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Harvesting Data for Shared Value? Measuring Impact of Agribusiness on Society

Written by Linda Pappagallo

Linda is a Monitoring and Evaluation Specialist. Linda developed monitoring and evaluation metrics that turned Ulula's data into insights. Before joining the team, she worked on key environmental and social policy issues like land grabbing and resettlements in the extractive and agricultural sector in Eastern Africa and Mozambique.

October 15, 2014

The sheer impact global food production has on our society, economy and environment is hard to overstate. Approximately three-quarters of the world’s agricultural value added is generated in developing countries, and in many of these the agriculture sector contributes as much as 30% to GDP. More than 3 billion people live in rural areas, and for roughly 80% of these people agriculture is the main source of income and employment. Food production occupies nearly one quarter of all the habitable land on earth; it is responsible for more than 70% of fresh water consumption, 75% of deforestation and 19–29% of all anthropogenic greenhouse gas emissions. Current trends in consumption patterns indicate that food production may need to increase by an estimated 70 % globally by 2050. This raises important sustainability questions for businesses and societies.

The agribusiness and food sector have partially responded to these impending sustainability issues by applying shared value concepts, a natural evolution of corporate social responsibility schemes that reconceive the intersection between society and corporate performance. But there are still important gaps: comprehensive tools that are able to quantify the linkage between social impact and business results in real-time to create shared value in the food production supply chain do not exist.

True, tools such as mobile-enabled technology for agricultural services (mAgric) have shown some degree of success. But most mAgric tools have not yet been able to demonstrate their ability to operate sustainably and in scale. One of the main reasons is that mAgric projects often lack solid business models and rely on the unrealistic assumption that that end-users are able or willing to pay for the services these projects provide. As a result, these projects rely heavily on grant funding and fold if donors move on.

More promising are mAgric projects that are framed under a shared value perspective as they offer stronger incentives for corporations to invest and subsidize projects. One successful shared value project is the COCOALINK initiative in Ghana, which is supported by Hershey’s, America’s largest producer of chocolate. Using a mobile-phone platform, COCOALINK provides cocoa farmers with updates on farming practices, farm safety, child labor, and crop disease prevention via a simple mobile messaging system. Using a randomized control trial impact to conduct an impact assessment, Hershey’s found that farmer’s household incomes increased by 70% over three years. Households that used COCOALINK increased cocoa yields by 10% in the first year and by 46% over three years. The COCOALINK program developed and launched by Hershey’s in 2011 has now scaled up to include cocoa farmers in Cote d’Ivoire and expects 100,000 farmers to be in the network by 2016.

Mobile technology can also help resolve some of the practical challenges that come with measuring shared value by instituting continuous feedback loops to boost productivity while improving sustainability along the agribusiness supply chain. Besides Hershey’s, Nestlé, Coca Cola, DANONE, Mars, Syngenta, Cargill, and others have also created shared value projects with the aim of improving the quality and sustainable cultivation of raw materials on which their productivity depends. They have also launched projects that connect and organize farmers, and enhance farming knowledge to increase yield productivity while reducing risk and stabilizing farmer’s income.

Yet the field is still in its infancy. According to Measuring Shared Value, a report recently released by the Foundation Strategy Group (FSG), very few corporations follow a framework that continuously links social progress directly to business success, and vice versa. Social and environmental performance is usually measured without a link to the resulting business benefits in terms of increased productivity or reduced costs. Similarly, financial performance is tracked without incorporating social impact into the calculations. These omissions make it hard to construct good business case arguments for social investment projects. Part of the reason for the hesitation in measuring social value creation is that measuring impact is typically done through randomized control trials or by hiring independent consultants, which can be expensive and time consuming.

There are also some other added challenges identified in FSG’s report such as reaching scale (measuring social outcomes for large populations and across business units), tracking progress in real time and across time to address the challenge that business value accrues on a different timeline than social value or analyzing data in near real time to help create performance incentives aligned with shared value objectives.

Mobile technology can help institute simple two-way communication through SMS between businesses and stakeholders with the aim of creating continuous feedback loops to create shared value and overcome the challenges that come with measuring shared value.

Using FSG’s four-step feedback loop (figured above), we briefly explore how mobile technology can be used.

1. Identify the social issue to target As a first step, the mobile platform can be used to survey stakeholders and systematically screen for the unmet social needs and gaps that overlap with the business operations. Once the social needs that bring shared value are prioritized, stakeholders that are most impacted can be engaged to co-identify, with businesses, the shared value indicators to track.

2. Make the business case This step includes specifying the activities and costs involved for each shared value opportunity, from the business side. Modeling the potential business and social results relative to the costs can be fine-tuned by using the mobile platform to survey or poll target beneficiaries on the expected shared value gains. Additionally, the mobile platform can be used to crowdsource shared value opportunities by involving communities, workers, stakeholders and the public sphere on new ideas that can create value for both businesses and other stakeholders. Finally the mobile platform can become a tool through which sustainable, adaptive and scalable shared value added services are designed.

3. Track progress On the business side this step includes tracking inputs and business activities, outputs, and financial performance (revenues and costs) that are directly affected by outcomes with the social investment. On the beneficiary side this involves tracking and surveying expected benefits to direct users, and monitoring for possible unexpected benefits from the wider population. For example, a shared value added service could be delivering payroll, automatically enrolling employees in retirement savings schemes, or directly paying insurance premiums to rural farmers, many of whom are still unbanked, through the mobile platform. The expected shared value outcomes on the business side are reduced costs for businesses to process payroll, for example, evidence suggests the cost of transactions reach 15% of annual operating budgets in the coffee supply chain. On the client side, the rural farmers, benefits include timely receipt of payments and better financial management of cash which can even indirectly benefit businesses. A five year research program by MIT, Harvard and Princeton professors with Busia farmers in Kenya found that farmers enrolled in automated financial savings schemes were over three times more likely to purchase fertilizer for next harvest than those without savings accounts. In this case, the mobile platform can be used to track shared value indicators by monitoring farmer’s satisfaction with payroll procedures, farmer’s change in household income expenditure or farming practices as a result of increased savings and timely receipt of payroll, while business tracks transaction costs savings from using the mobile platform.

4. Measure results and use insights to unlock new value As indicators are tracked, data can be analyzed in near real-time or at important points during the business cycle to realize new shared value opportunities or assess the value added in continuing existing social investment project.

The rapid change in consumption patterns is bringing new challenges to the agribusiness and food sector. Unlocking and measuring the link between business results and social impact can help create innovative and sustainable win-win business models. In practice, methods for quantifying the changes and impacts creating shared value solutions require systematic frameworks, such as the feedback loop proposed by FSG, and simple tools, such as mobile technology, in order to reach scale and create value for corporations and society.

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