Sun International Hotels, enhancing climate resilience in smallholder sourcing programmes, Zambia
Since 2004, Sun International Hotels in Zambia has managed a local food sourcing programme through which it procures fresh fruits and vegetables from 400 smallholder farmers. This has resulted in security of supply and reduced costs for their two hotels and provided livelihoods opportunities to smallholders in the region.
The inclusive business initiative
As part of both its corporate social investment (CSI) and procurement strategy, Sun International (SI) manages a local sourcing programme through which its two hotels in the area purchase fresh fruits and vegetables (e.g. tomatoes, lettuce, bananas) from smallholders in the Livingstone and Kazungula districts. The programme runs in partnership with ASNAPP, an agricultural technical assistance (TA) provider, which trains smallholders in horticulture production. SI has also partnered with CETZAM, a microfinance institution providing working capital to smallholders.
However, challenges remain: lack of access to wider markets has limited the programme’s scalability; yields have increasingly been affected by extreme weather events (e.g. hail, floods, drought, frost); and as a result, smallholders struggle to meet loan repayments. Lack of resilience against these conditions has led to greater smallholder dependence on SI as a market to purchase their produce and to guarantee loan repayments.
Sun International and ASNAPP have identified some solutions including the establishment of a pack house through which produce can be channelled to existing and new markets and greenhouses to increase smallholder resilience to climate change. Other technologies are also being considered.
Sun International’s primary commercial driver is to reduce the costs of procuring fresh produce. It has found that local sourcing of fruits and vegetables is less expensive than transport from Lusaka or imports from South Africa – and can generate savings of 20% and 35%, respectively. Local sourcing also directly contributes to a reduced carbon footprint for SI.
In addition, the programme contributes to security of supply for Sun International, enabling it to provide fresh fruits and vegetables to guests in a sustainable manner. The quality of smallholders’ produce meets the standards required for both SI and nearby hotels.
Finally, the smallholder sourcing programme increases Sun International’s license to operate in the area as it strives to make the programme more efficient and enhance livelihood opportunities. The programme features in its marketing, which may attract guests who value its relationship with local communities.
Sun International’s local sourcing programme provides a number of development benefits.
- ASNAPP’s training in horticulture production helps increase smallholder yields and income. Last year, smallholders earned an average of $2,500 each from their produce.
- SI aims to double its network of smallholders from 400 to 800 over the next five years.
- Development of a pack house facility and partnership with a regional retailer is opening up new markets in which smallholders can sell surplus produce.
- Potential adoption of new climate change resilient technologies and products could reduce vulnerability of smallholders to market and extreme weather conditions.
- Income increase among smallholders is also contributing to greater overall economic activity in the Livingstone area.
Innovation and scale
The new pack house facility’s centralised system can benefit both SI and smallholders, and serve as a collection and distribution point for inputs (e.g. seeds, fertilizers), raw materials (e.g. unrefined honey), fresh produce, and value-added products (e.g. honey). Public and private funding for smallholders can also be managed through the packhouse. An automated system and use of ICT such as mobile phones, can increase transparency , deliver TA, and streamline the procurement process for all parties. This can help increase the number of smallholders and small-scale processors involved in the programme. The partnership with regional suppliers is also set to scale the programme by channelling produce to wider domestic and regional markets. Finally, new, value-added products could potentially reach international markets.
Objectives of Facility engagement (May 2012)
SI’s local sourcing programme is in transition from its current model, which employs agents to manage collection and delivery of produce from networks of smallholders to the company, to a more efficient model that operates around a pack house facility. Given this transition and the greenhouse technology identified to increase smallholder resilience to climate change, SI has asked for BIF support to provide recommendations on achieving more sustainable routes to market for smallholder produce and products, and to increase smallholder capacity. BIF support focused on:
- identifying sustainable new markets (e.g. additional sales in local markets; small-scale processing enterprises for value-added products such as honey, Fair Trade, moringa)
- organizational structure for the pack house facility including potential new partners
- options for climate-resilient technologies (e.g. greenhouses, weather warning systems, financial services, mobile training)
- funding options for the programme and smallholder inputs (e.g. working capital for inputs; longer-term loans for greenhouses).