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Evolution of Anheuser-Busch InBev’s Nile Breweries Limited Smallholder Sourcing Program

Nile Breweries Limited (NBL), Anheuser-Busch InBev’s Ugandan subsidiary, launched its sorghum-based Eagle Lager in 2002. The sorghum-based beer is crafted from local grains predominantly grown by smallholder Ugandan farmers. The Eagle brand exhibited unprecedented success for the company in the Ugandan beer market and that success incentivized NBL to increase their investment in local sourcing and local producers. NBL has also supported the introduction of malting barley to Uganda and has built a professionalized local supply chain. To date, the company has provided farmers with training and access to inputs

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Nile Breweries Limited (NBL), Anheuser-Busch InBev’s Ugandan subsidiary, launched its sorghum-based Eagle Lager in 2002. The sorghum-based beer is crafted from local grains predominantly grown by smallholder Ugandan farmers. The Eagle brand exhibited unprecedented success for the company in the Ugandan beer market and that success incentivized NBL to increase their investment in local sourcing and local producers. NBL has also supported the introduction of malting barley to Uganda and has built a professionalized local supply chain. To date, the company has provided farmers with training and access to inputs to enhance their farming and entrepreneurial skills as a part of Anheuser-Busch InBev’s global sustainability commitments to skill, connect and financially empower 100% of their direct farmers by 2025.

In 2016, the Sustainable Food Lab partnered with NBL to consider a methodology to assess the impact from this local sourcing and identify areas of improvement. As part of its Smallholder Performance Measurement Community of Practice, the Sustainable Food Lab and The International Institute for Tropical Agriculture (IITA) designed a survey methodology, with the field research done by IITA Uganda. This study assessed farmer livelihoods, access to agricultural services, adoption of agricultural conservation practices, trading relationships with NBL as well as crop loss in harvesting, storage, and post-harvest processing of sorghum and barley. IITA interviewed over 800 sorghum and barley farmers, 19 farmer associations and 30 company agents.

SURVEY RESULTS

Through this study, NBL found that their trade and support to producers improved farmer livelihoods. They also found that NBL sorghum and barley farmers had higher household income compared to non-NBL producers. The results on crop loss at various stages were different for barley than for sorghum, given that 97% of barley farmers sold their crop immediately after harvest, while 58% of sorghum farmers were storing their grain for longer periods of time before sale.

Analysis from on-farm data collection estimated that 9.4% of grain was lost during drying, threshing and cleaning. Farther up the supply chain, loss in storage and rejections were in some cases found to be quite high, in some storage facilities rejections were upwards of 75%. This was partly due to lack of sorting at farm level. The study found that there was a 34% gap between actual yield and the obtainable yield for sorghum farmers. This gap was attributed to low sorghum prices and limited farmer training. For barley farmers, a 40% gap was present between actual yields and the obtainable yield. This was due to the need for training specialization among farmers in different regions, such as the varying soil type from region to region which required different fertilization.

 

TAKING ACTION

The company took the results of this study and engaged multiple parts of the business to analyze leverage points for improvement. In mid 2016, they partnered with TechnoServe to develop the Initiative for Inclusive Agricultural Business Modelsto increase the social and commercial value of their local sourcing programs.

Helping farmers and aggregators professionalize and improving the communications and governance throughout the chains were seen to be critical investments. Improved supply chain management was needed to better deliver technical assistance, lower crop loss, and increased impact for farmers and the company.

The results of this initiative show the significant commercial and social value that efficient local smallholder sourcing plus an effective service delivery system can bring to buying companies and smallholder farmers. The topic of reducing loss and waste in the system was integrated into the farm level technical assistance provided by NBL’s agronomist and the upgrading work done by TechnoServe with NBL’s intermediary suppliers.

In 2017, the Food Lab, Nile Breweries Limited, and TechnoServe partnered again to study how climate change was affecting these supply chains. The study was not driven by increases in loss and rejection rates per se, however the NBL agronomy lead had seen effects on quality due to variable rains and weather. The results of this study, documented in the case study on Improving Grain Sector Climate-Smart Awareness and Decision-Making, include the different climate threats facing sorghum and barley farmers in different regions and the recommendations for the company to address these threats.

With a clear need to provide better services like agricultural training and inputs, NBL has continued to examine their supply chain for improvements. In addition to continuing the work to upgrade the capacity at both farm and aggregator level, they have recently invested in a project to bring weather stations to sourcing regions to improve weather forecasting for farmers and potentially develop a crop insurance product. Understanding that training can only increase yields to a certain level and that for some mechanization is needed for further increases, NBL has been piloting mechanization (push-planters and threshers) with barley farmers, which have shown yield increases of 40% in trials and can be used on other rotational crops.

To support the agronomic services provided to farmers, NBL has also implemented a blockchain purchasing platform with partner BanQu that creates a digital production and transaction history on a distributed ledger that brings greater transparency and security to the supply chain while creating an economic identity for farmers history that will improve access to financial services.

Reflecting on the work done to understand strengths and weaknesses in these two grain supply chains reveals that post-harvest crop loss is indeed an important issue. However, the most effective way for the company to address that was to design a program to deliver farm services more efficiently, be aware of regional specific climate risks, and provide continued commercial value to the company, which is critical to maintaining the resources for both sourcing and technical assistance. The more food loss and waste is linked to key commercial concerns and priorities, the more efficient and effective the loss reduction efforts will be.

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