Tom Morton: An innovative fund for supply chain resilience

Food supply chains face a volatile future. Resilience means looking outside of the box to build long-term wellbeing in the producer communities as well as the crops. What’s often lacking is a way to invest in supply chain projects that improve health, tackle poverty and fight climate change, at scale. For instance, how can the cost of health solutions for Kenyan farm workers growing food and flowers for sale across UK and European supermarkets be factored into the financial model of the supply chain?

This article was originally published on Forum for the Future – Futures Centre on March 25 2015.

 

This is a question that we are exploring with food and beverage grower Finlays, through its Horticulture Fairtrade Association. Together, we are creating a funding model that food retailers and manufacturers can follow to deliver similar impacts around the world.

In this instance, the solution we are funding is efficient cookstoves. The Finlays workforce that these supply chains depend on, face a life-threatening challenge in the cost and health implications of cooking on traditional, inefficient stoves or open fires. These emit toxic fumes that kill 15,000 people in Kenya every year, and damage the health of many more. The UN endorses the provision of modern, efficient stoves to address this issue, but for most farm workers the latest efficient stoves are out of reach financially.

Our project makes efficient cookstoves available to agricultural workers by subsidising the initial cost of a stove and creating a revolving fund which provides an interest free loan to assist purchase. As loan repayments top up the revolving fund, the money is used again allowing the project to expand and support more families.

 

Finlays-Blog

Over two years, this project will improve the health and disposable
income of 8,000 supply chain workers

That’s not all. The fund has an innovative second source of income, beyond the loan repayments. Cleaner cookstoves help to save carbon by reducing deforestation for charcoal, and so we are generating and selling carbon credits to boost the fund. This will ensure the long-term sustainability and expansion of this project across the farm workforce community. Setting up these projects is complex. You can’t design the solution and then add on a financial model; they need to be developed hand in hand. From our offices in Nairobi, we ran extensive testing and market research with groups of workers to select the best possible stove within the budget constraints and to develop an effective distribution and retail network. At the same time, we set up a mechanism to manage the loan and repayment facility and arranged for upfront investment by DFID, Kenya.

The project is now launched and at least 8,000 agricultural workers are set to take advantage through 2015. They will benefit from the positive health impacts of a more efficient stove, and will each save approximately £125 in fuel costs every year.

And, the business benefits from a healthier, happier workforce – without which no supply chain is resilient.

To find out how to develop similar projects within your own supply chain contact Tom.Morton@ClimateCare.org

 

 

Tom leads our project development team, specialising in activities that deliver environmental and social development outcomes. Under Tom’s leadership, ClimateCare has won numerous project development awards. His team also provide consultancy services to development agencies and NGOs and advise governments on clean energy and development policy. Tom is based in the ClimateCare Africa office.