Interview transcript
Teymoor Nabili
So much of the conversations that we’re having around the SDGs, and around sustainable development in Asia, do focus on this apparent contradiction between the commercial and the social impact and the sustainability side of things. But in the business that you operate, they merge in certain ways. And I hope through this conversation, we begin to tease out some of the ways in which they do interact, and how that might reflect on the broader issue that we’re facing, which is – how do we create greater value and promote sustainability through the farming sector in Asia? So let me just step back and get your perspectives on Asia in general, because a lot of your work has been outside of this region. Do you think there are differences in the challenges facing the farming industry and the food production and the social elements in Asia compared to Africa or Europe?
Fernanda Lopes Larsen
I think if you compare talking farmer specifically, if you compare to Europe, yeah, for sure, because Europe is a professional farming territory, the same way that United States is or Brazil, so the way that they do farm.
Teymoor Nabili
I guess a better comparison will be between Asia and Africa.
Fernanda Lopes Larsen
Exactly. Africa, I would say that the challenges are very similar. So first and foremost, I think there’s a major macro challenge, which is to to make agriculture interesting for the younger generation. Because today agriculture, particularly in the smallholder world, which is mainly Asia and Africa, agriculture is done by people between 41 and 50 years old. They want to go to the city, they don’t want to have anything to do with agriculture. So that is the major challenge. So how do we make it interesting and sexy for this generation? There is also a major, I would say, gender issue in agriculture as well. So a lot of women work in farms, but they don’t own the land. So they are deprived of the right tools or the right knowledge to even do agriculture. So those are macro challenges that I would say are very similar between Africa and Asia.
Teymoor Nabili
So for young people, yes, the pull of the cities and the growth of the cities in Asia is a major problem for continuing the farming industry, the agri industry. But nonetheless, there are 100 million people involved in agriculture in Asia right now, the population is growing fast, at least for the moment, and so the numbers that need to be fed is growing. So we need to make sure that industry does maintain some degree of continuity and expansion. What are the challenges to that happening in practical terms?
Fernanda Lopes Larsen
So instead of talking maybe on the challenge, I say a few words about how we are trying to contribute and resolve that, for example, through digital technology. Because it’s a matter of reach, right? There are millions of them, I’m never gonna have a big enough salesforce to reach all these millions of smallholder farmers across Asia or Africa because I have responsibility for both. So digital technology plays a major role into that. So if you’re looking to knowledge, for example, if you have a normal, I would say, agronomist meeting, you would have, I don’t know, in best case 30 farmers there. Through digital technology can reach I don’t know 30,000, 300,000?
Teymoor Nabili
So the challenge you’re addressing there is aggregation, is consolidation reaching scale…
Fernanda Lopes Larsen
Yeah, exactly, exactly. And then through those digital technologies you can share knowledge, and knowledge has many dimensions like how much water should I use to grow a certain crop, or when should I do the planting, based on weather patterns, wind patterns, rain and so on? So this is information that the farmer doesn’t have. It’s not easy.
Teymoor Nabili
So these are all challenges for the farmer. And you do deal with the individual farmers, the bottom of the pyramid. Tell me what the farmer is telling you that their challenges are, how they are struggling to deal with the changing demographics.
Fernanda Lopes Larsen
Many challenges. Financing is one of them. Access to money, access to insurance packages, I would say simple enough for them to acquire and to understand what they’re getting themselves. Inputs, offtake. There are so many. Our philosophy when we look into our solutions, we want to be this one-stop-shop for the farmer, where he or she can go and find all of that.
Teymoor Nabili
So the finance aspect has been a major problem for a very long time. This is one of the things that we really want to discuss. Because we have the money, lenders say they have the money, farmers say they need the money, bringing the two together seems to have been problematic. But having said that, if we do give them more money, would that solve all the problems?
Fernanda Lopes Larsen
I don’t think so. Because I think it’s about de-risking it. Right? Like you said, I don’t think availability of money is the problem. And that’s probably my personal opinion; there is enough money in the system. It’s how do we ensure that the ones that are lending the money – I mean, there are risks into lending the money to a smallholder farmer, you don’t know, if he or she are even going to take that money and buy the the fertilizer or the seeds or the pesticides that he or she said they would. There are too many risks involved in the chain. So the question is, how do we de-risk this, and that’s a little bit what we are trying to do.
Teymoor Nabili
Tell me how.
