Not to be confused with corporate social responsibility; “For Pepsi, a business decision with social benefit”

A New York Times article entitled, “For Pepsi, a business decision with social benefit” told the story of a new venture involving Mexican farmers selling their crops to PepsiCo. 

 “PepsiCo’s work with the corn farmers reflects a relatively new approach by corporations trying to maintain a business edge while helping out small communities and farmers… The social benefits of the corn program are obvious in higher incomes that have improved nutritional and educational standards among the participating farmers, … but PepsiCo insists those benefits are ancillary to the business rationale for the program”

The article then goes on to list some other examples of creative business models that are able to satisfy the “triple bottom line” – interestingly even with products that are “profit-neutral” but that provide valuable intelligence about new and emerging markets.

The article made me smile quoting a spokesman from Dalberg Global Development Advisors who talked about corporate social responsibility (CSR) being “largely nonsense”.  Agreed — business models need to be a lot cleverer than relying on corporate consciousness to satisfy the complex goals of development.  This article highlighted another example of out-to-box thinking in ag development.

I sent the post to Peter Bloch to see what he thought and he said:

“Renowned economist Michael Porter participated in one of the main panel discussions at the World Economic Forum along with the CEOs of PepsiCo and Nestle.  Porter spoke out against Fair Trade.  His rationale was that Fair Trade is/was driven by a perceived need to pay small holder farmers a living wage irrespective of their efficiency.  This approach appealed to corporate CSR managers.  Porter described Nestle’s approach: Why is the small farmer poor?  Because he cannot grow enough (poor inputs, no mechanization) and the quality is poor.  So we will help him to grow more, higher quality food which we will buy at market prices.

This takes developing country poverty alleviation out of the Corporate Social Responsibility department into the business mainstream, and the approach – developing market-driven value chains – is consistent with the latest thinking at USAID and other donors.

(Thanks to Victoria Henson-Apollonio for sending me the original NYT link)

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2 responses to “Not to be confused with corporate social responsibility; “For Pepsi, a business decision with social benefit”

  1. Jonathan Rosenthal

    I am saddened to read that Michael Porter thinks fair trade is just about paying a living wage. That is just one small part of building market access and community organizations that build small farmer and small farmer organizational capacity. Clearly, there is much education about fair trade still needed beyond the FTUSA wage soundbites. Perhaps it is time to write a public letter to Mr. Porter?

  2. For the sake of clarity, Jonathan, you might want to look at the video of the panel discussion I reference – http://www.weforum.org/videos/future-enterprise?fo=1
    You could skip forward to Porter on fair trade – 35:26
    And, while I am a supporter of fair trade in the largest sense, I’m in Uganda right now working on several projects which will result in better quality and increased outputs for small farmers, which will in turn enable them to increase their incomes without investing any more labor. Its going to take time to see impact, and time for these practices to proliferate. Market access is another major item on our agenda, and there is a program in the works intended to both inform and link small agribusinesses (the ones that deal directly with small farmers) to big regional markets so that surpluses can be aggregated and secure the same market prices that big farm operations get. So while I think that fair trade will continue to be a valid MO for quite some time, the general trend in both the private and the public sectors is to provide developing country producers with the tools and the expertise to substantially increase incomes as an integral part of market-driven value chains. To be continued!

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