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Finding effective ways to ensure sustainable supplies of forest-risk commodities


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Shea nut processing in Burkina Faso. Photo by Ollivier Girard/CIFOR
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Cross-sectoral jurisdictional approaches offer promise  

The increased consumption and production of a range of raw material and commodities, so-called “Forest-risk commodities” such as palm oil, soy, cocoa, coffee, rubber, timber and beef, contributes significantly to global tropical deforestation and forest degradation.

As both global and domestic demand grows for such commodities, they constitute one of the biggest threats to forests, leading to tree and vegetation removal – often due to burning – biodiversity loss and the release of greenhouse gases into the atmosphere. Often their cultivation through large industrial-scale estates can also pose threats to the livelihoods of Indigenous Peoples and local communities.

How to secure the sustainable production and consumption of such commodities, without impinging on forests, is therefore a key challenge for public and private actors. But acting on commodities and value chains to reduce deforestation is complex because of several factors.

First, value chains can be very long or complex, making the link between production and consumption very distant. Second, the way production chains, logistics and markets are organized make products difficult to trace, making attribution and accountability difficult. Third, how these value chains operate within landscapes is often not controlled either at the value chain or the landscape level. How public and private actors can effectively work together in landscapes and along value chains is key to solving these problems.

Cable system to transport oil palm harvest in San Martin, Peru. Photo by Juan Carlos Huayllapuma/CIFOR

Expansion of trade in forest-risk commodities led to increased pressure from civil society organizations, consumers, international banks and shareholders of consumer goods companies to develop and implement a diverse array of instruments and tools to promote sustainable or deforestation-free sourcing, and as a way to reduce their exposure to reputational, financial and regulatory risks. Multi-stakeholder platforms and commodity roundtables also emerged, in response to criticisms of government failures.

FTA’s new Working Paper  “Reviewing initiatives to promote sustainable supply chains” focuses on on forest-risk commodities [PDF]
Researchers at the Center for International Forestry Research (CIFOR), France’s International Cooperation Center in Agricultural Research for Development (CIRAD) and the World Wildlife Fund for Nature (WWF) through the CGIAR Research Program on Forests, Trees and Agroforestry (FTA) have conducted a comprehensive review of initiatives to promote sustainability including recent “hybrid” initiatives that involve governments at the national or subnational levels to create a better enabling environment for the private sector.

The multiplication of sustainability initiatives has also been driven by the growing complexity and diversity of conditions under which agri-food and timber supply chains operate. Private sector actors increasingly define and monitor their own sustainability performance by using certification standards or by developing their own procedures and criteria.

More recently, a discernible shift from supply-chain-based or sectoral approaches toward landscape or jurisdictional approaches has been seen as a way to meet sustainability goals. However, the growing complexity of policy regimes results in ambiguities and can lead to trade-offs between gains and losses. The findings of the FTA review suggest that many aspects of complex policy regimes are not yet well understood by policymakers, scientists or the public.

Amongst the supply-chain based and sector-based approaches, Voluntary Sustainability Standards (VSS), are market-driven mechanisms introduced to ensure that social economic and environmental sustainability issues are addressed in the production, processing and trade of agricultural and forestry commodities.

“Although VSS have been widely adopted, they have come under greater scrutiny in recent years and are often associated with high transaction costs (usually transferred to the end-consumers), the need to meet increasingly complex sustainability and legality standards, the exclusion of smallholders, the frequent lack of any premium for certified products and weaknesses in compliance,” said Andrew Wardell, a principal scientist with CIFOR.

The scientific evidence on the economic, environmental and social outcomes of tropical forest certification is encouraging although regional differences do occur. Take, for example, the Forest Stewardship Council (FSC), which since the early 1990s ensures that the chain of custody for production, transformation and sales of timber complies to specific voluntary, third-party audited standards, including covering sustainable forest management and avoiding deforestation.

“There is no doubt that the FSC has achieved a great deal of progress, but it’s not an unqualified success,” said Marie-Gabrielle Piketty, a researcher with CIRAD and a joint author on a review of FSC in Brazil. “Like most sustainability standards, it faces the classic dilemma of balancing stringency needed to ensure the sustainability of FSC-certified forest management, while becoming more inclusive.”

As a result, new public and private commitments have emerged to reduce deforestation and include initiatives based on either sectoral approaches with a focus on supply-side interventions, or mixed supply-chain and territorial approaches at the jurisdictional level. Government-led regulations can guide the private sector to ensure greater third-party accountability and reduce reputational risk.

Timber processing in Yaoundé – Cameroon. Photo by Ollivier Girard/CIFOR

Similarly, environmental non-governmental organisations (NGOs) are increasingly engaged as intermediaries to help companies address social and environmental risks in the supply chain, and to support sub-national governments in meeting their sustainability commitments.

