Around the table with Alexander De Croo

Alexander De Croo, Vice Minister and Minister of Development Cooperation of the Belgian Federal Government, visited Rikolto’s office in Leuven on October 20th. First, our colleagues highlighted our worldwide activities to make the food sector structurally more sustainable. Subsequently, the Minister led a panel talk in which the role of the government, business and development cooperation were discussed.

After the presentation by Rikolto, Joost Oorthuizen of the Institute of Durable Trade (IDH) from the Netherlands outlined their experience in pushing the sector of soy and cotton to higher standards of sustainability. IDH’s experiences are very similar to Rikolto’s. This was the start of a discussion with David Leyssens (The Shift), Koen De Maesschalk (Colruyt Group), Els Haelterman (Cabinet of Minister De Croo), Bogdan Vanden Berghe (11.11.11), Luuk Zonneveld (BIO – Belgian Investment Company for developing countries), Caroline Huyghe (Vredeseilanden/Rikolto), Chris Claes (Rikolto International), Jan Wyckaert (Vredeseilanden/Rikolto) and Joris Aertsens (Vredeseilanden/Rikolto).

“The question that occupies me as a Minister, is, of course: which is for us the most sustainable way of doing development, and what is our role in it?”, wondered the Minister to open the debate. “The chain approach of Rikolto and IDH is very interesting. On the one hand, I hear that the lessons learned during pilot projects are not easily taken up in mainstream business operations; on the other hand, we see that IDH has made significant progress in that matter, specifically with regards to soy and cotton.”

“It is indeed a difficult and lengthy process” says Koen De Maesschalck (Colruyt group). “The first steps that Colruyt took together with Rikolto date back to 2002. You should first get to know each other well to establish a good relationship. Once that basis is present, the projects follow. Then it is the task of the company to expand those examples into a complete brand. What we learned from the chain projects should become the benchmark for our house brand Boni, for example. And that is what we are doing.” But, what is then the difficulty to introduce new practices in the whole sector?

“One cannot just make agreements within the sector”, continues De Maesschalck. “That’s where competition law enters. And yet change must happen at sector level. As an individual company you can cover investments in sustainability for a number of years, but this is not sustainable in the long term, because you price yourself out of the market. Hence, public authorities should, at one point, take up the task to create a level playing field”.

Only when the pressure from society and consumers is big enough, the entire sector will start moving by itself. But we all know that we cannot wait for that any longer. “What is the solution according to IDH?”, asks Alexander De Croo to Joost Oosthuizen. “How did you succeed in getting the cooperation of the cotton and the soy sector?”

“That differs from chain to chain”, says Oosthuizen. “For some chains it is simpler to get the big players around the table. We are looking for chains with are leaders that want to make progress. But companies won’t do it by themselves. What you also need, is a strong mandate from an active government…and money.”

IDH has a working budget of 35 million euro. A part of this is used to finance ‘first-mover advantages’ that motivate companies to make the leap. “We then launch a ‘call for proposals’ for companies that want to implement projects.”

“As a company you must have a clear goal in such a process, one that suits your business activity”, says Koen De Maesschalck. “You shouldn’t want to do everything at once, but rather channel your energy. For us, it is crucial that the transparency increases within the chain, so the trust between the different actors can grow. The final focus should lie on changing the systems and processes within companies, so that the sourcing staff can also be judged on sustainability.”

Luuk Zonneveld, director of the Belgian Investment Society for Developing Countries (BIO) agrees. “There must be a win-win situation, for starters for the farmers. But it does not work if everyone in the chain only looks at its own efficiency. In fact, the efficiency of the whole chain should be of concern to everybody. That should be the common goal”.

“In the Netherlands, it seems to go faster than in Belgium”, Alexander De Croo notices. “Do we see similar initiatives in Belgium?”, he wants to know from David Leyssens, director of The Shift, a network of companies and non-profits.

“The SDG-charter was a great step forward”, says Leyssens. “It was surprising how many Belgian companies signed it immediately. More than 100 companies, which caused strong dynamics. But honestly? We had to work very hard to find good cases. You can’t find 100 of them in Belgium. The Netherlands have a much longer history of linking the aid and trade agenda. Here this is rather new. The pressure from consumers also seems to be more present in the Netherlands than here.