Fernanda Lopes Larsen
We have this beautiful platform, where you bring all these partners to the platform, and through the platform you generate data, and data is what is going to de-risk I think for many of these other players, for the insurers, for the banks, and so on.
Teymoor Nabili
Data in what form?
Fernanda Lopes Larsen
Knowing what happened to the money. So you will know that the farmer actually bought the fertilizer with the money, that they grew I don’t know how many kilos or tons of crops, so you have so much information around the farmer. And that will de-risk automatically for the banks or for the insurers because they know what happened to the money, they know that there is an offtake for that product, so the farmer will make money in the end to pay them back. Because I think that has been a bit of the issue or a lot of the issue basically.
Teymoor Nabili
So you say you’re creating a solution to that. Tell us about this platform idea.
Fernanda Lopes Larsen
We’re still piloting, it’s early days. Our ambition is what we’re calling internally to be the Amazon for the farmer. So the one-stop shop where the farmer can go and find everything, find finance, find other inputs, seeds, pesticides, tools, and so on. And the idea is to bring all those players into this platform. So you create this virtuous circle, the more farmers you have, the more players are going to be interested in being in this platform, and then of course there will be more offerings for the farmer and then more farmers will join the platform and so on. So that’s a little bit what we’re trying to create through a Yara own developed app. It’s called the Yara Connect. You have also the retailers, the retailers or the last mile, I think that’s how sometimes we call it, which are also an essential part in this chain. Because that’s today what the farmer relies on.
Teymoor Nabili
Can you make a commercial platform and bring the kind of collaborative partners that you need to that platform in a context where actually sustainable development and social impact are as important as the profit element? How can you convince other people to be part of that enterprise?
Fernanda Lopes Larsen
First, we have been in this for over 100 years. So we do understand the farmer – not only farming, but we understand the farmer. And we do have, I would say, the connection with the retailers or with the last mile, right?
Teymoor Nabili
If we’re talking about getting finance into the hands of small farmers, we’re dealing with financial institutions who may not have social and governance principles at the top of their agenda. Do you think all the other participants in this game are on the same page as you when it comes to the sustainability and the ESG aspects?
Fernanda Lopes Larsen
I think the ones that we try to work with, yeah. Because there are a lot of companies I think that have evolved in that.
Teymoor Nabili
So you’re looking specifically for partners that do express…
Fernanda Lopes Larsen
Partners that at least share a common understanding and a common goal of wanting to do something good for the farmer as well. And normally we are working with local banks that have actually supported farmers for many, many years. But of course it’s not easy for the reasons that we discussed before. But I would say that working with like-minded partners is a good way to make it work, even when it’s difficult, even when you’re struggling. If you have that common purpose together, it makes it easier. So it makes you more resilient, I would say, in the end.
Teymoor Nabili
And as you envision an ecosystem that will deliver the kind of outcomes that you’re thinking about, who do you think are the core players? I mean, we’ve talked about finances being an important part, but what are the essential core elements of a really well functioning ecosystem?
Fernanda Lopes Larsen
For sure, banks, insurance companies, seed companies, tools. I think at one point we will need to bring some some technology company, a telecom or someone of that sort to enable the farmer to reach better technology, have better access to internet or better phones, and so on. And of course, the last mile. The offtake or food companies could be part of this platform so that the offtake is secured. And so, players like that.
Teymoor Nabili
So I mean, there’s the technology aspect is key, isn’t it? I mean, even though even if you’re working in an environment where you can only use a feature phone rather than a smartphone, you still need the telecoms, the connectivity, and the familiarity of the farmer. How do you get the farmers themselves to be familiar? How do you get those bottom of the pyramid players in the system to be comfortable with that interaction, and that process?
Fernanda Lopes Larsen
I was having that conversation today with someone, because it’s still a traditional approach to get the farmers into the platform, it’s still the face to face and the word of mouth, so that farmer will tell the other farmer will tell the other farmer, building trust with the farmer. But getting the farmer into the platform is not the issue, it’s keeping the farmer engaged on the platform. Because then you really need to think of the content that you generate. It’s like, you know, when you go, how many apps do we download, and we actually stop using, right, because we don’t find them interesting anymore. The farmer thinks in the same way. So creating content all the time, that is interesting, that is relevant, and that is hyperlocal. So we go to the point of even thinking about the dialect of a certain country, we need to create that content for that specific area of that country to keep that farmer engaged. So, it’s not only about bringing him or her onto the platform, but keeping him or her there. That is a challenge.