“We need greater transparency to ensure that companies aren’t just paying lip service to environmental sustainability initiatives, but that they can substantiate claims that deforestation has been reduced,” Wardell said.

FTA’s brief on FLEGT-like approaches for West and Central Africa Cocoa’s sustainability [PDF]
To this end, the Accountability Framework initiative (Afi) developed a global disclosure system which aims to stimulate ethical supply chains by tracking progress toward eliminating deforestation and other forms of ecosystem conversion from corporate supply chains. Uptake and compliance challenges remain and Afi released a baseline for 2020 in an effort to improve disclosure for deforestation-free supply chains.

Some state-led interventions can be effective. For example, the European Union Forest Law Enforcement Governance and Trade action plan (FLEGT), restricts imports of unsustainably produced and illegal timber. The European Commission is currently exploring ways to enforce a Due Diligence based regulation for other forest-risk commodities. Nevertheless, the New York Declaration on Forests (NYDF), a voluntary public-private commitment to halve deforestation by 2020 will be missed and meeting its 2030 target of ending deforestation will require an unprecedented reduction in the rate of annual forest loss, according to a recent assessment.

Seeking solutions

Jurisdictional approaches, which align governments, businesses, non-governmental organizations, social organizations and local stakeholders in specific areas around common interests in land-use governance, are now often considered to have the most potential. They can ensure and provide incentives for sustainability compliance across a whole geographic area, a key issue which value-chains or sector-based approaches fail to address, or often only partially address given the existence of spatial leakage (when some areas in a landscape are not compliant) or sectoral leakage (when some value chains in a landscape are not covered by a sustainability scheme). Some of these initiatives have been developed around the notion of enhancing regulatory frameworks and enforcement, while others constitute partnerships for improving the uptake of good practices for a specific commodity within wider land-use planning and service provisions schemes. Others involve de-risking schemes for financial actors when they invest in forest-risk landscapes or constitute wider partnerships to advance sustainability at the jurisdictional level.

Soy beans, Santa Cuz, Bolivia. Photo by Neil Palmer / CIAT

“Some corporate actors are actively developing place-based solutions not only as a risk management strategy to delink their supply chains from deforestation, but also to benefit from longer term investments in the sustainability of the landscapes or jurisdictions on which their sourcing depends,” said Pablo Pacheco, global forests lead scientist at WWF.

“We shouldn’t focus only on the negative consequences associated with the expansion of forest-risk commodities, but also contribute to the development of a more positive agenda, which supports livelihoods and local people’s rights, protects nature and restores forests in addition to slowing deforestation,” he added.

“Trying to bring together disparate people to achieve common goals isn’t easy because supply chains and jurisdictional governments have different priorities,” Wardell said.

“Several teams – and some through FTA – have started to better highlight some possible impact pathways and shortcomings of jurisdictional approaches, but empirical knowledge remains incomplete,” Piketty said. “Lessons from existing case studies need to be systematized.”

“There’s a clear need to better understand how interactions between state regulations and non-state sustainability initiatives can combine supply chain management and jurisdictional approaches to stimulate wider uptake of improved practices by smallholders,” Wardell said.

“As well, determining how to evaluate impact is a key challenge, due to the many variables that come into play, thus research and science will continue to have an important role to play,” he added.


This article was written by Julie Mollins.

This article was produced by the CGIAR Research Program on Forests, Trees and Agroforestry (FTA). FTA is the world’s largest research for development program to enhance the role of forests, trees and agroforestry in sustainable development and food security and to address climate change. CIFOR leads FTA in partnership with ICRAF, the Alliance of Bioversity International and CIAT, CATIE, CIRAD, INBAR and TBI. FTA’s work is supported by the CGIAR Trust Fund.

 


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Does soybean certification help to reduce deforestation?


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FTA COMMUNICATIONS TEAM

An aerial view of the Amazon rainforest, near Manaus, Brazil. Photo by Neil Palmer/CIAT

If hearing the word “soy” makes you think of tofu, edamame and soy sauce, think again.

Soybean is a “hidden commodity”, and most consumers have no idea how much of the legume they eat daily. Not only is it found in thousands of processed foods and products, from margarine and chocolate to cosmetics and soaps, rising demand for meat has driven soy production to nearly 10 times what it was 50 years ago.

A full 80 percent of the world’s soybean crop is fed to livestock. Much of it is produced in the Amazon and Cerrado ecosystems of Brazil, which each lose between 5 to 10,000 square kilometers of forest each year, despite public and private efforts to limit soy production to land that has already been cleared.

Today, 2 to 4 percent of global soy production is certified as responsible, representing a niche market of concerned consumers who are willing to pay more for products guaranteed to be emissions and deforestation-free. But do such guarantees actually reduce deforestation?

