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Growing A Southern Brand To Global Success: The Olam Story

Most people haven’t heard of Olam International, but they know the brands they work for and they more than likely eat their produce. The story of Olam (http://www.olamonline.com) – a global food supply company in ‘agri-products’ that got its start in Nigeria – shows how a Southern brand can grow and go global, and overcome the difficulties of cross-border trade.

Olam supplies well-known global food brands including Cadbury (chocolate), Nestle, Lavazza (coffee), Mars (chocolate), Tchibo and Planters (peanuts).

Olam not only survived its startup in Nigeria, it has thrived, trading around Africa and across the globe, becoming a major supplier to the world’s top food brands.

The quantity of agri-products harvested in the world is 5.2 billion metric tonnes. In that market, Olam is a significant producer of cashews, peanuts, spices, beans, coffee, cocoa, sheanuts, packaged foods, rice, wheat, barley, sugar, cotton, wood, and rubber. It is already the world’s largest supplier of cashew nuts and sesame nuts and in the top three for peanuts. Olam’s cashew business in Africa provides work for 17,000 people, 95 percent of whom are women.

Olam also uses its success to play a critical role in securing the world’s food supply and has specialized in meeting the food needs of the world’s rapidly growing population, especially in China and India. Between 2001 and 2007, annual increases in the global consumption of agricultural commodities were larger than during the 1980s and 1990s. Higher incomes are leading to higher consumption of proteins like meat. And as meat demand rises, so does the demand for grain and protein feeds to produce the meat. It takes two kilograms of grain to produce one kilogram of chicken, four kilograms of produce for one kilogram of pork, and eight kilograms of produce for one kilogram of beef.

Chris Brett, Olam’s senior vice president and head of corporate social responsibility and sustainability, said the company tries to blend business success with wider social goals.

“We are one of the few businesses investing in rural environments and am tackling the problem of urbanization,” said Brett in Olam’s London office – the company’s global headquarters is in Singapore.

In 2008, it won the World Business Development Award for its contribution to achieving the Millennium Development Goals (MDGs) (http://www.un.org/millenniumgoals/).

Olam also has been recognized for its contribution to global food security. By providing farmers with credit to help build their communities, it has also been able to revive declining rural economies and help stem the outflow of farmers to the big cities and urban slums.

“Many countries are afraid to lend to farmers,” Brett said. “We gather the farmers together in groups of 500 and Olam manages the loan while a local bank receives the money. Defaults have been low and farmers are building up a credit rating. In this way, farming becomes a business not just a subsistence existence.”

The dramatic changes taking place in African countries – especially rapid urbanization that has made the continent home to 25 of the world’s fastest growing cities (International Institute for Environment and Development) – means there is an urgent need to increase food production and stabilize rural economies to support farming.

Olam International, started in 1989 in Nigeria by its India-born CEO Sonny George Verghese has many lessons for any Southern entrepreneurs who have their sights set high.

After developing its skills in exporting cashew nuts from Nigeria, Olam moved into cotton, cocoa and sheanuts. From 1993 to 1995, the company explored ways of taking their skills into other countries and different products. It was a period of rapid expansion into other African countries including Benin, Togo, Ghana, Cote d’Ivoire, Burkina Faso and Senegal.

Olam now operates in 26 African countries.

There has been a renaissance in South-South trade in recent years before the current economic crisis, growing by an average of 13 percent per year between 1995 and 2007. By 2007, South-South trade made up 20 percent of world trade.

Olam started with one product, got its supply right, and then started looking around and seeing what other products and services it could offer, applying already-tested expertise and supply skills – what the company calls the ‘Olam DNA’.

Olam claims its success has come from building strong relationships with farmers to guarantee high standards for the food products. The company does this by tightly tracking its stock and its quality. Olam then uses the information to analyze risks to the supply network. The company also keeps both warehouses and field managers close to the farmers. Olam estimates 65 percent of its profit comes from managing the journey from farmer’s field to factory gate.

Its selling point to customers is the ability to guarantee the entire journey from farmer’s field to factory gate, taking on all the risk and stress for ensuring the product is of the right standard and delivered on time.

Its niche is to provide the food products required by some of the world’s top food brands. The company has grown from just one product in Nigeria and two employees in 1989, to directly employing over 10,000 people worldwide and supplying 20 products in 60 countries, according to Brett. He says the company, which had a total 2008 turnover of US $5.75 billion, was “born out of Africa.”

