(9i)
44%
Sourcing sustainably
Source agricultural
vv j
raw materials locally
in Africa
O O Qs
Introduction Report of the Executive Board Report of the Supervisory Board
2020 commitment
Deliver 60% of agricultural raw materials in
Africa via local sourcing within the continent7
Our progress
Off track
Our contribution to the SDGs:
2.3 Productivity and incomes of
small scale farmers
2 SS».
In 2019, we sourced an estimated 44% of agricultural
raw materials locally in Africa and the Middle East
(up from 37% in 2018).
Twelve of our operating companies source locally
across 32 different value chains. Our raw material
purchases and our six Public-Private Partnerships
(PPP) supported more than 140,000 farmer
households in 2019.
Overall, our focus on value chain and recipe
development has delivered a 19% year-on-year
increase in the quantity of raw materials sourced
in Africa.
- In Ethiopia, we increased domestic malt and
barley purchases, significantly growing our
proportion of locally sourced raw materials.
- Our sorghum programme in Sierra Leone saw the
share of locally sourced raw materials double from
2018 levels.
- A similar increase was seen in Democratic Republic
of Congo (DRC), driven by increased purchasing
of local rice and sugar. This included 1,000 tonnes
of rice sourced from five co-operatives in the Ruzizi
valley through a pilot PPP with Agriterra.
- We extended our PPPs in DRC and Ivory Coast
to the end of 2020 and we will start a new barley
project in Ethiopia in 2020.
- The proportion of locally sourced raw materials
in South Africa more than doubled in 2019 as a
result of domestic sourcing of maize, sugar and
apples for cider.
- We launched a programme to develop local barley
production in eight countries. This alternative
crop gives farmers the opportunity to diversify
production, including in Rwanda where we have
successfully completed the second year of trials in
collaboration with the Rwanda Agriculture Board.
Despite good progress in many areas, local raw
material sourcing has not kept pace with volume
growth in key markets. It has also lagged behind
the expansion of our business footprint in new
markets, where there are initially lower local sourcing
contributions. Furthermore, lack of processing
capacity continues to be a factor in several markets.
The decline in domestic sugar production in Africa,
which has faced competition from cheaper imports
from outside the continent, has also proved to be
a challenge.
Looking ahead
Although we will not reach our 60% local sourcing
target in 2020, we remain committed to achieving
it. We are working with partners to increase
processing capacity. In Ethiopia, two new malteries
are expected to begin operating within a year,
each providing an additional 60k tonnes annual
processing capacity.
Financial Statements
Sustainability Review
Heineken N.V. Annual Report 2019
Other Information
We will continue supporting farmers in Africa by
providing access to new crops, improved varieties,
agricultural and business skills training, and the
inputs and finance they need to make the transition
from subsistence to commercial farming.
For more on our Local Sourcing programme in Africa, progress and
initiatives, see our website and case studies
Raw materials sourced in Africa
Our 2020 target 60%
2019 44%
2018 37%
2017 42%
2016 49%
2015 49%
Extending the CREATE Project in Ethiopia
The CREATE Project has supported over 40,000 farmers
in Ethiopia and increased our quantity of locally-sourced
barley five-fold. We have extended the project to 2020
with two new malteries due to begin operating by the
end of the year