Teymoor Nabili
You’re talking about building the trust of the farmer and the user. What about the trust of the other members of that platform? We were talking about financing earlier on, and a lot of the big finance corporations are very loath to deal with smallholder farmers, because the amount of trust, the amount of credibility, the amount of credit worthiness, all those measures that they use, are very difficult to ascertain. The change of mindset in the world of big finance, there’s got to be an element here, isn’t it?
Fernanda Lopes Larsen
Absolutely. And I have to say, you know, on our side as well. I’m not gonna sit here and say that only they need to change their mindsets. We in this process are learning as well. Because if you’re talking really partnerships, right, everybody loves to talk about partnerships, but our mindsets are still completely commercial, right? We go for the contract, you go for the kill, right? I mean, you want to get the best advantage for yourself and for your company. So that has to go. When you’re really negotiating a partnership contract with someone to be part of your platform, that thinking cannot be there.
Teymoor Nabili
How can you get rid of that? Or at least ameliorate it?
Fernanda Lopes Larsen
By trying. It takes a long time. That’s the longest part of putting this platform together, is actually getting those bank contracts or insurance contracts, even the templates that that we start with. It takes several iterations until you have something that is, I would say, “partnership fit” enough, “trustworthy enough” so that we can actually then progress to the next stage. It’s just by persevering by doing, by reminding ourselves of why we’re actually doing this as well. Sure it’s business but it’s also purpose, right? So that’s where it helps to work with companies that share the same purpose, and are equally obstinate about it as we are.
Teymoor Nabili
I mean, so much of business in the past has been predicated on the idea of owning intellectual property, owning rights, owning a space. The idea of collaborating with others, particularly competitors, is a hard sell sometimes. Are you finding problems with that? And does it change around the world? Are there differences in approach?
Fernanda Lopes Larsen
There’s potential to change it even more, I would say, because the mindsets are really competitive, if I’m open enough, if I’m honest enough here. It’s a process. We’re not all there yet. But we are really trying. I was having a conversation two days ago with a consultancy company, and we were talking exactly about that. You know, how do you actually make partnership work? There are so many attempts across the world, so many pilots of so many things, if you look into the food value chain. But how do you make that actually work? And I think there’s the element of trust, but there is also the element of everyone knowing what role they should play in this. Because sometimes you should just stay close to the core, stay close to what you know – Yara, fertilizer and knowledge, right? Sometimes you need to step up and maybe be the orchestrator.
Teymoor Nabili
Be the lead actor in the process…
Fernanda Lopes Larsen
Exactly, you know, bring all the actors together, which we’re trying to do digitally. Sometimes you need to be that full fledged solution provide. Take a food company, like ‘I have an issue that, you know, I need to decarbonize my chain, blah, blah, blah” so Yara, or any company, could take the role of, you know what, I am going to create that solution for you, and I’m going to provide the full service to you. I think there is no clarity yet in the chain, of what is the right role to play. And then things don’t progress as fast as they should. Because the food value chain is super long, depending on who you’re dealing with. If you look at the difference between Yara and I don’t know, take Walmart. Look at how many players are there inbetween. Is it realistic to expect that a company with 17,000 people can actually resolve everything up to Walmart? I don’t know, question mark. Sometimes we’re bold enough, and we go and try. Right.
Teymoor Nabili
But is it necessary? I mean, obviously, reconciling the entire value chain would be incredibly efficient. But is it absolutely necessary to think about that enormous challenge you just laid out? Is it possible to break it down into different tasks?
Fernanda Lopes Larsen
That, for example, is a way of doing, or maybe someone else in the chain can play that role. And then maybe we can play a different role in shorter chains. For example, if you look into fruit and vegetable producers, there’s not much distance between fertilizer up to that point. There, I think we can play a role that goes beyond just selling fertilizer and knowledge. We can be this orchestrator that that specific chain needs. But I don’t think the clarity, into who plays what role, is there yet. So everybody’s learning as we go, to be honest.
Teymoor Nabili
What about government in this role? How do you see them playing a part, both in a national level, how they manage and coordinate their own in-country activities, and on a regional level? I mean, ASEAN, with ASEAN RAI, is making great strides in trying to standardize and inculcate a certain set of practices and ideas into all the ASEAN nations. What role do you think government should be playing? And where should they be stepping up more?
