Livelihoods 3F Case Study

Mars and Danone have set up a fund designed to tackle poverty among smallholder farmers.

Photo credit: Livelihoods Venture / Hellio Vaningen

Mars and Danone have set up a fund designed to tackle poverty among smallholder farmers while improving food security, restoring ecosystems and increasing supply chain productivity and sustainability.

Two of the world’s leading food companies, Mars and Danone, are among the backers of a new investment fund designed to tackle poverty among smallholder farmers while improving food security, restoring ecosystems and increasing supply chain productivity and sustainability.1

If it sounds like an ambitious list, it is. But then the epic challenges facing the global food system need big thinking. We are hugely reliant on smallholder famers – 500 million of them produce 70% of the world’s food. But three-quarters of this group are malnourished. Their job is getting harder too: food production needs to double by 2050 to meet the needs of a growing population, but unsustainable farming practices, compounded by climate change, are depleting resources.2

The Livelihoods Fund for Family Farming, or Livelihoods 3F, plans to invest €120 million in the next 10 years on projects that alleviate poverty and promote sustainable agriculture in Africa, Asia and Latin America.3 It will focus on key commodities threatened by climate change, including milk, cocoa, vanilla and sugar.4 Under its innovative model, the fund will provide upfront financing and tech support to organizations, such as NGOs and farmers’ cooperatives, working with rural families to restore degraded ecosystems and boost the sustainability of their crops. They in turn will provide farmers with sustainable farming techniques and technologies, plus training and technical assistance. Farmers will have the possibility to sell their production to the investors and business partners of the Livelihoods Fund that commit to purchasing produce over the long term. With an enhanced agricultural productivity and an efficient connection to markets, family farmers will be able to sustainably improve their livelihood while preserving their natural resources.

The fund will get its return from result-based fees from companies, for access to sustainable sourcing in quantity and quality, but also from institutions and governments, who benefit from the public goods and environmental services generated, including carbon sequestration and water preservation.5

Livelihoods 3F hopes to attract private and public partners looking for a positive social and environmental impact, plus companies that want to improve the sustainability and productivity of their supply chains.6 Corporate giants Firmenich and Veolia have already signed up.7 The potential is enormous. Mars alone purchases 8 million tons of commodities per year. If these were all sourced sustainably, the benefits for both smallholder farmers and the ecosystems that support them would be immense.8

References