Not necessarily, according to recent research by the University of Bonn’s Center for Development Research and the Center for International Forestry Research (CIFOR), which compared seven soy certification schemes in Brazil.

“We find that these schemes may be able to provide consumers with deforestation-free products, but they cannot generally safeguard against the negative impacts of increasing land footprints,” said Jan Börner, a CIFOR senior associate and professor of Economics of Sustainable Land Use and Bio-economy at the University of Bonn, who co-authored a policy brief that sums up the research results.

Although all seven schemes commit to preventing illegal deforestation and support the enforcement of national laws for natural ecosystem preservation on private properties, they may simply relocate sourcing patterns or provoke indirect land use change – which is known to occur but difficult to measure.

“As long as it is a niche market, you can source soy from already deforested landscapes and label it deforestation-free,” Börner said. “So consumers are eventually paying for something that is very easy to provide, but doesn’t actually reduce deforestation.”

Additionally, some studies argue that confining soybean production to already cleared land – which is widely available – is pushing cattle production to expand new pastures along the forest margins. By converting low-value pastures to high-value cropland, cattle farmers are benefiting from differences in land prices by selling high and buying low, reinvesting profits and effectively ramping up overall cattle production.

This causes a cascading effect of different agricultural land uses with time lags, making it difficult to point the finger at specific drivers of deforestation. If the construction of roads and highways needed to get soy to export markets is factored in, it’s estimated that as much as one-third of Amazon deforestation since 2002 can be attributed indirectly to soybean expansion.

Read also: Decoding deforestation in Brazil and Bolivia

Roads and cattle farming are two major drivers of deforestation in the Brazilian Amazon. Photo by Kate Evans/CIFOR

INCENTIVE OR DISINCENTIVE

Another factor that limits the spread of voluntary certification especially for bulk commodities is low cost-effectiveness. Certification costs are similar for most schemes, but the cost of implementing them can be prohibitive, depending on the supply chain model. A combination of high transaction costs and low price premiums lower the appeal for producers – especially smallholders – to invest in certification.

“For farmers who don’t have to change anything, it’s a no-regret effort to get certified,” Börner said. “But for those who would have to significantly adjust the way they operate, the premiums are too low to create the incentive to change.”

Therefore, the effect of certification is to simply shift sourcing to farmers who can provide deforestation-free soy at relatively little or no opportunity cost, rather than encouraging those who are actually driving deforestation to change their behavior.

“We’re talking about harnessing consumers’ willingness to pay for conservation, but we’re not doing that,” Börner adds. “We’re just channeling rents to different producers that happen to be deforestation-free, but this money is not actually reducing any deforestation.”

This is not to say that certification doesn’t work.

“It does work in some contexts,” Börner said. “In Indonesia, for example, FSC [Forest Stewardship Council] certification was shown to make a significant contribution to natural forest conservation. Tropical timber is different than agricultural crops, though. It is primarily sourced from forest landscapes, where the adoption of sustainable practices can make a difference.”

As such, the voluntary standards and certification may serve as a complementary strategy, but they all hinge on appropriate and well implemented national.

“If you’re not even able to measure whether people are complying with national legislation, how can you ensure standards are delivering what they promise?” Börner said. “These value chain governance measures cannot serve as stand-alone tools to avoid illegal or undesired forms of deforestation – they have to be implemented in line with existing policies that need to be strengthened.”

Read also: Deep down in supply chains, zero deforestation commitments look different to what appears on paper

IF NOT CERTIFICATION, THEN WHAT?

The authors examine how responsible consumption initiatives could limit unsustainable expansion of soy production. Since voluntary payments such as certification are likely to remain niche markets, the scale of impact will be minimal unless these investments can be channeled into initiatives that can actually show impact.

For instance, if the willingness of consumers to pay for reducing their land footprint could be harnessed to finance direct conservation measures in areas threatened by deforestation, there is potential to make a big difference.

Based on this insight, Börner suggests that offsetting may be a more effective mechanism than certification.

For example, rather than paying a higher price for a certified soy product and having that money passed on to producers who just happen to cultivate soy without causing deforestation, consumers of products that are known to be associated with deforestation could be offered to support initiatives that demonstrate actual conservation impact on the ground.

“So you’re not guaranteeing the product is emission-free, but you’re guaranteeing that the extra money is actually going towards land-based emissions reduction,” he said. “Otherwise you’re actually blinding the consumer with a certificate that claims deforestation has been avoided, when it’s not actually the case.”

By Erin O’Connell, originally published at CIFOR’s Forests News.


For more information on this topic, please contact Jan Börner at jborner@uni-bonn.de.

This research forms part of the CGIAR Research Program on Forests, Trees and Agroforestry, which is supported by the CGIAR Trust Fund.


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