Brett says the company is now “investing heavily in Africa in processing and distribution centres” – proof that a success story feeds back into more success and investment. It has been able to use its profits to go back and buy up failing businesses and former state-run enterprises, and modernize them. Olam now grows the food, processes it, and transports it to market.

Olam actively works with international donors, global NGOs like Technoserve (farmer business development), WWF (environmental impact of supply chain), and the Bill and Melinda Gates Foundation (cocoa and cashew farmers).

Olam, however, has received criticisms for its past practices. The global environmental group Greenpeace attacked its logging in the Democratic Republic of Congo (DRC) (http://www.greenpeace.org.uk/tags/olam), and the International Finance Corporation (IFC) divested its holdings from Olam for it trading illegally cut timber.

Olam and the Gates Foundation project are working with 200,000 cocoa farmers in West Africa to double their incomes. In Ghana, cocoa farming has become synonymous with poverty and perceived as an occupation of last resort. The work force is rapidly aging and the industry will die out if it doesn’t become more profitable and attractive to young people.

“We want the farmers to be profitable, the transporters to be profitable,” Brett said. “We believe a supply chain does not work if one player takes too much.”

And what advice does Olam have for budding food producers and growers? “Catchy, simple brands work. Our Mama Mia pasta caught the wave of the Abba revival.”

“Our Tasty Tom brand became very popular in Africa so we extended the brand into other products than just tomato paste. You reduce the cost of advertising by extending the brand name.”

“We feel SMEs (small, medium enterprises) growth is critical because it would give us more support. If more people invested in SMEs, we would have more people to do business with. We want to be able to make deals: they could be entrepreneurs.

“If you can add extra value it costs nothing but time.”

Brett advises budding SMEs: “It’s all about quality: trust and shared business ethics like formal contracts. When you have those, the bigger brands will give you support.”

By David South, Development Challenges, South-South Solutions

Published: October 2009

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP’s South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South’s innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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A UNDP Success Story: Grassroots Environmental Campaign Mobilizes Thousands In Mongolia | 1999

I had read the other day the following headline from Bloomberg: World’s Worst Air Has Mongolians Seeing Red, Planning Action. As far back as 1999, such a health and environmental tragedy was foreseen by a highly successful UNDP environment project. As its Canadian adviser Robert Ferguson said to UNDP News at the time, “Mongolia’s environment is endangered by a range of problems that are on the brink of exploding.”

He knew what he was talking about: Ferguson and his Mongolian colleagues had spent two years mobilizing Mongolians across the country to take practical steps to address the country’s environmental problems as part of the Environmental Public Awareness Programme (EPAP). Few people had as much first-hand knowledge of the country and its environmental challenges as they did.

In its 2007 Needs Assessment, the Government of Mongolia found the EPAP projects “had a wide impact on limiting many environmental problems. Successful projects such as the Dutch/UNDP funded Environmental Awareness Project (EPAP), which was actually a multitude of small pilot projects (most costing less than [US] $5,000 each) which taught local populations easily and efficiently different ways of living and working that are low-impact on the environment.” 

UNDP News: Networking Publication of UNDP Staff Worldwide April/May 1999

A UNDP Success Story 

By David South, Communications Coordinator, UNDP Mongolia 

Grassroots environmental campaign mobilizes thousands in Mongolia 

A countrywide environmental education campaign in Mongolia has drawn praise from around the world, most especially for its ability to mobilize thousands of people and produce hundreds of advocacy materials.  

Robert Ferguson, a UNV Information Specialist from Canada, has just finished a two-year assignment advising on the Environmental Public Awareness Programme. The project, implemented by UNDP, proved that civil society is alive and very well in Mongolia, despite 70 years of Communism and the hardships of transition to a free-market economy.  

For the first-time visitor to Mongolia, it is easy to be dazzled by the view: the expansive steppe, the sparse population with a sprinkling of nomadic tents, the enormous herds of sheep, goats and cows. First impressions tend toward the belief that Mongolia is an unspoiled paradise where nomads have roamed for thousands of years. The reality is considerably different. The 600,000-plus capital of Ulaanbaatar, or Red Hero, is densely populated, urban and home to the country’s remaining factories and electrical power plants. In winter, pollution from power plants and coal stoves in the traditional tents, or gers, where half of the city’s population still lives, chokes the population and causes numerous respiratory problems. 

