Latin America’s McDonald’s franchise and the Syngenta Foundation share their initiative to scale local sourcing from smallholders across the entire LA region, and how they think about the business case for smallholder inclusion. Leonardo Lima from Arco Dorados and Carola Amezaga from Syngenta Foundation touched on what partnerships and co-investment are most promising to make these types of initiatives successful.
Notes from the presentations:
Three objectives of Qorichacra:
- Increase grower incomes
- Share learning both within sector and across sectors
- Grow producer capacity and the model
Overview of Arcos Dorados at this moment: Community is an important tenet of McDonalds culture. Arcos Dorados has five global pillars of Sustainability: Food. Sourcing. People. Community. Planet. They are working more and more with ingredients that have some certification. They are exploring how to minimize and mitigate the negative impacts of their business like carbon emissions. Qorichacra touches the sourcing and community pillar. Although the project is small, it is designed to learn how to include small producers in a low economic level into the McDonald’s supply chain. The project is not just one of smallholder development and improvement of livelihood. McDonald’s purposefully chose to develop smallholders where Arcos Dorados does NOT buy 100% of the supply, but rather 30-40% – so that they can open the road for other companies to buy from the producers. They intend to replicate the methodology. And it is an initiative that is not short term. This is a medium to long term initiative.
What the supply chain wants:
- Approved suppliers
- Products according to specs
- Predictive costs
- Assured supply
- 100% fulfillment of orders
- Farmers didn’t know of McDonalds and quality standards
- Production experience without any efficiency and productive concerns
- No previous experience in greenhouses
- Absence of confidence in project due to being the first one
- Language barrier
- No commercial experience to sell together
- Local production to serve local demand
- Keep smallholders in field and from moving to cities
- Production in greenhouses to promote more guaranteed results
- Smallholders can pay for initial investment with sales
What we have learned:
- Project in Cusco works for Cusco but not necessarily elsewhere
- Methodology needs to be more robust
- Develop a implementation kit for other companies
- Invest more time in planning to minimize inefficiencies during the implementation phase
- Commercial networking is a critical factor of success – bringing smallholders together
What we see for the future:
- Need high efficiency and productivity
- Benchmarking approach for the entire system
- Create an online platform to share results and best practices
- Create a center of excellence in Brazil
- Define logistics that are unique to each region
- Find new partners locally in each region
- Increase the purchase volume with other buyers
- Funds to cover design and implementation phase
- Investing together in a particular place to involve more than one company.
- Government involvement needed to invest in infrastructure.
- What is the end game for this pilot?
- Vegetables is a category that is very low and allows us to bring production closer to the restaurant.
- Southern Brazil has centralized supply that takes vegetables to the northern part of the Brazil – more local production reduces GHG, and improves livelihood.
- 10% of what we purchase is 1000xs what we purchase in Cusco.
- How do we impact society in a positive way – if we have to pay more – we can’t do it – we need to develop an economically viable model to keep going?
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