally, may significantly improve smallholders’ productivity as primary producers or enhance the smallholders’ link directly to the commercial market, as shown in the MDDD case. Ingemann has established a formalized alliance with the private company PROFYSA to provide discounts on agrochemicals for smallholders linked to Ingemann production, whereas SRL is in the process of setting up asimilar cooperation with seed, fertilizer and agriculture supply companies providing necessary input to smallholder farmers in trade stations, which are easily accessible for the communities. Civil Society Organisations The MDDD case shows the significant effect that social change and empowerment have on the smallholders’ capacity to engage effectively in changed production schemes and activate their entrepreneurial skills for improved income generation. Although SRL has a well established partnership with the NGO Musika, the support received is linked solely to the provision of capital items such as vehicles. The benefits of both civil society organisations (CSOs) and companies to enhance their cooperation through strategic partnerships are related to creating stronger links between efforts of creating social change, equal participation and decision-making, increased agro-technical skills and stronger links to the market. For partnerships to be effective in creating sustainable change, CSOs should be well-established with a strong local presence. The cases show links to community-bases organisations (CBOs), such as faith groups as in MDDD, building on established governance structures in communities, which through their long-term presence have a high level of community trust. Other groups that should be considered include indigenous groups and pastoralists, who are only present in the areas for part of the year and therefore need special consideration in the mapping of stakeholders with whom to engage. Engaging with civil society stakeholders can also be a way to improve companies’ human rights due diligence and analysis of contextual risks (e.g. human rights risks including land rights and food security, vulnerable people at risk, environmental risks).

10. GOOD PRACTICES AND INSIGHTS

A number of good practices and insights can be drawn from the cases to inform future involvement of smallholders in commercial and non-commercial initiatives with the potential up-scaling of positive experiences. The following outlines identified practices increasing the outreach and the conclusions that can be drawn from these.

1. Conducting ex-ante human rights due diligence. The UN Guiding Principles on Business and Human

Rights57 is the global standard for companies’ management of their human rights impacts. Under the Guiding Principles, companies are expected to ‘know and show’ that they do not infringe on human rights through their operations or business relationships. Human rights due diligence represents a key first step in meeting this expectation. In all three cases a systematic approach to human rights due diligence was not applied. Both IFU and DCA have competencies related to human rights due diligence procedures and practices that could have benefited the investments, had these been put

57 UN Office of the High Commissioner for Human Rights, Guiding Principles of Business and Human Rights, endorsed by the UN Human Rights Council in 2011

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in play at an early stage of the interventions. A systematic human rights due diligence can not only reduce risks for both the companies and the communities, but also contribute to ensuring development effects of the agribusiness investments.

2. Implications of land tenure. Insecure land tenure significantly impacts the incentives and possibilities of smallholders to invest in their agriculture production and engage in long-term transitions of the farming practices. Smallholders’ motivation for longer-term investments is strongly correlated with land ownership, and incentive to invest in agro-ecological practices comes from secure tenure. Insecure land tenure restricts smallholders’ access to the credit that is required for improved land practices, forcing them to continue traditional land-use practices, despite their willingness to change. While securing smallholders land tenure is outside the sphere of influence of investors, companies and civil society actors, the impacts on their agribusiness investments and the inclusion of smallholders are significant. Since the land tenure status has significant impacts on the smallholders’ access to financing and their incentive to make considerable production investments, for example, these aspects should not be underestimated and must be considered at the initial stage of the planned agribusiness investment.

3. Building trust and long term commitment. Ensuring sustainable inclusion of smallholders in value chains can only be achieved in the longer term perspective, and require companies’ long term commitment and a building of trust between the company and communities. Both Ingemann and Silverland’s production is based on the purchase of existing companies, i.e. Xoco and the Forsythe Ranch. The cases show the importance of conducting a thorough due diligence of existing relationships and engagement practices that the company has with communities, including former or ongoing disputes. For a company building their business model on smallholder farmer engagement this due diligence is critical, since the former ownership influences the level of trust that communities have towards the company going forward. In order to build trust companies should be open about their intentions of the smallholder farmer engagement and the benefits that the company expect to gain from working with the communities. Managing expectation is key, and companies should avoid raising expectations among smallholders that cannot be met, thereby losing the communities’ trust and confidence in the partnership. The SLIC program was initiated clearly communicating to communities that their main objective was the purchase of traditional cattle, and that ensuring healthy animals and a disease-free zone through the provision of access to dipping stations was part of meeting this objective. This approach helped build trust with the smallholder farmers, since they understood the mutual benefits created through the SLIC initiative and how they could take actions to become part of the value chain. Although immediate benefits to smallholders exist, changing production and income improvement takes time and sustainable benefits for smallholders are more likely to be seen in the longer term. Smallholder farmers need to be able to trust a company’s continued commitment to them if they are to experience the longer term gains.

