Last year, South Africa’s second largest fresh fruit exporter, Colors Fruit, set up the Colors Foundation to channel international investment into improving social and agricultural sustainability across its supply base and the greater South African fruit industry. David Farrell, group director for sustainable business at Colors Fruit, talks to Gay Sutton about the business, ethical and agricultural reasoning behind the move.
The political, business and social evolution in South Africa has been swift and extensive, and many companies are reaching the conclusion that to thrive and survive they must contribute positively to the social and environmental evolution of the country. South Africa’s second largest exporter of fresh fruit, Colors Fruit, is one of those.
The company grew directly out of South Africa’s political change. Formed by a trio of fruit producers in 1997—a year after the dramatic deregulation of the agricultural product marketing liberated the industry and opened up the internal and global marketing channels—the company has a portfolio of farms owned by its shareholders, and has built a strong supply base of more than 300 farms who supply around 85 per cent of its produce.
Today, the company accounts for eight per cent of South Africa’s fruit industry, and exports over 150,000 tons of fruit to markets across the world, including the UK, Europe, the Middle and Far East and North America. “Our marketing strategy is strongly focused on serving top end retailers,” explains group director, David Farrell. “So we work with the likes of M&S, Asda, Tesco, Sainsbury’s, Waitrose and Morrisons in the UK; Delhaize, Carrefour and Migros in Europe; and Loblaws and Costco in Canada.” To manage these relationships effectively, the company has a head office in Paarl, Western Cape, and offices in the UK, Belgium and Toronto in Canada.
Over the years, Colors has invested heavily in developing good farming practices and in building the infrastructure for the business. “We have seven fruit packaging operations across the country that we either own completely or have invested in. Around 40 per cent of our produce goes through our own packaging operations, significantly strengthening our control of the product grading and the packaging for the final market,” Farrell continues. Investment has also gone into freight forwarding and clearing services, as well as packaging material supplies which are a major cost to the business.
Farrell believes, however, that the company’s future depends on developing a strong sustainable business strategy, and rolling this out across the business and through the supply chain. “The concepts of economic, social and environmental sustainability resonate very strongly with our own corporate values,” he says. “This is not an altruistic endeavour. There are in our view unavoidable business imperatives that make this such a key subject for our future success.
“South Africa has many socio-economic challenges, particularly in rural areas, and as a company with direct farming interests as well as being dependant on a primary agriculture supply base, we are going to feel very directly the effects of climate change,” he continues. “So as a company we have asked two questions. Can we see ourselves as a long lasting, healthy organisation if we are drawing our work force from increasingly dysfunctional communities with family breakdown, poor health or poor education? And the answer is an emphatic no. Likewise for climate change—can we see ourselves surviving into the future where there’s increased water stress, declining soil health and a changing climate? The answer to us is again clearly no. In fruit production, temperature and water are critical to our ability to produce a crop. We have therefore concluded that we must do something to pro-actively develop strategies to manage within and mitigate these realities of our business environment.”
As a result of these deliberations, a sustainability strategy has been developing over the past four years. This strategy is driven through the sustainable business function which comprises three main pillars. The first is the standards pillar. This defines the standards by which the company operates, and covers many conventional elements such as food safety, quality management and traceability compliance. Within this pillar, however, Colors has developed some interesting new concepts. Its Ethical Trade Programme is a code of best practice in good labour management, and was formulated by combining the principles of the Ethical Trade Initiative (ETI), a UK initiative which most of the retailers are affiliated to, with the labour law of South Africa. “We are using this as a base code by which to audit our supply base, to identify non-conformance and to stimulate continuous improvement in labour management,” Farrell says. By providing suppliers with guidelines, training and support material, the company hopes to stimulate progress that goes far beyond mere compliance.
