Photo Credit: Sustainable Food Lab
Engage Your Supply Chain to Find the Mutual Benefits
Given that sugar is such a ubiquitous food ingredient and accounts for significant land use, it is heartening to see leading companies and development organizations prioritizing the sustainability of this ingredient. Global demand is projected to require an estimated 49% increase in land under cane production alone by 2050. The sector is facing serious and systemic environmental and social issues that are critical for both buyers and policy makers to address. The recent Business Fights Poverty and CSR Initiative at the Harvard Kennedy School report on sugar production documents these concerns and provides us a helpful framework of 6 building blocks to operationalize high impact solutions.
Cost-effective Certification: As is the case in several crops, certified sugar has seen relatively low uptake in the market relative to the volume produced, signaling weak demand. If certification is seen as a necessary and impactful solution for assurance and continuous improvement in farming practices, then new commitments from leading buyers will be necessary to shift this dynamic and enable certification as a market mechanism to be cost-effective. And getting the right balance between a production standard that is rigorous enough to provide assurance to buyers while delivering value at origin is not easy. As we have seen in other sectors adopting certification at scale – coffee, cocoa, timber – only a portion of certified production can be sold at a premium price, so there have to be gains for farmers and processors that justify the cost of compliance through production increases, market access, cost savings and the like.
In a complicated crop like sugar with multiple origins, multiple markets, diverse farmer bases, and strong political issues:
Engagement: The companies out in front are taking the time to learn about their sugar supply chains through suppliers and NGO partners. Most are familiar with the global issues facing the sector – water, soil, working conditions, child labor, forced labor, land conflicts, poverty among smallholders, worker health issues – and know the critical importance of understanding how global issues play out in a particular country context. Companies that engage their supply chains – through origin visits, regular communication on sustainability issues or partnerships – are better able to prioritize investments, incentivize continuous improvement and preempt serious issues. It is also much easier to analyze materiality and decide which regions are most critical to focus on for reaching long term sustainability.
Partnerships: Robust and dynamic exchange between the market leaders, NGOs like Solidaridad and Bonsucro and sugar producers and processors is fundamental to embedding sustainability in trading relationships and policy. Creating mutual value along the chain is best achieved through agreeing on desired outcomes and collaboration to identify and overcome barriers such as affordable credit for equipment upgrades like green cane harvesters or farm renovation with improved varieties. This is particularly important in a sector like sugar in which food is only one of sugar’s multiple markets and where specific issues can vary greatly from region to region.
Strong market signals which value long term sustainability can be important levers in fostering successful regional efforts to resolve the stickier issues like improving labor conditions or managing water resources. Several major sugar cane and beet producing regions are severely water stressed. And the solution is not field level or mill best practices alone. Watershed management requires engagement of multiple actors in the landscape – municipal governments, the industrial sector and the farming community. Global brands are often the catalysts for launching ambitious partnerships at the landscape level, and important links to philanthropic or conventional co-investment finance.
We know from research that we and others have done that standards combined with engagement and partnerships can lead to much greater change than standards alone. The process through which standards are rolled out with suppliers, the attention to shared value, and the willingness to jointly solve problems where there is real impact are key ingredients of success. Engage your trading partners and ideally their suppliers to analyze the risks and opportunities to long-term sustainability. Use the building block framework presented in the Business Fights Poverty-CSR Initiative report to craft comprehensive approaches to partnership in select regions. Standards can provide assurance and some risk mitigation, but engagement and partnerships are key to ensuring that the people and land that produce sugar cane, beet, and corn will thrive for generations to come.