4. Access to knowledge and capacity building. Different approaches to capacity building have been used in the three cases, (i) as a pre-requisite for establishing changes in production with the SESE and Youth projects, or (ii) as an integrated part of the production activities, as in the case of SRL and Ingemann. The capacity building component is essential for providing the necessary knowledge, skills and attitude of smallholders to participate in the value chain. This includes both basic production

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skills, skills for improved environmental management as well as changing the mindset from a focus on subsistence production to a focus on agriculture production as business. Both approaches have shown benefits and challenges.

Both the MDDD and Ingemann have improved environmental preservation while using different approaches. While the cocoa production system by nature improves the agro-forestry system and, through the transfer of knowledge, has been able to positively impact the smallholder farmers’ management of natural resources MDDD has introduced agro-ecological practices as part of their capacity building programs, using integrated system thinking of cropping and livestock, maximising use of local resources through e.g. intercropping and the use of organic nutrition from the livestock provided. The Ingemann case shows the importance of the training modules and involvement mechanisms to take into account the socioeconomic and productive reality of the smallholder farmers, as well as their limited economic-financial capacities to invest. Furthermore, it underlines the need for providing adequate training and basic skills development prior to commencement of production, especially where changes in production require smallholder farmers to make substantial initial investments. All three cases emphasise the need for continued access to knowledge. Whereas the MDDD project has provided this through the Community Agriculture Worker (CAW) as peer educators, SRL is ensuring access to knowledge and continued awareness raising through employees at the dipping stations and is planning to establish a Farmers’ Knowledge Centre. Ingemann meanwhile continues to provide technical assistance to its contract farmers.

5. Relationships and decision-making power. The cases show examples of both informal and formal

relationships between the companies and the smallholder farmers. In the case of SRL the relationships with the smallholder farmers are informal, and the company operates by invitation and provides the dipping services to any farmers who are interested and able to pay the small fee. The business relationship is based on the availability of healthy cattle, but there is no contract or obligation for smallholders to sell their cattle to SRL, nor for SRL to buy cattle from the communities. In the case of Ingemann the cocoa farmers have a formal contract with the company, formalizing the relation between the two parties. Full disclosure and transparency is obviously essential in formalized relationships, which is underlined in the Ingemann case when farmers say they do not have the original documents of the contractual agreements which they originally signed with Xoco and hence do not fully understand the conditions included in these contracts. All three cases show a step-by-step approach, whether starting with capacity building activities and thereafter moving into the improvement of the production schemes as in the MDDD case, or setting up dipping facilities and using the participation of smallholders to increase the opportunities for smallholder farmers to further integrate in the value chain, as with SRL. In the cases of informal relationships, one of the benefits is that smallholders are provided with options for involvement, leaving the level of inclusion to the decision and capabilities of the smallholders.

6. Ensuring strong value chain linkages. Ensuring smallholder access to all parts of the value chain and insuring input, production methods, storing facilities and access to market is critical for the inclusion of smallholder farmers, since lack of access to any part of the value chain will significantly hinder their integration and opportunity to fully benefit. The cases show different approaches in assisting smallholders with access to e.g. input and storage. Ingemann is providing seeds to the smallholders

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from their own nursery and collects the harvest on-site, SRL is ensuring smallholder access to inputs through alliances with commercial seed and fertilizer companies, and MDDD is assisting communities in putting up their own grain bank facilities.

7. Cost and benefit sharing. Fair share of cost and benefits is essential for the company to continuously confirm the trust-based relationship with smallholder farmers. The cases do not provide the data needed to establish whether a fair distribution of income generated through activities in the value chain is actually taking place, through fair pricing of the agricultural produce. However, the Ingemann case shows that recovery of smallholders’ investments needs to be assessed carefully, especially where smallholders’ inclusion is based on an initial investment in production resources. The financial plan for such investments should include risk mitigation components, including elements such as restructuring the debt, with appropriate conditions for smallholders, and be linked to other types of assistance, such as replanting and technical assistance.

