The greatest challenge with we have accomplished so far is to build a robust and integrated organic supply chain, developing fairtrade relationships with the farmers and food growers.
Integrating and shortening the supply chain is not easy. One of the tasks is to develop a supplier network from smallholder organic producers while creating trust and ensuring an increasing volume to produce. Brazil’s organic food market is evolving, but its supply chain is still unripe. We face issues like lack of specialized technical assistance, equipment and biological products for scaling crops. Since our ingredients come from small farms surround São Paulo, transportation can be an issue for us to explore more the potential of our current and possible suppliers.
We have accomplished a lot already. As we integrate the whole supply chain, we aim to facilitate decision making processes across each player by sharing data such as demand forecasting and production costs, so every partner can thrive as LivUp scales.
To implement such integration, our key activities are:
- 1. Plan demand forecast for each ingredient
Identify potential suppliers and farmers, raising information about which items they can grow
- 2. Allocate demand according to each supplier characteristics and previous harvests
- 3. Follow up with each farmer on crops development, updating supply forecast and reallocating demand, if necessary
- 4. Evaluate and manage suppliers’ performance, according to planning adherence and quality of ingredients delivered.
For Liv Up, there is a guaranteed supply of organic ingredients for agreed prices, with data about how each crop is developing. We went from 50% of organic vegetables in February 2019 to over 80% in November 2019, with no increase in the average cost of raw material. If we would buy from distributors, the costs would be 20% to 30% higher.
For the farmers, there is a guaranteed demand for their crops, so they can focus on food production — instead of commercialization — for an agreed price, which makes their income independent from market fluctuations. Also, not everyone has access to technical support, so the partnership is a way for them to learn different organic and regenerative techniques.
In 2019, we sourced over 230 tons of organic food through these partnerships, representing around 65% of all vegetables cooked at Liv Up. We expect to reach 80% in 2020. Some farmers had an annual income of over R$100.000, while the majority of them ranged from R$70.000 to R$15.000. Many of them have accomplished personal goals, such as buying their own piece of land — instead of leasing it — and found in organic farming a solid purpose of living.
We are building an empirical example of how organic agriculture and smallholder farmers can effectively produce food in scale and in connection with food-manufactures, integrating every player from farm to the consumer with consciousness and respect to nature. Our next steps are to incorporate more technology at the farm-level, improving data collection and enabling an increase in productivity, as well as to strengthen the relationships between the farmers and our chefs, exploring new flavours and possibilities for new recipes.