When established corporate houses like Nestle, Unilever, and Starbucks took decades to figure out their responsible sourcing strategies, young agri enterprises from their inception realize that sourcing sustainably is crucial to the way they would want to operate. Hence, agri “sociopreneurs” in the emerging markets are modeling their operations keeping sustainable sourcing at the center – but HOW?

Let us discuss how Siam Organic from Thailand and East Bali Cashews from Indonesia have successfully cracked the code in designing an operating model embedding the principles of sustainable sourcing at the core. Both Siam Organic and East Bali Cashews were established almost during the same time – early 2010’s.

Neil and Palmmy were MBA students in 2011 when they learned that Thai farmers were among the poorest in the world, earning just $0.40/day, because of poor yield, rising costs, and inefficient agricultural systems. With a desire to create a sustainable and irreversible solution Neil and Palmmy co-founded Siam Organic with only 25 farmers producing Jasberry – a new variety of non-GMO whole grain rice which is more nutritious than conventional Thai breeds. Today, the organization is more than 1100 farmers strong who have been able to increase their income 14 times. Last year, Siam Organic was awarded USD 400,000 by the Chivas Venture Fund in Los Angeles.

When Neil and Palmmy were helping the Thai farmers get out of poverty, around 5000 km down south in Indonesia Aaron Fishman was conceptualizing East Bali Cashews. Due to the drier climate in East Bali, the farmers can grow only cashew nuts there, but 90% of the processing is done overseas – primarily in Vietnam and India. Aaron quickly identified an opportunity for forward integration of the supply chain which can help the farmers get out of their poverty. Raising USD 900,000 from IIX and KKR in 2013, Aaron set up the first large-scale cashew processing plant in Bali. Today, East Bali Cashews works with local farmers and villagers in growing and processing cashew nuts, creating sustainable livelihoods and empowering the cashew growing community.

If we try to decode Siam Organic and East Bali Cashews’ sustainable sourcing strategy we will find similarities.

Below we have tried to condense that into 4 key guiding principles on how a Sustainable Sourcing strategy can be a way of operating rather than being an add-on to an organization’s already existing sourcing model:

1. Ethos – Glocalization: Both Siam Organic and East Bali Cashews have localized their sourcing and processing but cater to Global markets. They understand sourcing and processing locally will not only save operating costs for the organization but invigorate the local economy as well. Siam Organic have developed milling and storage facilities in the villages where the Jasberry farmers can come and sell their produce. East Bali Cashews through their farmer extension programs have closely engaged the farmers in cashew drying – one of the most important post-harvest processing activity. Having produced and processed locally both the organizations have eyed for global markets and for this they have positioned as a premium offering. Their products have gained momentum in the from the premium segment as the products are nutritious, healthy and organic.

2. Approach – Inclusive Innovation: At the basis of Siam Organic’s venture is the innovation of Jasberry Rice, a new variety of non-GMO rice developed by local scientists through decades of natural cross-breeding. Today Siam Organic have new product offerings where they mix this new variety of rice with traditional Thai Jasmine Rice customizing it for the local palate. To execute their innovative idea the organization has teamed up with local poor farmers and in the process increasing their income. Today the Jasberry farmers earn up to 200% more than they would otherwise receive if they grew conventional commodity rice instead. While Siam Organic is more about their product innovation East Bali Cashews have broken conventions through their farmer-led process innovation. Village Drying Centers (VDC) where the community can come together and collectively dry their harvested cashews, have empowered the local community to semi process their produce and increase their income by 30%.

3. Operate By – Community Engagement: Today Siam Organic and East Bali Cashews have a stronghold in their respective sourcing hubs. This is by constantly engaging with the community and respecting the fact that the farmers are the backbone of their operations. Siam Organic conducts a handholding for the Jasberry farmers from sowing to harvesting and even post harvesting. They distribute high-quality seeds, train them on field preparation and how to farm with natural inputs and collaborate with them on pricing strategies. Neil says, “When we make key decisions like pricing there is total transparency to the farmers.” East Bali Cashews have a dedicated Farmer Extension Program through which they introduce sustainable farming techniques in the community. With a forward-thinking approach, they planted 30,000 new cashew trees in 2016 through their extensive seedling and nursery distribution program. As the soil in East Bali’s Ban region is dry, the organization works closely with farmers to introduce responsible use patterns of soil and using naturally available fertilizers.

4. Key Impact – Resilient Livelihoods: The two organizations may have different processes, scale, geographies and products but they aim at making the community more resilient in terms of their livelihoods – because they know for a sustainable sourcing value chain they need their backbone to be resilient. The Jasberry Farmers under Siam Organic today have an improved productivity (around 8 Kg per hectare) than conventional commodity rice and earn around 7 Thai baht more per Kg. With the additional income, many have started to rear pigs which have become an alternate income stream for them. The farmers who were once poor have now strengthened their socio-economic conditions by growing Jasberry Rice. On the other side of the sea, East Bali Cashews identified that the farmers in the dry province of Ban have nothing to do after 3 months of cashew season.  After testing several resilient high-value crops to find one that would grow well in the arid environment and provide farmers with another source of income outside of cashew season, the organization introduced Rosella – a bright versatile flower which goes into savory products, breakfast cereals, and tea. East Bali Cashews today sources Rosella from their group of farmers and have started a different set of product offerings.