There is growing interest in the sustainability of agricultural commodities such as sugar, soy, palm oil, cotton, cocoa and coffee. This is reflected in the development in recent years of a number of commodity-specific initiatives such as the Roundtable on Sustainable Palm Oil, the Better Sugar Initiative and the World Cocoa Foundation. Cocoa aside, commonly, the initial impetus behind these has been the rising concern at the environmental impacts of contemporary global agriculture – heightened by the recent explosion of interest in the use of palm oil and sugar as raw material for biofuels – rather than labour issues.

However, it is no accident that the ‘sustainable commodity’ initiatives inaugurated by the Worldwide Fund for Nature (WWF) – in sugar, cotton, palm and soy – have grown to encompass a series of principles and criteria to ensure both the social and environmental sustainability of crop production. It is increasingly understood that any definition of the ‘sustainability’ of these commodities must include the livelihoods and the living and working conditions of those who produce them.

At the same time, efforts by some Northern retailers to manage labour standards in their supply chains are beginning to penetrate through to the producers of agricultural and horticultural goods such as flowers, fruit and vegetables, as well as some commodities that
form the basis of other consumer products such as cotton. Retailers’ systems, designed to address and remediate labour rights breaches in industrial production systems, have been confronted with a series of different problems in agriculture, however, not least that the retailer seldom has a direct trading relationship with many of these producers.

Agricultural complexity

Apart from a different set of commercial relationships, there are a cluster of issues specific to agriculture which render any attempt to understand and address ‘social sustainability’ uniquely complex. The regions reliant on agricultural export include some of the world’s poorest. Agriculture in these regions may be characterised by smallholder production systems with family-based labour inputs entailing the risk of potentially unacceptable forms of child labour. There is frequent over-representation of women in low-paid manual roles, and casual, seasonal and migrant labour prevalent. Land tenure systems can lead to forms of gender iniquity and, potentially, forms of labour bondage. Low levels of worker organisation are endemic, alongside informal employment relations exacerbated by lack of statutory protections – for instance, Pakistani labour legislation currently does not apply to the agriculture sector (although legislative developments are underway to extend statutory protection to larger-scale forms of 'corporate agriculture’).

This is not to paint a picture of homogeneity in the labour aspects of agricultural production systems, however. Perhaps the key question is: when is work in agriculture employment per se? Contemporary agricultural production may include anything from a smallholder growing subsistence crop on 5 acres with solely family and community labour inputs, to a palm oil plantation directly employing thousands of workers.

Labour v employment?

Therefore, the implementation of any standard or initiative to address and improve living and working conditions must first recognise that there are fundamental differences between the issues relevant to plantation workers – which tend to be legally-defined labour issues, such as those highlighted in plantation-focused initiatives such as the RSPO – and those relevant to smallholder farmers, there there is likely to be a combination of social and labour issues evolving around access to credit and indebtedness, producer organisation and health and safety. It is for this reason, for instance, that the Fairtrade Labelling  Organisation (FLO) designates different standards for smallholders and for formal employees; why the Ethical Trading Initiative has developed comprehensive guidance on working with smallholders on labour standards; and why the Social Accountability in Sustainable Agriculture (SASO) initiative to coordinate standards and approaches in the sector reports several caveats on the appropriateness of direct application of any social or labour standards to smallholder farmers.

Given that working conditions are intrinsically bound up with social conditions, when it comes to achieving socially sustainable agricultural practices, it is far from clear what role there is for an assessment and inspection regime aimed at identifying labour ‘breaches’. In this context, applying a standard – with which the producer should comply – is seemingly the contrary to what the situation demands: that the producer’s capacity to achieve change is developed, in order that they can perform according to the standard expected of them. This is the rationale of those initiatives which seek to promote needs assessment and capacity building in place of standard ‘compliance’, such as the ETI approach to smallholders.

Of course, this is not an issue ignored by those programmes that do seek to implement  standards and to certify compliance with these standards. Such programmes commonly seek  to provide market incentives and, in the case of Fairtrade-based schemes, an incremental increase in farmgate prices – in spite of the global market, through payment of commodity  and social premiums – is the aim of the undertaking.

Risks of certification

However, outside Fairtrade and premium-price approaches, there are pronounced risks associated with certification where the ability of the producer to comply is inadequately reflected in the certification process. Most acute among these is the risk of potential market exclusion for smallholders unable to meet performance criteria. Moreover, in the absence of capacity-building support or financial incentives for the adoption of standards there is a risk that the burden of any associated costs will fall disproportionately on producers, entailing a likely worsening in circumstances. Yet there are also severe challenges to those schemes, such as Fairtrade, which would seek to support producers in improving working and living conditions by assuring prices resulting from premiums paid by consumers. It is not simply that there may be a finite number of consumers willing or able to pay this premium: in fact, in many cases – bananas and chocolate amongst them– consumer demand for these products has shown itself to be lively indeed.

A more profound problem relates to the structure of the commodity value chain. Premium-price certification schemes rely on  establishing direct and traceable links through  very stage of the value chain, and thereby risk limiting themselves to a market niche. The mainstream agricultural commodity chain currently militates precisely against any such form  of traceability, or chain of custody. Commodities, as the name implies, are commonly sold on open international markets: the purchaser of the commodity is severely constrained in  identifying the origins of the commodity. In the absence of direct trading links between retailers – who are most motivated by consumer demand to seek to address sustainability – and commodity producers, the onus falls on those actors who can begin to deliver some degree of transparency or linkage in the value chain, be they commodity traders or international commodity companies.

Commodity traders

The Roundtable on Sustainable Palm Oil (RSPO) is attempting to deal with problems of  traceability by involving commodity traders in a ‘book and claim’ system of commodity chain of custody. In essence, this system proposes – in the manner of carbon trading – that purchasers (retailers’ suppliers) ‘book’ a certain amount of a commodity produced under an agreed standard with traders, and the trader then ensures (‘claims’) that this amount of the certified commodity from agreed producers enters the supply chain, albeit not directly supplying this to the purchaser.

There is also scope to explore the extent to which financing links may be more productive than supply chain links in addressing the sustainability of commodities. Many of the key downward pressures on smaller producers relate to their need to finance their purchases of inputs. This can lead to indebtedness arising from inequitable financing from informal sources which often exacerbates the circumstances that give rise to other socially unsustainable practices. Developing more favourable sources of financing for farmers – targeted microfinance is but one example – could have a major positive impact.

At the other end of the scale, international financial institutions with leverage from investing in or lending to commodity traders – which themselves may ‘on-lend’ to producers – may become key players in the next stage of developing ‘socially sustainable commodities’. The Sustainable Food Lab’s Responsible Commodities Initiative (see table) is taking up this challenge by explaining commodity sustainability to the financial sector. Financial institutions that are committed to sustainable investment have a clear role to play.

This article was first published in focus on labour March 2007