Social Vanilla answers questions on its journey towards traceability and transparency
Episode #5 of our Trace Talks allowed us to peek into the early experiences of Social Vanilla, a start-up selling socially sustainable and vanilla, with our Trace tool. “It is possible to redistribute value without compromising a good business as a reseller of a product”, guarantees Amie N’Dong, CEO of this Denmark-based venture, who chose to make her food supply chain transparent from day one. As the webinar didn’t give us enough time to explain how our paths came together, we extended this talk to learn about the journey to fair vanilla.
Commitment to traceability still sends chills down the spines of many managers of well-established companies. That was not the case of Social Vanilla, who sells high-quality vanilla in all its forms; from beans to powder. Faced with the paradox of a constant rise in the price of vanilla while product quality and farmers’ working conditions continue to decline, Amie N’Dong and her partner Mikael Mortensen decided it was time for things to change. With the founder’s professional backgrounds, their creation of Social Vanilla comes as no surprise. Amie worked as a project manager at Social Foodies, a social impact food company; Mikael had been involved in direct trade with coffee and vanilla in Uganda, with a strong focus on social responsibility. The goal was clear from the start: creating a business that doesn’t compromise on farmer’s working conditions or income nor the quality of the vanilla, by fixing the food supply chain while maintaining a profitable product.
First things first, why vanilla?
We went with vanilla for two reasons. First, while I was working at Social Foodies, I realised that even though the prices of Ugandan vanilla were rising, the quality was going down. So, while vanilla was being sold at record prices, the farmers weren’t getting paid enough nor fairly. This encouraged us to take a close look at the value chain and travel to Uganda to carry out feasibility studies on various issues with a strong focus on quality and, of course, a more equal distribution of the price. The second reason is that vanilla has a high market value, making it possible to uphold a financially healthy business while creating positive impact. Both of these things encouraged Mikael and me to start our company, because we recognised that there was an actual solution to inequality in the vanilla value chain. Not a simple one, but one with a much better outcome for the farmers.
We didn’t know that tools like Trace existed. But when we began to work on the marketing and sales of our product, we understood the importance of proving our claims of transparency. We knew we were sourcing as direct as possible, but we didn’t have a way of backing that claim up to our customers yet.
Was being transparent something you committed to right from the start?
When we first started, we didn’t know that tools like Trace existed. Our main goal was to solve the issues we saw in the value chain, to realise a more equal distribution, and then cooperate with NGOs to make sure that our work was contributing to the best possible solution, instead of just doing what we thought was best. But when we began to work on the marketing and sales of our product, we understood the importance of proving our claims of transparency. We knew we were sourcing as direct as possible, but we didn’t have a way of backing that claim up to our customers yet. So, despite implementing a sustainable production strategy approach right from the start, the transparency followed a little bit later.
You have been using Trace for two months now, could you tell us a little about the farmers you work with?
The farmers we work with represent small household incomes. Often there’s one or two in the family supporting between four to eight household members. For most of them, vanilla is their main source of income, but they have other crops with a much lower market value as well. We don’t have collected data on gender yet, but we know most of them are men. We will try to promote gender equality by creating incentives for female vanilla farmers. It’s not a main focus in our setup yet, because we’re still at an early stage, but it is something that we will focus on.
What are the main challenges that come with making the supply chain transparent and traceable?
The hardest thing is properly communicating our data to the consumer, without it getting lost in translation. There are many costs involved in the food chain that are much more difficult to understand than the farm gate price. We commit to paying for our product more than six months before we have it and are able to sell it. Then there are the costs of the import, the storage and the packing, the staff, management, website, and many more costs linked to selling a product. So, when you look at the farm gate price and compare it to what we sell the vanilla for, some people might wonder where all the money went, and it might look as if we are making huge profits. Hopefully people can understand that Trace helps us find a good price that benefits all the parties involved and compare it to what the farmers were earning before.
Does tracing your products also make them more expensive?
Not for us, because we chose to source our product directly and just pay a fee for the curing, while most other companies will solicit wholesale, or source from a curing facility which involves paying a middleman, who usually profits from underpaying the farmers. The extra costs of sourcing responsibly can be covered through cutting our own profits within the company. This makes our business much more focused on long term investments and less on trying to get up to high volumes. We made a conscious decision to do that, because our mission is to ensure a more equal distribution and go against the classical market logic of a company that tries to maximise profit.
What additional value does Trace offer you?
With a blockchain system like Trace, you would have to try very hard to fake something, because it tracks an integral part of your activities and your trade systems. And while we know our clients trust us in terms of what we do and the additional work we put in to support the farmers, the kind of additional proof that Trace provides is still necessary.
Social Vanilla’s quality is also based on providing farmers with agricultural training and a good price. What does that look like in practice?
Regarding agricultural training for farmers, we try to promote the use of an intercropping system. While the conventional method includes clearing land and then growing vanilla and banana, there is a much more regenerative way of farming, growing a bigger diversity of crops. We also provide farmers with up-to-date agricultural expert knowledge on matters related to climate change and its effect on rainfalls, for example. Ideally, the farmers would also implement practices that allow them to get an organic certification in the future. When it comes to securing good prices, which is very important to us, we originally wanted to work with a minimum price but that turned out to be unfeasible because of the extreme volatility in the price of vanilla. What we decided to do instead was implement a system where we pay 20 to 25 percent more than the market value, which is something we can do by cutting some of our own costs and taking out some of the expensive middlemen. In the long term, we are also working on making farmers more resilient to price drops by increasing their income from other crops, i.e., macadamia and cacao, which are more stable in price and could help provide them with a stronger financial basis.
Does Social Vanilla exclusively work with Ugandan vanilla?
We mainly work with Ugandan vanilla, for two reasons; to create socio-economic growth with our approach, and to contribute to a stabilisation of the vanilla market at large. In the beginning we also looked at Madagascar and a few other vanilla producing countries, but through Mikael’s experience, who had been working in Uganda for the last couple of years, and some other projects we knew of, we realised that another important element of the value chain is that 80% of the vanilla is grown in Madagascar, creating a lot of dependence and instability. A couple of years ago, the price of green bean vanilla was $70 per kilo. In Uganda, now, it can be as low as $7 per kilo. There has been an extreme drop in prices, which regardless of our expectation that it will go up again, makes it extremely difficult for the farmers to depend on vanilla for their income. So, while we mainly focus on Ugandan vanilla, we also work with smallholders in Sub-Saharan Africa.
What have been your biggest achievements and learnings so far, and what else would you like to accomplish?
First, making it through the Pandemic has been a huge achievement. I think my biggest learning so far has been understanding the true meaning of responsible sourcing, including knowledge of the market and value chain. Also, understanding the importance of farmers’ involvement in value-adding activities, which is something we really want to promote. I would love to see farmer-owned vanilla processing facilities in the future, because if they are involved all the way to the exporting of their product, they will also care about ensuring its quality. Issues with incorrect harvesting and handling would most likely be solved, as there would be a much bigger incentive for farmers to focus on quality than they have now.