“To reach consumers, you must make a very understandable case”, notices Alexander De Croo. “Some cases spread more easily. Fair Trade is a powerful concept and it grows… But if you look at an average consumer’s total expenses on food, it still remains very much a niche.”

“The most important thing is that we build a social base for sustainable entrepreneurship, together”, adds Bogdan Van den Berghe. “Fair Trade is a part of it, but the same goes for 11.11.11’s work on food speculation, for instance. On the one hand, we conducted a campaign to raise the pressure of our society; on the other hand, these reports opened a space to enter into a debate with the banking sector. The result was that most banks stopped proposing financial products speculating on food. We do a similar effort regarding bank’s investments in polluting mining activities.”

Then the Minister introduces one of his pet subjects: trade and development. In principle, the two should go hand in hand. However, at the political level, very few links exist between trade and development cooperation. “In Belgium, this has an institutional explanation”, says De Croo. “The mandates for trade and development cooperation are situated with two different governments in Belgium. But actually, this shouldn’t be an argument. Often, there is a fear that trade will instrumentalise development cooperation. A first step in the right direction is the transformation of BTC to Enabel. One of the consequences is that the local diplomatic missions will come together under one roof. I am especially curious to find out how 11.11.11 looks at the link between trade and development cooperation.”

Bogdan Van den Berghe has no problem with closer linkages between trade and development cooperation, on one condition. “The budget for development cooperation aims at development in developing countries. As long as this objective remains intact, a lot is possible. Fragile states are the biggest challenge. Projects, such as the ones from Rikolto, work best in middle income countries with a stable institutional framework. The key question is therefore how development cooperation can be a support for companies that work in a fragile context.”

Joost Oosthuizen (IDH) refers to a tea program in Malawi. “Our goal is to let three times more tea farmers earn a living income in 2020 than is the case today. But investors are hard to find in Malawi. The inflation is terrible over there. You see the same thing in Côte d’Ivoire. The cacao sector holds this country upright. In fragile states it is of utmost important to keep these sectors upright by supporting the local business community.”

Alexander De Croo picks in. “Don’t we also have to ask ourselves which support we should give to realise a transition from pure subsistence farming to an agriculture more based on entrepreneurship? Everyone likes to talk about small-scale family farming, but for most people this means extreme poverty.”

“True”, says Chris Claes, co-director of Rikolto. “You know that, often, support towards the agricultural sector will not deliver much, because it addresses families that will never be able to create a viable farm. In fact, that just means that you are preserving poverty. Those people would benefit much more from safety nets and other employment opportunities inside or outside agriculture. For that reason, we do not support the poorest of the poorest, who are only farming out of necessity. Instead, we support people who see a perspective in agriculture and are therefore willing to go for it.”

"Is development cooperation always the most appropriate instrument to stimulate entrepreneurial-oriented agriculture?" De Croo asks.

"Investments and support from development cooperation should go hand in hand", continues Chris Claes. "But when I look at our own practice, we see that it is easier to pay an investment into a farmers' organisation with grant money instead of facilitating a capital investment or a loan and then coach an organisation to make that investment commercially profitable. That is the reason why we have set up Kampani, an investment fund with patient capital that takes participations in collective enterprises of farmers. The support of NGOs is complementary to this financing. A lot is happening at this moment in the field of alternative forms of financing, but in Belgium we can still learn a lot from neighbouring countries."

Minister Alexander De Croo concludes with some core issues that came up during the discussion. "As a government, we must be more than just a 'donor'. We must take up our coordinating role to bring the whole food sector to the table. Our trade missions can be a tool to create opportunities for farmers all over the world, and at the same time to make our own food sector more sustainable. We should not linger to long in the development atmosphere, but we must dare to make the leap to an investment logic. For the economy to play its role in improving the lives of people. Sometimes we have lost that belief in progress here in Europe. Wrongly."

Authors:

Jelle Goossens

Communications officer

jelle.goossens [at] rikolto.org

0485/08.29.60 | 016/74.50.33

@jasperwiet