8. Access to finance is the major obstacle for smallholders’ transition of their agriculture production and productivity. Smallholders generally experience limited access to finance and insurance. Improving smallholders’ access to financing is key to supporting more inclusive economic development. Additionally, financial services need to work better in helping the smallholders to diversify their production through long-term investments in value crops, agro-ecological practices and equipment, to become more resilient to periodic shocks and prevent them from falling into poverty and food shortage. Access to finance and financial arrangements, especially the timely and accurate payment for small holder farmers’ produce is another critical aspect in ensuring that smallholder farmers are able to invest in improved production methods and in facilitating cash flow between the company and the smallholders. SRL mentions the good relationship with the local bank in Zimba as one of the absolute key factors for success in mobilising smallholder farmers. For production that needs initial smallholder farmers’ investment, as in the cocoa farming, the financing plans and access to credit on fair agreements is essential for smallholders to be able to make the initial investment. Companies can play a role in negotiating financing agreements for the smallholder farmers who wish to invest. Partnerships with cooperatives, as in the Ingemann case, is another mechanism for potentially improving the loan conditions available to smallholders. However, it should be emphasised that the smallholders’ financing plans should be closely linked to the productive reality on the ground according to the agro-ecological conditions and production potential. A wide range of financial services are needed to improve financial inclusion of smallholders. While micro-financing can help to meet the short-term needs of smallholders other financial instruments may be needed for larger investments in agricultural production. Financial services need to enable smallholder access to finance as well as providing them with appropriate options and means for savings. Using innovative delivery models and technology including mobile banking options is an important aspect of smallholders’ financial inclusion.

9. Creating social change and strengthening community governance structure. In all three cases a community governance structure was established that supported the engagement of smallholder farmers in e.g. the dipping facilities, capacity development activities, access to input and finance. Well established and functioning governance structure helps create social change in communities

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through active participation and consensus decision-making. The community councils established as part of the MDDD projects showed a high degree of self reliance and the saving groups in particular have helped women and youth to take initiatives beyond the scope of the project. Ingemann’s work through the cooperatives, which have a high degree of credibility in the communities and actively work to empower smallholder farmers, is a good example of how organisations with a strong local presence can play a key role in strengthening communities’ capacity and create lasting social change. The MDDD introduction of the ‘family as a development unit’ concept has had a significant impact on the empowerment of women and girls in particular, and has created social change that appears to be lasting. These cases show evidence of a direct link to improved agriculture production, enhanced entrepreneurial thinking, as well as improved food security and household livelihoods.

10. Ensuring equal participation has a positive effect on the socioeconomic development in the communities. As mentioned above, the MDDD case provides convincing evidence of the strength in addressing the underlying social value and dynamics emphasising gender inequalities. However, an increased focus on the gender aspect of smallholder production, access to resources and land rights, ensuring that women in communities benefit from inclusion in the value chain, is essential for commercial entities as well as production schemes such as Ingemann and SRL.

Regarding the aspect of inclusion of poorer smallholders, the SRL case shows that although the poorer households with a small number of cattle may not immediately be included in the value chain and have a commercial relationship with SRL, they have access to the dipping facilities and benefit immediately from their participation. Furthermore, the interviews with workers indicated that smallholders with limited production resources were seeking employment on the Silverland Ranch and were supplementing subsistence farming with employment. These workers were all using the dipping facility and experiencing an improvement in the health of their cattle. From a long-term perspective however, the inclusion of poorer smallholders or other marginalised groups in surrounding communities would be important for any commercial entity in order to minimise social conflict and ensure security.

11. Adopting to climate change is critical for the sustainability of the agribusiness. Climate change risk must be at the forefront of initial assessments when choosing to engage smallholder farmers in commercial value chains. The case of SRL shows that two of the 14 communities that are engaged in dipping services are experiencing water shortage for their cattle during the dry season. Assessment of whether there are viable solutions to such challenges e.g. investing in deeper wells, or if the increasing risk of drought in the area means that livestock production is not a viable livelihood for smallholder farmers, is essential to ensure that commercial production is sustainable. The SRL introduction of more drought resistant crops among smallholder farmers is an example of a strategy that addresses the climate change challenge, while at the same time ensuring nutritious feed for the cattle in the feedlots. Furthermore, the proposed crops have multiple consumption purposes, and can be used as nutritious crops for consumption in times when smallholders experience difficulties in staying food secure. In the case of Ingemann, the cocoa cultivation represents the establishment of an agroforestry systems while apiculture production represents an environmentally friendly productive system that helps pollinate plants and crops. However, given the risk situation of climate change, it would be advisable to make greater efforts to promote and contribute to agro-ecological practices, soil and

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water conservation works, and the preservation and sustainability of the water, forest and soil resources among the smallholder farmers contracted by Ingemann.

12. Establishing strategic partnerships and alliances is essential, both on the practical level of creating a well functioning value chain and at the strategic level of ensuring sustainability. At the practical level partnerships with organisations that can deliver timely access to input, access to market and payment can help bring smallholder farmers into the value chain. In the case of SRL, a strong alliance with the local bank has been important for providing the smallholder farmers with prompt payment for the cattle brought to the feedlot. At Ingemann the partnership with cooperatives has assisted in the relationship building with smallholders, and facilitated access to finance for the farmers and to knowledge on community conditions for Ingemann.

