ICACBrisbane

4th December 2019

Capacity building of small farmers:Improve yield & enhance traceability

Anupam Gupta Olam International

Global Fibre Demand Expanding ~108 MMT in 2022, Cotton unable to keep pace

2

0

20

40

60

80

100

120

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

Sources: ICAC, IWTO, USDA, and Fiber Economics Bureau.

COTTON

MMF

Cotton losing share 68% (in 1960) to 27% (expected in 2022)

3

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%19

60

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

Sources: ICAC, IWTO, USDA, and Fiber Economics Bureau.

COTTON

MMF

Challenges faced by Cotton Industry

80

90

100

110

120

130

2001

2004

2007

2010

2013

2016

2019

Supply Volatility

50

60

70

80

90

100

DEC

-11

SEP-

12JU

N-1

3M

AR-1

4D

EC-1

4SE

P-15

JUN

-16

MAR

-17

DEC

-17

SEP-

18JU

N-1

9

Price Volatility Labor intensive Pesticides Dyes & chemicals

5ExCo Presentation - Cotton V2SNG

Note: 2018 represents 2017/18 harvest yearSource: ICAC

6180815 Cotton Full Potential S ...SNG

Note: 2018 represents 2017/18 harvest yearSource: ICAC

Supply: Potential constrained by production area and yield

Production Area Yield

0

10,000

20,000

30,000

40,000

2013

2014

2015

2016

2017

2018

CAGR CAGR

2024

(F)

-0.3%

'13-'18

0.6%

18-'24

Cotton global production area (‘000, ha)

7180815 Cotton Full Potential S ...SNG

Small Farmers: 58% Area, Produce 36%

42%

45%

13%

58%

ACREAGE

Indian Sub-Con

Africa

64%30%

6%

36%

PRODUCTION

Indian Sub-Con

Africa

Production: 26.5M tons, Area: 35M ha

(20.3M ha) (9.5M tons)(14.7M ha) (17M tons)

8ExCo Presentation - Cotton V2SNG

0

500

1000

1500

2000

Aust

ralia

Turk

ey

Chi

na

Braz

il

Mex

ico

USA

Paki

stan

Indi

a

Ivor

y C

oast

Mal

i

Burk

ina

Faso

Zim

babw

e

Moz

ambi

que

Cha

d

2.7 0.040.250.17 0.030.03Production MMT

Manual & Rain-fed

Source: ICAC

Yield: Australia & Brazil among highest yield with African nations the lowest

0.5 0.84 6.04 6.24.00.38 0.3

Yield (2018, Kg/ha)

World Average, 770 kg/ha

1.6

Mechanized & Irrigated

Small farm, 470 kg/ha

Large farm, 1150 kg/ha

Small holder farmers - Challenges

Training in Good agricultural practices

Access to good quality agriinputs

Access to Bank/Micro Finance : limits capacity building through investments into mechanization

Access to Technology: unable to deploy modern technology due to small farm size

Functional literacy, access to medical amenities

Market access, fair price

Ecosystem required for success of small cotton farmer West Africa example

Role of ginner : Long term commitment to support growers and provide all the resources required for cotton production, yield improvement, capacity building.

Role of government: create a governance model to define roles of sector participants, enforce contractual performance, ensure balanced sector development

Role of industry association : Create platform for dialogue between stake holders, develop market based pricing model for seed cotton and create a support fund to maintain sector maintain financial attractiveness of the sector during low price regime

Role of NGO & DFIs : Build farmer capacity through training in GAP, functional literacy, farmer field schools, functioning of cooperative, educating farmers on Child Labor policy, deforestation, sustainability programs

Olam’s experience in Integrated ginning in Cote D’Ivoire Production Volume Drivers : Area X Yield

1618

23

3.0

3.4

3.8

4.2

4.6

5.0

0

5

10

15

20

25

14 15 16 17 18 19 24

Ha/

Far

mer

No.

