How agro-commodity traders can help the SDGs and reduce poverty
29 May 2015 by Andrew Bovarnick, Global Head of the Green Commodities Programme, Sustainable Development Cluster, UNDP
With the global population predicted to reach nine billion by 2050, we face a dual challenge: ensuring the continued production of agricultural commodities, such as soy, palm oil, cattle, coffee and cocoa, without destroying the planet’s natural resources that humanity depends on to survive.
Agricultural commodities are the bedrock of a number of rural developing economies, contributing to vital economic growth and the ongoing fight against poverty. As such, they play a critical role in contributing to the Sustainable Development Goals.
But deforestation and land degradation, a direct result of the growth of the agriculture sector, is irreversibly damaging our planet, its biodiversity, and the important ecosystem services it provides. In fact, the largest driver of deforestation today is the production of agricultural commodities.
This is why UNDP set up the Green Commodities Programme (GCP) in 2009 to spearhead dialogue, decision-making and action in the agro-commodity sector between governments, the private sector and civil society. The goal is to improve the economic, social and environmental impact of agricultural commodities, with a specific focus on improving the lot of smallholders, most of whom live in poverty with no access to training, financing or land security.
For example, an estimated 26 million coffee farmers, in 52 countries, earn less than $2 a day. They struggle to eke out a living from agriculture. As a result, many of the younger generation are fleeing rural areas that seemingly offer no prospects in search of urban opportunities, leaving a void in the farming communities.
GCP is working in several countries in key commodity sectors including Indonesia (palm oil), Costa Rica (pineapple), Ghana (cocoa), Paraguay (cattle and soy), Peru (palm oil and coffee), Dominican Republic (cocoa), and Ethiopia (coffee) to support multi-stakeholder dialogue with the national governments. As head of GCP, I frequently travel to these countries and am encouraged by the progress that is being made towards true multi-stakeholder dialogue.
Working together is good for business
Commodity traders connect producers and users by sourcing, processing, transporting, and distributing agricultural commodities. They can have a substantial impact on shifting entire sectors from negative practices to positive initiatives that actually promote sustainability, improve farmer income, and give the smallholders a competitive advantage.
UNDP has been working with traders to encourage closer relationships with farmers. If dealings between farmers and traders develop, traders will better understand farmer risks and work to mitigate them. As a result, the sustainability of the supply chain improves, which makes great business sense on both ends. In this way, direct sourcing and assistance to farmers becomes a risk management strategy, not just corporate social responsibility.
For example, UNDP works with Mondelez (the largest chocolate company and second largest coffee company in the world) and its Cocoa Life and Coffee Made Happy programmes to mainstream sound cocoa production practices in Ghana. A central approach of this grassroots work is to require suppliers and traders, such as Cargill and Archers Daniel Midland, to increase their support to farmers so that Mondelez is assured of sustainable cocoa.
Another aspect of the work is for traders to train farmers and communities. Traders have in-country presence and local expertise, and building more constructive relationships is good for business.
Some traders are increasing support to farmers, but sometimes in isolation. This means that innovations in farmer training, for example, are not being captured and scaled up by governments. We also need public-private partnerships, like the national commodity platforms, to enable communication between all stakeholders in the supply chain.
With the active and direct participation of commodity traders in the supply chain, we can make a serious contribution to the SDGs and help millions of farmers globally reduce poverty and improve their lives.
A longer version of this post was originally published in L'AGEFI's Special Edition 2015 on Commodities.