At the strategic level the commercial initiatives could be strengthened through partnerships that would allow community capacity building on marketing, business mindset, strengthening the community governance structure, social change and savings group for investment in productive resources, inputs and equipment. The effects that the MDDD projects showed on the social change in the involved communities, the improved understanding of their productive resources and their entrepreneurship that was established would be valuable for the relationship between communities and commercial businesses. NGOs thus still have an important role to play in addressing many of the community development aspects that are a prerequisite for establishing long-term sustainable production relations between companies and communities.

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11. DEVELOPMENT INDICATORS

Based on the impacts and challenges identified in the three cases and the related SDGs a number of indicators have been identified for monitoring the effects on smallholder farmers. Note that the list is not exhaustive and should rather be seen as inspirational.

Relevant SDG goals

Selected SDG indicators

IFU indicators Indicators for small holder inclusion

1.4 By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership and control over land and other forms of property, inheritance, natural resources, appropriate new technology and financial services, including microfinance 1.4.1 Proportion of population living in households with access to basic services 1.4.2 Proportion of total adult population with secure tenure rights to land, with legally recognized documentation and who perceive their rights to land as secure, by sex and by type of tenure

Proportion of smallholders with access to secure tenure Proportion of smallholders with access to financial services

2.1 By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritional and sufficient food all year round 2.1.1 Prevalence of undernourishment 2.1.2 Prevalence of moderate to severe food insecurity in population, based on the Food Insecurity Experience Scale (FIES)

Area under cultivation Smallholder farmer inclusion aspects Smallholders supported

Level of increase in income of smallholders through inclusion in the value chain Proportion of agricultural area used for drought resistant crops/sustainable agriculture

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2.3 By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists and fishers, including through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and non-farm employment 2.3.2 Average income of small-scale food

producers, by sex and indigenous status

2.4 By 2030, ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production, that help maintain ecosystems, that strengthen capacity for adaptation to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality 2.4.1 Proportion of agricultural area under

productive and sustainable agriculture

Percentage of households selling their assets (livestock) due to food insecurity Percentage of household income spend on food per person Number of food-secure months among the smallholders

4.4 By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship 4.4.1 Proportion of youth and adults with information and communication technology (ICT) skills, by type of skill

Percentage of smallholders participating in agro-technical and entrepreneurial skills development programs, by age and gender

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5.1 End all forms of discrimination against all women and girls everywhere 5.1.1 Whether or not legal frameworks are in place to promote, enforce and monitor equal and non-discrimination on the basis of sex 5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life 5.5.2 Proportion of women in managerial positions

Sex-disaggregated data on the percentage of women and men involved in the community committee’s set-up for small holder farmer inclusion, by ‘position’

Percentage of women involved in training, mobilisation and sensitisation activities

6.4 By 2030, substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals and supply of freshwater to address water scarcity and substantially reduce the number of people suffering from water scarcity 6.4.1 Change in water-use efficiency over time 6.4.2 Level of water stress: freshwater withdrawal as a proportion of available freshwater resources

Percentage of communities experiencing seasonal water shortage

Number of water saving measures introduced in crop/livestock production

8.2 Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors 8.2.1 Annual growth rate of real GDP per employed person 8.3 Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-,

Direct employees Female direct employees Youth direct employees Unskilled direct employees

Percentage of workers employed in the agribusiness who are under the age 25 Increase in the household income level Improved health and safety working conditions for employees (decent jobs)

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small-, and medium-sized enterprises, including through access to financial services 8.3.1 Proportion of informal employment in non-agriculture employment, by sex 8.5 By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value 8.5.1 Average hourly earnings of female and male employees, by occupation, age and persons with disabilities 8.5.2 Unemployment rate, by sex, age and persons with disabilities 8.6 By 2020, substantially reduce the proportion of youth not in employment, education or training 8.6.1 Proportion of youth (aged 15-24) not in education, employment or training 8.8 Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment 8.8.1 Frequency rates of fatal and non-fatal occupational injuries, by sex and migrant status 8.8.2 Level of national compliance of labour rights (freedom of association and collective bargaining) based on International Labour Organization (ILO)

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textual sources and national legislation, by sex and migrant status

15.1 By 2020, ensure conservation, restoration and sustainable use of terrestrial and inland freshwater ecosystems and their services, in particular forests, wetlands, mountains and dry lands, in line with obligations under international agreements 15.1.1 Forest area as a proportion of total land area 15.1.2 Proportion of important sites for terrestrial and freshwater biodiversity that are covered by protected areas, by ecosystem type

Percentage of communities introduced, trained and provided with technical assistance to implement agro-ecological practices in their production

16.7 Ensure responsive, inclusive, participatory and representative decision-making at all levels 16.7.1 Proportions of positions (by sex, age, person with disabilities and population groups) in public institutions (national and local legislatures, public service, and judiciary) compared to national distributions 16.7.2. Proportion of population who believe decision-making is inclusive and responsive, by sex, age, disability and population group