While Mongolia has space to spare – the population is 2.4 million, plus 32 million head of livestock, in a territory the size of Western Europe – a long list of threats are taking their toll on this harsh but beautiful country.  

“Mongolia’s environment is endangered by a range of problems that are on the brink of exploding,” says Robert Ferguson. “As these  problems are not yet out of control, this country is in a very good position for grassroots initiatives that can help communities to realize their environmental problems and understand possible ways to keep them under control … 

… On one cold autumn day, Ferguson and his colleagues are visiting a project in the shantytown of Chingeltei in the north of the capital. A majority of Ulannbaatar’s population live in neighbourhoods like this, where the mix of traditional gers, wooden cottages and newly built Mongolian monster homes gives a vivid example of the transition years. The population has exploded as more and more Mongolians seek out their dreams in the capital.  

The Environmental Public Awareness Programme, or EPAP, uses small grants of between $1,000 and $2,000 to start awareness projects with local NGOs. After two years, nearly 100 small projects have been implemented – yet the original project document had only proposed 15 projects.  According to Ferguson, the project team, which includes Sumiya and Davaasuren, were struck by the wellspring of enthusiasm they were tapping.

… Garbage is strewn liberally on the dusty streets. Inspired by recycling campaigns in his native Canada, Ferguson encouraged local women to start the Blue Bag Project. Local women proudly show off their streets – garbage-free – as they collect pop and beer bottles and animal bones to turn in for cash at the local recycler. This is just one EPAP project that has galvanized grassroots action. Back in the EPAP at the Stalinesque Ministry of Nature and Environment, Ferguson continues … 

…. were all weak. What was needed was a means to take the right to public participation and an understanding of these laws to community organizations and let them develop public awareness campaigns that get the information out.”  

The Programme has exceeded expectations … 

…. “The response we got to our initial call for interested environmental groups was unexpected,” says Ferguson. “NGOs came from nowhere. And they embraced the idea …

… In October last year, EPAP launched the Mongolian Green Book, a pocket-sized environmental awareness handbook for NGOs. More recently Ferguson completed a Handbook on Environmental Public Awareness to share Mongolia’s experiences with others who care about the environment…

… The workshop is an immediate follow-up to the launching of the network through a workshop attended by 12 members in December 1998…

… with such enthusiasm that we pursued more money and nearly doubled the funding for small public awareness problems.”

Note: This is just an excerpt from the story. This issue of UNDP News featured contributions from UN Secretary-General Kofi Annan, Danny Glover, Nadine Gordimer and Amartya Sen.

The highly successful EPAP project was profiled in UNDP News in April/May 1999. This issue of UNDP News featured contributions from then UN Secretary-General Kofi Annan, Danny Glover, Nadine Gordimer and Amartya Sen.

The highly successful EPAP project was profiled in UNDP News in April/May 1999. This issue of UNDP News featured contributions from then UN Secretary-General Kofi Annan, Danny Glover, Nadine Gordimer and Amartya Sen.
Many resources are available online to explore Mongolia’s 1990s transition experience.
The Environmental Public Awareness Handbook: Case Studies and Lessons Learned in Mongolia, published in 1999 by the UNDP Mongolia Communications Office.
The Mongolian Green Book was published in 1999 by the UNDP Mongolia Communications Office.
The EPAP Handbook and the Mongolian Green Book were published by the UNDP Mongolia Communications Office and funded by the European Union’s TACIS programme.

Read Robert Ferguson’s The Devil and the Disappearing Sea: Or, How I Tried to Stop the World’s Worst Ecological Catastrophe (Publisher: Raincoast Books, 2004) to learn more about the toxic mix of politics and the environment. The book has been widely cited since and can be purchased online here: The Devil and the Disappearing Sea: A True Story about the Aral Sea Catastrophe: Amazon.co.uk: Ferguson, Robert, Ferguson, Rob: 9781551925998: Books

Robert Ferguson’s The Devil and the Disappearing Sea: Or, How I Tried to Stop the World’s Worst Ecological Catastrophe (Publisher: Raincoast Books, 2004).

Further reading on the plight of the Mongolian steppe in China: Life sentence for former Party chief who killed the Mongolian steppe: For 8 years Liu Zhouzhi pocketed bribes favoring mines exploitation, destroying the landscape, polluting land and drying up the pastures’ water sources. 

