FTA Highlight No. 10 – Sustainable Value Chains, Finance and Investment in Forestry and Tree Commodities

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Analysis shows that between 2012 and 2019 the estimated volume of global trade in key forest commodities (oil palm, soy, cocoa, rubber, coffee and timber) has grown significantly. This production growth has put increasing pressure on forests, across landscapes in the tropics and subtropics of Latin America, sub-Saharan Africa and Southeast Asia, leading to multiple environmental challenges linked to losses in forest cover and biodiversity.

The growth in the trade of commodities also presents social challenges, including threats to local food and nutrition security and tenure rights and to the livelihoods of Indigenous Peoples and local communities.

For a decade FTA’s research has focused on supporting transitions to more sustainable and inclusive value chains, finance and business models for these commodities in order to meet growing global demands for food, feed and fibre from sustainable sources.

Download the volume! [PDF]
Within the context of the new series of highlights from 2011 to 2021, the CGIAR Research Program on Forests, Trees and Agroforestry (FTA) is now publishing the volume on Sustainable Value Chains, Finance and Investment in Forestry and Tree Commodities.

Annually, billions of dollars flow into rural landscapes worldwide. However, many investments fail to address a number of important goals of the inhabitants of these landscapes. FTA’s research links the impacts of global trade and investments to state- and market-driven responses in order to address their socio-environmental impacts from the subnational to the global level.

FTA has worked to address these themes over 10 years, providing critical results and improvements. FTA’s Flagship Program 3 on value chains and business models addresses three main themes:

  • which policy arrangements have the most potential for enhancing sustainability and social inclusivity in the value chain?
  • what support is needed to involve smallholders and SMEs in ways that are economically viable, socially inclusive and environmentally sustainable?
  • what mechanisms could promote more widespread adoption of responsible finance that improves sustainability and supports smallholders’ access to finance?

FTA’s efforts in the forestry sector and with tropical commodities such as coffee, cocoa and bananas have been at the forefront of certification and sustainability initiatives. In Indonesia extensive engagement with national and provincial authorities supported smallholders to meet the new challenge of timber legality accreditation through collective action.

Extensive FTA research has also contributed to improved policies and practices that support environmentally conscious and socially inclusive palm oil value chains. FTA researchers have also analyzed Fairtrade coffee value chains and their gendered dimensions.

Efforts increasingly aim to de-link deforestation from supply chains and to achieve zero deforestation. FTA research has shown, however, that commitments to zero deforestation should not be considered in isolation from the wider processes of forest degradation.

The growth in the trade of agricultural commodities is also linked to rising carbon emissions. FTA’s work over the past decade also helps to achieve broader objectives of low-emissions development and climate change mitigation and adaptation in production landscapes.

Private initiatives implemented at the supply chain level alone are insufficient — public and private arrangements that involve supply chains and landscape goals are needed. FTA research has used the Landscape Assessment of Financial Flows to assess how private-sector investments can contribute to income generation and resilient landscapes.

Landscape analysis of financial flows, Gunung Tarak landscape, Indonesia

The complexity of the governance of supply chains in the palm oil sector has led to multiple approaches to implement sustainability initiatives that also relate to how supply chains are structured. Numerous publications produced by FTA contributed to putting the domestic timber sector on the political agenda of many producer countries and the European Commission.

During the past decade, the emphasis of FTA analyses has shifted to embracing different types of suppliers — from smallholders to large-scale loggers and farmers. FTA research on value chains focuses on the inclusion of smallholders and small and medium enterprises (SMEs) at the landscape scale. Public-private initiatives are also engaging with processes for reform.

Future strategic initiatives will need to strengthen partner capacities in developing countries to co-design and deliver evidence-based solutions to address supply chain and investment constraints.

Download the report to find out how future initiatives can build on FTA results and work in ways that ensure sustainable and inclusive value chains and support climate change mitigation and adaptation in production landscapes.

Published volumes until today include:

FTA Highlights of a decade series
Ten years of forest, trees and agroforestry research in partnerships for sustainable development

Look out for the other publications in the FTA Highlights series. FTA will publish them on a weekly basis, and all of them will be available on the series website. Bookmark it!

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