Fernanda Lopes Larsen
Yeah, I think that the example of ASEAN is a great one. Even if you don’t look at a specific group of countries but a standalone country like Singapore, the number of agreements that they do on digital, I think it’s called Digital Economy Agreement or something like that. Where they take a really strong role, into making digital a huge thing in this country. So I think every country could understand what their strength is, and play a bigger role in that. Be the convenor, be this party that incentivizes other companies.
Teymoor Nabili
Be more specific. What would you like governments in the region to do? From the perspective of Yara, what can governments do to encourage you to be more active, to invest more, to do more?
Fernanda Lopes Larsen
I think there is a question of creating a transparent business environments for us to operate. Removing red tape. It’s still extremely bureaucratic to be in some of the countries that we are present today. I think there’s an element of facilitating that, removing that tape, incentivizing for us to be there with more infrastructure, trade agreements and things of the sort. So I think that will attract many more companies. If you look into our experience, for example, in Africa, we’ve been there for years and years. And it took a long time for us to actually make money. You know, not many companies have that patience or those deep pockets, to stay in a continent, and wait and wait and wait until we can actually turn into positive numbers. So I think the government plays a role into making the business environment probably friendlier and less bureaucratic, make public tenders fully transparent, along those lines, so that companies like ours are incentivized to not only stay, but also to invest.
Teymoor Nabili
And from the private sector perspective, those companies that you want to collaborate with, what do you want from them?
Fernanda Lopes Larsen
I think alignment on the purpose, is important. It’s not easy to make those things work. So having the patience, the resilience and the true purpose to stay there as long as it takes, or as long as we can. I think that is an important prerequisite.
Teymoor Nabili
This series is dedicated to the proposition that we need to force action if necessary, at least to encourage action. Rather than just talk about the problems and the principles, get people to commit. So let me specifically ask you, what’s your pitch to those people to get involved and to take action?
Fernanda Lopes Larsen
It’s not only the right thing to do. You know, we only have this planet, and to fix by 2050 we have to do something. It’s the right thing to do. And it’s not contradictory to being profitable and making money, if that’s what they’re worried about. Of course, as a business, you know, we all want to make money. It’s not contradictory. But yeah, it will take patience, will take resilience, it will take a different way of investing.
Teymoor Nabili
What would success look like to Yara, specifically. When you have set up your platform and it’s functioning, and it’s operational, and it’s successful – what does that picture look like?
Fernanda Lopes Larsen
Oh, it’s a beautiful picture! It’s a farmer that managed to move from subsistence into commercial farming. Even if we’re talking about a small three-acre farm. We’re not talking about those huge professional farms that you see in Brazil and the United States or Europe, but a farmer that moved away from subsistence into a space where he or she has his or her business. That is the dream. That is the goal. And I think it’s achievable.
Teymoor Nabili
How would you measure the success of that? Because, again, from the perspective of getting the financials right, from the perspective of your commercial business, that’s easy enough to measure. But how do you measure the social outcome of that?
Fernanda Lopes Larsen
It’s not easy. Of course, you need to have the structures in place. And we are doing that right now as part of our social impact strategy, because we want to have 50 million farmers connected, we want to lift thousands of women, of female farmers and youngsters and so on. We even need to get to the point where you see that in the country’s indicators or in the region’s indicators. You need to see and recognize this in GDP numbers, in social economical numbers of that region, or of that state or of that country. Because otherwise it’s greenwashing, otherwise it’s social washing, and we don’t want that, we don’t stand for that. So, you need to invest into getting those mechanisms to measure the impact up and running. And that’s what we’re doing now. And it costs money. It costs a few millions, I can tell you.
Teymoor Nabili
And finally, we’ve talked about the need for collaboration, the interactions, the parties that are involved, all the stakeholders and participants that need to be part of this. But there are others; apart from your platform model, there are others who are trying to bring together groups and trying to solve problems and different aspects and areas of this conversation. What advice would you give them in building multistakeholder collaborations? What advice would you give to people who want to engage?
Fernanda Lopes Larsen
Let’s talk! Even though we are working on similar issues, two brains think better than one brain. So maybe let’s try to tackle this together, even if you are a competitor of Yara. Come and talk to me because there might be something that we can actually do together. Because you’re right. We’re not the only ones trying. There are a lot of us trying. But I think trying in our own silos is going to generate much less than if we tried to do this together. So yeah, let’s forget competition maybe. And then try to really collaborate for the purpose of the farmer.
Teymoor Nabili
Great talking to you. Thank you very much for participating.
Fernanda Lopes Larsen
Thank you. Thank you for having me.