Percentage of women and youth (other vulnerable group) participation in community committees (linked to the investment)

17.17 Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resources strategies of partnerships 17.17.1 Amount of USD committed to public-private and civil society partnerships

Number of strategic partnerships entered as part of smallholder inclusion schemes

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REFERENCES

ACT Alliance, Supporting Small Businesses in Developing Countries: Which Programmes Work and Why? 2016

Action Aid, Contract farming and out-grower schemes, 2015

AIFSRC, Smallholder Value Chains for Food Security, 2014

Australian International Food Security Research Centre, Smallholder Value Chains for Food Security, 2014

CYATC, Youth enterprise development and value addition (YEDVA) project, 2015

Danida, Guideline to Risk Management, 2013

DanChurchAid, International Strategy 2015 - 2018

DCA, CSR guidelines, 2015

DCA, DanChurchAid’s Private Sector Strategy 2015-2022

DFID, Agriculture and the Private Sector, 2014

Escobedo Adriana, Cadena Productiva de Cacao en Nicaragua, Proyecto Cacao Centroamérica, 2010.

FAO, Coping with the food and agriculture challenge: smallholders’ agenda, 2013

FAO, Gender Action Plan 2002-2007

FAO, Review of smallholder linkages for inclusive agribusiness development, 2013

FAO, The economic lives of smallholder farmers, 2015

FAO, Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests (VGGT), 2012

Gereffi & Fernandez-Stark, Global value chain analysis: a primer, 2011

IAPRI, Zambia Agriculture Status Report 2016, 2016

IFAD, Latin America: The State of Smallholders in Agriculture, 2011

IFAD, Women in decision-making: meeting challenges, creating change, 2006

IFAD, Agricultural cooperatives: paving the way for food security and rural development, 2012

IFC, Performance Standards on Environmental and Social Sustainability, 2012

IFC, Working with Smallholders – A Handbook for Firms Building Sustainable Supply Chains, 2013

IFU, Operating report, 2015

IFU, Operating report, 2016

IFU, Development Impact Model Indicators, 2016

IFU, Sustainability Policy, 2014

Monze Diocesan Development Department, Sustainable Economic and Social Empowerment of Vulnerable and Marginalised Rural Communities of Southern Province (SESE) Project, Final Evaluation Report, 2013

NCG, Investments to support sustainable development – A comparative study of how the Nordic development finance institutions work with development impact in context of sustainable development goals, 2016

Seville, D., Buxton, A. and B. Vorley, 2011. Under what conditions are value chains effective tools for pro-poor development? IIED/Sustainable Food Laboratory, London/Hartland

Technical Centre for Agricultural and Rural Cooperation, An introduction to Contract Farming, 2013

The Ministry of Foreign Affairs’ Strategy for The Investment Fund for Developing Countries (IFU) 2017-2021

UN, Guiding Principles on Business and Human Rights, 2011

UN, High-Level Panel of Experts on Food Security and Nutrition, Investing in Smallholder Agriculture for Food Security, 2013

UN, Sustainability Development Goals Indicators, 2016

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VECO-COSUDE, Situación Actual de la Cadena de Valor de Nicaragua. Proyecto Gestión del Conocimiento de la Cadena de Valor de Cacao en Centroamérica, 2016

Vorley, B., Cotula, L. and M. Chan, 2012. Tipping the balance: policies to shape agricultural investments and markets in favour of small-scale farmers. IIED/Oxfam, London/Oxford

World Bank, Agriculture for Development, 2008

World Bank, What Would it Take for Zambia’s Beef and Dairy Industries to achieve their Potential? 2011

Zambia Ministry of Agriculture and Livestock annual report, 2010

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ANNEX 1 SEMI-STRUCTURED INTERVIEW GUIDES

Interview with management of the company

1. Please describe the background for the Company, the project and the relationship with IFU a. Organisational structure b. Describe the value chain c. Describe the production d. What are the main market for products (local, domestic, export)? e. How long has the Company been involved with IFU and how is the relationship/commitments?

2. Sustainability aspects a. Did any risk/impact assessment take place, as part of the human rights due diligence process of the

project cycle? If yes, to what extent did it include the situation of smallholders and local communities?

b. What are the impacts (positive and negative) of the agribusiness project on local communities?

3. Organisation of the work with smallholders

a. Number of communities in which the Company are engaging smallholders or contract farmers b. Number of contract farmers c. Number of smallholders d. What is the division (estimated percentage) between men and women with whom the Company

engages? e. How is the ‘household contact person’ identified? f. How are the contract farmers and smallholders involved in the supply chain? g. How is the work with smallholders organised? h. What has the Company done to ensure smallholder inclusion and best practice strategies for

smallholder engagement? i. Does the Company have any special focus on outreach activities aimed at including poor families and

smallholders in the local community? j. Pros and cons of different ways of inclusion, including use of contract farming k. Does the Company have a grievance mechanism in place for workers and for communities, contract

farmers and smallholders?