“The former head of the Communist Party in Inner Mongolia has been sentenced to life imprisonment for taking bribes that have led to pollution of the Mongolian steppe and the oppression of Mongolian herders. According to the judgment, published yesterday, by Beijing News, Liu Zhozhi, who had been expelled from the party before trial, used his eight years in power to pocket up to 8.17 million Yuan (over one million euros).”

Read more on the connection between corruption and air pollution levels here: The effect of corruption on carbon emissions in developed and developing countries: empirical investigation of a claim 

“There’s many a slip between the cup and the lip.”

“Yet you all come to us young people for hope. How dare you!” Greta Thunberg, Sept. 23, 2019

“How dare you!” indeed …

UN agency hit with corruption allegations at climate projects – United Nations Development Programme internal audit describes signs of fraud and collusion

Document of the Week: Aid Donors Blast UNDP for Resisting Appeals to Fight Corruption – A dozen wealthy donor states press the United Nations Development Program to investigate allegations that funds were misappropriated from a Russia climate program it managed.

Greed and Graft at U.N. Climate Program – Whistleblowers and experts allege corruption at a United Nations Development Program project for reducing greenhouse gas emissions in Russia, according to a Foreign Policy investigation.

And it hasn’t got better, according to UNICEF, as reported in The New York Times:

Mongolian Air Pollution Causing Health Crisis-UNICEF

The story reports on a child health crisis in the country’s capital, Ulaanbaatar, because “Many ger households burn coal or even trash to keep warm and the smog they produce has led to a surge in respiratory and heart disease and stoked anger and protests.”

And “Pollution levels in Ulaanbaatar” have “become worse than that in cities such as Beijing and New Delhi”, according to the UNICEF report. 

In 2018, Time published a story titled “Life in the Most Polluted Capital in the World”. This consequence of poor development policy stands in stark contrast to just a few years earlier, when the Mongolian President was awarded the 2012 Champions of the Earth award for “leadership that had a positive impact on the environment” and in 2013 was named as Global Host for World Environment Day 2013 because Mongolia “is prioritizing a Green Economy shift across its big economic sectors such as mining and promoting environmental awareness among youth”. Awards and meetings are clearly not enough. Update on Tuesday, August 28, 2018 at 3:35AM by David South

The importance of reducing exposure to urban air pollution is being backed up with more studies and evidence. What we have seen in the past 20 years of globalization has been a big push to encourage urbanization and denser urban living conditions. But, unfortunately for human health and well-being, this has not been connected to a strategy to reduce urban air pollution. In fact the opposite has been happening in many cities.

Urban air pollution has increased from various sources, in developed countries from vehicles, in particular those burning diesel fuel, and in developing countries, from not only vehicles but also households burning fuel for heating and cooking.

The tragedy unfolding in Mongolia’s capital, Ulaanbaatar, is a classic case of this public health problem. But it is also a crisis in developed world cities, as more vehicles clog streets (many people have been encouraged to buy these vehicles as a boost to the economy during the Global Financial Crisis). Bizarrely, highly polluting diesel engines were marketed as a ‘green’ solution, in particular in the UK!   

Some stories that highlight the harm done, especially to children, can be read below:

Air Pollution Linked To Increased Mental Illness In Children

Air Pollution Causes ‘Huge’ Reduction In Intelligence, Study Reveals

A new book to be launched in April 2019 by journalist Beth Gardiner (@Gardiner_Beth), “Choked: The Age of Air Pollution and the Fight for a Cleaner Future” (Granta) (University of Chicago Press), explores today’s global air pollution crisis in the world’s cities. Gardiner is an environmental journalist who writes for The New York Times, The Guardian and other publications (bethgardiner.com).  

The UK cover for Choked: The Age of Air Pollution and the Fight for a Cleaner Future (Granta, 2019). 

A story by Beth Gardiner on the air pollution crisis in Mongolia from National Geographic. Kids suffer most in one of Earth’s most polluted cities – In winter, coal stoves and power plants choke Mongolia’s capital, Ulaanbaatar, with smoke—and lung disease.

“An urgent, essential read” Arnold Schwarzenegger

Listed in the Financial Times’ “What we’ll be reading in 2019”

“A compelling book about a critical subject” Elizabeth Kolbert, Pulitzer Prize-winning author of The Sixth Extinction

“Air pollution kills seven million people every year, causing heart attacks, strokes, cancer, dementia and more. In Choked, Beth Gardiner travels the world to tell the story of this modern-day plague, exposing the political decisions and economic forces that have kept so many of us breathing dirty air.” 

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© David South Consulting 2020