of F

arm

ers

No. of Farmers (‘000 Ha) & Ha/ Farmer

2621

40

65

0

20

40

60

80

14 15 16 17 18 19 24

Production (‘000 Tons)

55

77

105

0

30

60

90

120

14 15 16 17 18 19 24

Area (‘000 Ha)

5577

483

316

620

300

400

500

600

700

0

30

60

90

120

14 15 16 17 18 19 24

Yiel

d/ K

g

Area

Area (‘000 Ha) & Yield/ Kg

12ExCo Presentation - Cotton V2SNG

Yield Growth Initiatives

12

Initiative

Current Yield - Base Case (kg/ha) 450

R1 & R2 Seed Generation (kg/ha) 65

Input Application (kg/ha) 65

Plant Population (kg/ha) 55

Selective Mechanization (kg/ha) 15

Soil Fertility (kg/ha) 10

Expected Yield (kg/ha) 660

Target Yield (kg/ha) 640

Target Yield of 640 kg/ ha

Key for successTo achieve differential yield requires extensive farmer engagement, continuous follow up and frequent trainings warranting different approach for Farm Extension Services through embedding this activity within Co-operatives

450

640

6565

5515

2010

0

100

200

300

400

500

600

700

Current Yield CaseInput Application SelectiveMechanization

Plantpopulation

Soil Break Final

Yield 2016 to 2022

Improving Yield – Back to Basics

Optimal Plant population

Early Planting

Timely weeding

Effective Insect pest control

Timely Fertilization

5 fingers approach for achieving better yields

14180815 Cotton Full Potential S ...SNG

Improving Yield of Small Scale Farmers

Seed Multiplication Program

Farmer training program

Model demo farms

Cattle Agric. Equip support program

Zero Tillage Farming

Produce quality planting seeds for farmers

Increase crop productivity with Good Agricultural Practices (GAP)

Establish yield potential of a village by ensuring all GAP are deployed.

To help small holding cotton farmers for increased cotton area & plant cotton early as monsoon sets in.

To help small holding cotton farmers for increased cotton area & plant cotton early.

15180815 Cotton Full Potential S ...SNG

Spyder: Tool for farmer engagement, farm extension services & crop tracking

Farm activities

Track season activities from Farmer registration to Payment

Farmer engagement, two way communication Track Extension Services activities of Field Staff

Agri Inputs distribution & inventory controlOnline data entry & tracking of Agri Input distribution

Farmer/Cooperatives Credit & payment trackingReports on credit outstanding & Payments

Database creation and data analysisLink to SOFIA & Building on Farmer / OPA Database

16ExCo Presentation - Cotton V2SNG

Agriculture faces some of the biggest development, economic, and environmental challenges...

Consumers are becoming aware & demanding… But agricultural supply chains are complex

• Customer focused

• Driving transparency across our supply chains

• Showing sustainability metrics that matter

• Generating action on identified risks

• Helping our customers meet their sustainability commitments & targets

• Fully aligned with our Purpose to Reimagine Global Ag & Food Systems

• Delivered through a simple & clear Digital Dashboard

AtSource is Olam’s comprehensive sustainable sourcing solution in the B2B marketplace

AtSource Olam’s Sustainability platform

A lot of re-imagination is required to grow responsibly

17

Conclusions

1. Cotton is a preferred textile fibre

2. Increasing supply will result in higher demand

3. Significant opportunities to increase production by small scale farmers in Africaa) Area increase from 4.5M ha to 6.0 M ha and yield increase from 350 kg/ha to 640 kg/ha.b) Current production of 1.5M tons can increase to 3.8M tons

4. Governments have to create an enabling ecosystem for Ginners to take a long term view and engage with farmers in improving farm productivity and increasing farmer capacity.

5. Ginner to play multi functional role – banker, seed company, agri inputs company, agronomic advice, logistics company, community projects

6. Production increase through yield increase will help increase financial returns for the farmer

7. Technology has a significant role in reducing supply chain costs and establish transparency & traceability.