4. How does the Company engage with contract farmers/smallholders? a. What kind of engagement activities are undertaken? b. How does the Company communicate with smallholders?

i. What communication channels are used with the smallholders? c. What kind of outreach activities does the Company have?

i. Awareness campaigns ii. Training and competence development

iii. Others d. Does the Company introduce and train smallholders in e.g. agro ecological production methods?

i. Which methods have been included? ii. How have smallholders been introduced to new methods?

iii. Has the Company provided any supervision and guidance on implementation? iv. What has been the effect on the production (quantity/quality) of these new methods?

e. Does the Company engage in any value creation efforts that target the smallholder?

5. What are the risks and opportunities for the Company related to this business model?

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a. How did the Company identify a value chain that would potentially gain from the inclusion of smallholders?

b. What are the challenges for the Company in working with smallholders? c. What does the Company see as the main positive/negative impacts of the projects related to the

smallholder’s participation in the commercial agro-business project? d. What does the Company experience as the main barriers/opportunities related to smallholder’s

participation? e. What does the Company see as the implication of costs, effectiveness and efficiency of these

activities? f. Has potential up-scaling of positive experiences been considered?

6. Does the Company cooperate with any CSOs?

a. What are the benefits of working with a CSO? b. How have relevant CSOs been identified? c. How do you ensure efficiency and effectiveness of cooperation?

Group interview with workers/staff

1. How long have you been employed by the Company? 2. What are your employment conditions? 3. What are your main responsibilities? 4. How are you engaging with smallholders? 5. What are the barriers/opportunities in your work with smallholders?

a. What could be done to reduce the barriers? b. What could be done to enhance the opportunities?

6. Are you involved in any awareness raising activities or training? a. How do you ensure that these activities are targeted to the smallholders needs and existing

knowledge? b. Do you provide any follow up on these activities to measure effect on e.g. changed behaviour, and

provide support for improving performance of the smallholders?

Focus group discussions with contract- /smallholder farmers in local communities

1. Please describe the agricultural production in your household

a. Size of land (owned, leased/rented)? b. Land use c. How much land is used for production as supplier to the Company d. How long has the household been a supplier? e. Does the household have subsistence farming? f. Does the household experience challenges regarding food security? g. What is the gender division of labour within the household?

2. What are the main barriers/negative impacts related to working as a supplier to the Company?

a. What could the Company do to reduce these barriers/negative impacts?

3. What are the main benefits/positive impacts related to working as a supplier to the Company? a. What could the Company do to enhance the benefits/positive impacts?

4. How do you communicate with the Company?

a. What could the Company do to improve communication with you?

5. Have you been trained in agro-ecological production methods?

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a. Who was trained within the household? b. How has this training benefited your production?

6. Have you received any awareness raising materials from the company?

7. Do you have access to a grievance mechanism in the Company?

Interview with civil society organisations

Depending on the type of the CSO, the following issues are addressed:

1. Food security in the region – what are the issues? 2. Land use – subsistence vs. commercial production? 3. Challenges facing the agricultural communities? 4. How does the CSO work with communities? 5. What does the CSO see as the risks/opportunities of smallholders engaging with the Company? 6. What can be done to ensure participation of the poorest households? 7. Does the CSO engage with the Company? 8. Does the CSO see any benefits of cooperation with the Company on enhancing development impacts among

the rural communities and the rural poor? 9. What measures would the CSO recommend?

ANNEX 2 INTERNATIONAL FRAMEWORK FOR RESPONSIBLE BUSINESS

The Sustainable Development Goals (SDGs) is a vision statement and action plan for achieving social and environmental sustainability. It is an ambitious set of 17 goals, unanimously adopted by all UN Member States in 2015, which constitutes a global action plan for achieving sustainable development by 2030.

UN Global Compact (UNGC) is a United Nations initiative to encourage businesses worldwide to adopt sustainable and socially responsible policies and report on their implementation. The UN Global Compact is a principle-based framework for businesses, stating ten principles in the areas of human rights, labour, environment and anti-corruption. UN Guiding Principles on Business and Human Rights (UNGP) is the global standard of practice expected of all States and businesses with regard to business and human rights. The three-pillar framework consists of: I) the State duty to protect human rights, ii) the corporate responsibility to respect human rights and iii) the need for greater access to remedy for victims of business related abuse. International Finance Cooperation (IFC) environmental and social performance standards define companies’ responsibilities for managing their environmental and social risks. Additionally, a number of industry sector guidelines on environmental, health and safety exist including for agribusiness and food production. The Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and Forests (VGGT) provides a guideline that seek to improve governance of tenure of land, fisheries and forests for the benefit of all, with an emphasis on vulnerable and marginalized people. The aim of the VGGT is food security and progressive realization of the right to adequate food, poverty eradication, sustainable livelihoods, social stability, housing security, rural development, environmental protection and sustainable social and economic