“We are also in the process of developing a sustainable farming manual for our growers,” Farrell says. Over the years, farmers have been confronted by an increasing number of compliance schemes aimed at certifying their adherence to good agricultural practices, ethical trade, environmental stewardship and food safety. Each contribute to promoting an element of sustainable farming; but the manner in which these schemes have been implemented has caused confusion and increased costs, and has failed to achieve their aim. Working with the WWF, Colors is collating and packaging all these requirements, together with other subject areas currently not covered by these schemes, into a single comprehensive sustainable farming guide that it will then introduce to each of its growers. The aim is to have a single and logically structured body of knowledge on sustainable fruit farming that can form the basis of a comprehensive sustainable farming management system for farms. “It’s a fairly extensive exercise, but we’re hoping to have something meaningful in place by the end of next year.”
The second pillar of the sustainability function is the Colors Academy, which looks beyond the core business operations to the education and welfare of its workers and the communities of people associated with the farms and pack houses. This is approached from three perspectives: social development; education and training; and health services.
From the health angle, all the standard things are provided. There are health clinics on the farms, along with programmes for AIDS awareness, alcohol and substance abuse. Social development is promoted through social clubs and life skills training. From the educational angle, the company provides education and training for people of all ages, improving their literacy and numeracy skills. “Our approach with the Academy is to start with our own farms and pack houses and to use them as incubators for developing the ideas, then to take that out across our supply base,” Farrell comments.
New schemes are also in development, and the Colors Academy is currently trialling a crèche-based early childhood development programme for pre-school children, aimed at providing them with the numeracy, literacy and communication skills they will need if they are to take full advantage of their first years in school. The Academy has also developed a nutrition programme for the children and workers on its farms, providing three nutritionally balanced meals a day. This is an essential support to the educational progress of the children and of particular importance for the farm workers who are very often engaged in strenuous physical work, particularly during the harvest season.
The initiatives are being rolled out through a carefully selected network of service providers. “We’re now two years into the Academy programme, and we’ve become more confident and sophisticated in putting these initiatives together into a format that other farms can easily adopt,” Farrell says.
The third pillar of the sustainability strategy covers environmental matters. “And this is very pertinent to us because we’re an agribusiness and dependant on climate, weather, water and soil. It’s our means of production.”
In 2007 the company completed a full lifecycle assessment of carbon emissions across the entire supply chain, and has been using that to identify methods for reducing its carbon footprint. “Flowing out of that, for example, is our Biochar project. This uses woody waste from our fruit orchards, which is charred and reapplied to the soil. It not only sequesters carbon in the soil and offsets our carbon emissions but also has positive benefits for soil health.”
The other pressing environmental concern, of course, is the increasing scarcity and deteriorating quality of water in South Africa. To address this, Colors is currently studying water usage across its entire supply base and analysing the water basins around each of its farms and pack houses. From this it hopes to be able to make effective interventions.
During 2009, Colors took a significant step in the maturation of the company, its relationship with the international community, and the implementation of its sustainable business strategy. “We know that the real measure of the success and impact of our sustainability strategy lies in the degree to which it is adopted across our supply base. We recognised the need for supplementary funding to enable us to accelerate the roll-out and implementation of our various sustainability initiatives with our supplying farms, and set about developing a funding strategy to achieve this.”
Launched in 2009, the Colors Foundation is a not-for-profit organisation managed as a separate entity from the commercial Colors business. The aim is to attract funding from the national and international donor communities and to deploy these funds to accelerate the implementation of the many sustainability initiatives.
Already the money is starting to flow in from companies within the Colors supply chain. M&S, for example, is supporting research in the Biochar project, while Tesco and Norwegian wholesaler BAMA are supporting the Ethical Trading Programme and the Colors Academy projects respectively. However, the Foundation also has its sights on the international aid community. Assisted by specialist consultants Inspiris in London and Schuman Associates in Brussels, the Colors Foundation is now actively responding to calls for proposals from the UK and German governments and the European Union.
“It is still early days as far as our fundraising is concerned—we’re just scratching the tip of the iceberg,” Farrell says. “But as our proficiency at fundraising grows and as the impact of our sustainability strategy and projects grow as a result, this will become a real force for positive change in our business, our industry and our country. This is the vision behind the Colors Foundation.”