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development. The principles complement the UNGP, emphasising that companies have a responsibility to respect human rights and legitimate tenure rights. The VGGT follows the requirements of the UNGP to act with due diligence to avoid adverse human rights impacts, including impacts in tenure rights of others, and to put in place a grievance mechanism to provide remedy. The VGGT sees private investments as essential to improve food security through encouraging tenure right holders to make responsible investment in these resources, increasing sustainable agricultural production and generating higher incomes. Considering that smallholder producers and their organisations in developing countries provide a major share of agricultural investments that contribute significantly to food security, nutrition, poverty eradication and environmental resilience, States should support investments by smallholders as well as public and private smallholder-sensitive investments58.

ANNEX 3 SUSTAINABLE DEVELOPMENT GOALS INDICATORS59

SDG 2 – Zero Hunger

2.1 By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable

situations, including infants, to safe, nutritious and sufficient food all year round

2.1.1 Prevalence of undernourishment

2.1.2 Prevalence of moderate or severe food insecurity in the population, based on the Food Insecurity Experience Scale (FIES)

2.2 By 2030, end all forms of malnutrition, including achieving, by 2025, the internationally agreed targets on stunting and wasting in children under 5 years of age, and address the nutritional needs of adolescent girls, pregnant and lactating women and older persons

2.2.1 Prevalence of stunting (height for age <-2 standard deviation from the median of the World Health Organization (WHO) Child Growth Standards) among children under 5 years of age

2.2.2 Prevalence of malnutrition (weight for height >+2 or <-2 standard deviation from the median of the WHO Child Growth Standards) among children under 5 years of age, by type (wasting and overweight)

2.3 By 2030, double the agricultural productivity and incomes of small-scale food producers, in particular women, indigenous peoples, family farmers, pastoralists and fishers, including through secure and equal access to land, other productive resources and inputs, knowledge, financial services, markets and opportunities for value addition and non-farm employment

2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size 2.3.2 Average income of small-scale food producers, by sex and indigenous status

2.4 By 2030, ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production, that help maintain ecosystems, that strengthen capacity for adaptation to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality

2.4.1 Proportion of agricultural area under productive and sustainable agriculture

2.5 By 2020, maintain the genetic diversity of seeds, cultivated plants and farmed and domesticated animals and their related wild species, including through soundly managed and diversified seed and plant banks at the national, regional and international levels, and promote access to and fair and equitable sharing of benefits arising from the utilization of genetic resources and associated traditional knowledge, as internationally agreed

58 Food and Agriculture Organization of the United Nations (FAO), Voluntary Guidelines on the Responsible Governance of Tenure, 2012 59 Based on the revised list of global sustainable development goals indicators, as per March 2017

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2.5.1 Number of plant and animal genetic resources for food and agriculture secured in either medium or long-term conservation facilities

2.5.2 Proportion of local breeds classified as being at risk, not-at-risk or at unknown level of risk of extinction

2.a Increase investment, including through enhanced international cooperation, in rural infrastructure, agricultural research and extension services, technology development and plant and livestock gene banks in order to enhance agricultural productive capacity in developing countries, in particular least developed countries

2.a.1 The agriculture orientation index for government expenditures 2.a.2 Total official flows (official development assistance plus other official flows) to the agriculture sector 2.b Correct and prevent trade restrictions and distortions in world agricultural markets, including

through the parallel elimination of all forms of agricultural export subsidies and all export measures with equivalent effect, in accordance with the mandate of the Doha Development Round

2.b.1 Agricultural export subsidies 2.c Adopt measures to ensure the proper functioning of food commodity markets and their derivatives

and facilitate timely access to market information, including on food reserves, in order to help limit extreme food price volatility

2.c.1 Indicator of food price anomalies

SDG 5 – Gender Equality

5.1 End all forms of discrimination against women and girls everywhere

5.1.1 Whether or not legal frameworks are in place to promote, enforce and monitor equality and non-discrimination on the basis of sex

5.2 Eliminate all forms of violence against all women and girls in the public and private spheres, including trafficking and sexual and other types of exploitation

5.2.1 Proportion of ever-partnered women and girls aged 15 years and older subjected to physical, sexual or psychological violence by a current or former intimate partner in the previous 12 months, by form of violence and by age

5.2.2 Proportion of women and girls aged 15 years and older subjected to sexual violence by persons other than an intimate partner in the previous 12 months, by age and place of occurrence

5.3 Eliminate all harmful practices, such as child, early and forced marriage and female genital mutilation

5.3.1 Proportion of women aged 20-24 years who were married or in a union before age 15 and before age 18

5.3.2 Proportion of girls and women aged 15-49 years who have undergone female genital mutilation/cutting, by age

5.4 Recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies and the promotion of shared responsibility within the household and the family as nationally appropriate

5.4.1 Proportion of time spent on unpaid domestic and care work, by sex, age and location

5.5 Ensure women’s full and effective participation and equal opportunities for leadership at all levels of decision-making in political, economic and public life

5.5.1 Proportion of seats held by women in (a) national parliaments and (b) local governments

5.5.2 Proportion of women in managerial positions 5.6 Ensure universal access to sexual and reproductive health and reproductive rights as agreed in

accordance with the Programme of Action of the International Conference on Population and Development and the Beijing Platform for Action and the outcome documents of their review conferences

5.6.1 Proportion of women aged 15-49 years who make their own informed decisions regarding sexual relations, contraceptive use and reproductive health care

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5.6.2 Number of countries with laws and regulations that guarantee full and equal access to women and men aged 15 years and older to sexual and reproductive health care, information and education

5.a Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws

5.a.1 (a) Proportion of total agricultural population with ownership or secure rights over agricultural land, by sex; and (b) share of women among owners or rights-bearers of agricultural land, by type of tenure

5.a.2 Proportion of countries where the legal framework (including customary law) guarantees women’s equal rights to land ownership and/or control

5.b Enhance the use of enabling technology, in particular information and communications technology, to promote the empowerment of women

5.b.1 Proportion of individuals who own a mobile telephone, by sex

5.c Adopt and strengthen sound policies and enforceable legislation for the promotion of gender equality and the empowerment of all women and girls at all levels

5.c.1 Proportion of countries with systems to track and make public allocations for gender equality and women’s empowerment

SDG 8 – Decent Work and Economic Growth

8.1 Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries

8.1.1 Annual growth rate of real GDP per capita

8.2 Achieve higher levels of economic productivity through diversification, technological upgrading and innovation, including through a focus on high-value added and labour-intensive sectors

8.2.1 Annual growth rate of real GDP per employed person

8.3 Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services

8.3.1 Proportion of informal employment in non-agriculture employment, by sex 8.4 Improve progressively, through 2030, global resource efficiency in consumption and production and

endeavour to decouple economic growth from environmental degradation, in accordance with the 10-Year Framework of Programmes on Sustainable Consumption and Production, with developed countries taking the lead

8.4.1 Material footprint, material footprint per capita, and material footprint per GDP 8.4.2 Domestic material consumption, domestic material consumption per capita, and domestic material

consumption per GDP 8.5 By 2030, achieve full and productive employment and decent work for all women and men, including

for young people and persons with disabilities, and equal pay for work of equal value 8.5.1 Average hourly earnings of female and male employees, by occupation, age and persons with

disabilities 8.5.2 Unemployment rate, by sex, age and persons with disabilities 8.6 By 2020, substantially reduce the proportion of youth not in employment, education or training

8.6.1 Proportion of youth (aged 15-24 years) not in education, employment or training

8.7 Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms

8.7.1 Proportion and number of children aged 5-17 years engaged in child labour, by sex and age

8.8 Protect labour rights and promote safe and secure working environments for all workers, including migrant workers, in particular women migrants, and those in precarious employment

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8.8.1 Frequency rates of fatal and non-fatal occupational injuries, by sex and migrant status

8.8.2 Level of national compliance of labour rights (freedom of association and collective bargaining) based on International Labour Organization (ILO) textual sources and national legislation, by sex and migrant status

8.9 By 2030, devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products

8.9.1 Tourism direct GDP as a proportion of total GDP and in growth rate

8.9.2 Proportion of jobs in sustainable tourism industries out of total tourism jobs 8.10 Strengthen the capacity of domestic financial institutions to encourage and expand access to

banking, insurance and financial services for all

8.10.1 (a) Number of commercial bank branches per 100,000 adults and (b) number of automated teller machines (ATMs) per 100,000 adults

8.10.2 Proportion of adults (15 years and older) with an account at a bank or other financial institution or with a mobile-money-service provider

8.a Increase Aid for Trade support for developing countries, in particular least developed countries, including through the Enhanced Integrated Framework for Trade-related Technical Assistance to Least Developed Countries

8.a.1 Aid for Trade commitments and disbursements 8.b By 2020, develop and operationalize a global strategy for youth employment and implement the

Global Jobs Pact of the International Labour Organization 8.b.1 Existence of a developed and operationalized national strategy for youth employment, as a distinct

strategy or as part of a national employment strategy