What Are the Implications of New EU Mandatory Forestry Due Diligence Requirements for ACP Agricultural Commodity Exporters?

Summary
The EC’s proposed forestry due diligence regulation seeks to ensure only commodities from land not subject to deforestation and produced in line with national legal frameworks are placed for sale on the EU market. This will involve the progressive establishment of full traceability of all of the affected commodities (beef, wood, palm oil, soya, coffee, and cocoa) placed for sale on the EU market. Obligations placed on businesses will vary based on country and region-specific assessments of the risk of deforestation or forest degradation. A process of benchmarking will be undertaken to establish these risk assessments (high, standard, and low risk). The EC favours a collaborative approach involving all concerned stakeholders in building Forestry Partnerships to promote the transition to active protection of global forestry resources. A €1 billion EC managed facility is to be established to support these Forestry Partnerships. The value of exports to the EU27 from the main ACP exporting countries potentially affected by the new due diligence requirements amounted to nearly €7 billion in 2020. In the ACP the most important affected sector is the cocoa sector, which accounts for 75% of the value of ACP exports of the affected commodities. Important questions arise related to the distribution of the costs of new traceability systems and mitigation measures along supply chains and whether forestry due diligence will be closely linked to decent living income objectives. Addressing living income issues, particularly in the cocoa sector, is seen as essential to ensuring active farmer ‘buy-in’ to the necessary farm level production process transition required to better protect global forestry resources. Read more “What Are the Implications of New EU Mandatory Forestry Due Diligence Requirements for ACP Agricultural Commodity Exporters?”

Can the Tesco Commitment Provide a Basis for a Wider Pan European Retailer Programme of Action Ensuring a ‘Living Wage +’ Outcome for Banana Workers?

Summary
Tesco’s latest commitment on ensuring banana plantation workers are paid, at a minimum, a living wage includes two important innovations: independent determination of the living wage requirement and the establishment of a clearly defined timeline for attaining living wage objectives. This approach is indicative of the kind of ‘best practice’ which the EC ‘Code of Conduct on Responsible Food Business and Marketing Practices’ would like to see generally adopted (including in other sector such as the cocoa sector). By concentrating responsibility for establishing living wage levels at the level of the stakeholder with the greatest power within the supply chain, the Tesco initiative offers a real prospect of progress on living wage issues. This would be particularly the case, if it was generalised across products and throughout the corporate family of which Tesco forms a part (ABF). Read more “Can the Tesco Commitment Provide a Basis for a Wider Pan European Retailer Programme of Action Ensuring a ‘Living Wage +’ Outcome for Banana Workers?”

Some Implications of the EU Code of Conduct on Responsible Food Business and Marketing Practices for ACP Producers

 

Summary
The EU’s ‘Code of Conduct on Responsible Food Business and Marketing Practicescan only be welcomed. However, its limitations, in terms of delivering on objectives which ACP governments, producers and exporters share, need to be recognised. The focus on increased collaboration along the whole of the supply chain, means commitments entered into by EU companies will carry real implications for production practices adopted by ACP suppliers. These implications need to be recognised and addressed, in the context of the Codes commitment to ensuring the social and commercial sustainability of the required changes. In regard to each of the aspirational objectives identified, in operationalising the code of conduct there will be a need for meaningful dialogues with ACP stakeholders and governments, if the burden of necessary adjustments is not to be largely shifted on to the shoulders of ACP primary producers. This will require the identification of appropriate institutional frameworks for the conduct of these meaningful dialogues in each of the major areas of concern. Read more “Some Implications of the EU Code of Conduct on Responsible Food Business and Marketing Practices for ACP Producers”

Wider Trade Dimensions of EU Due Diligence Regulations: Where Does the Interest of the ACP Lie?

Summary
President Macron is throwing his weight behind efforts to establish regulatory ‘mirror clauses’ in EU trade agreements to combat ‘environmental and social dumping’. However, despite strong European Parliament support, there is no consensus among EU member states governments on the scope and practicality of such a ‘mirror clause’ approach. ACP exporters and governments need to define where their interests lie within these EU regulatory discussions, so as to be able to protect and promote ACP producer interests within these policy debates. Read more “Wider Trade Dimensions of EU Due Diligence Regulations: Where Does the Interest of the ACP Lie?”

Circumvention of the LID Highlights the Need for an Ambitious and Effective EU Human Rights and Environmental Due Diligence Regulation


 

Summary
The EC’s much heralded human rights and environmental due diligence regulation looks set to be limited to establishing a common minimum standard, which businesses will be required to adhere to, with an enabling environment being created aimed at incentivising companies to address the negative impacts of their activities. In the face of corporate lobbying Tony’s Chocolonely has broken ranks demanding the EC establish an ambitious minimum standard. This would appear essential, given current corporate efforts to side-step the overall cocoa procurement cost implications of the Living Income Differential initiative, by reducing other components of cocoa bean payments made in Ghana and Cote d’Ivoire. A clear Organisation of African, Caribbean and Pacific (OACP) States and African Union position in support of an ambitious and rigorously enforced corporate minimum standard for living wage, human rights and environmental protection commitments would appear to be required. Read more “Circumvention of the LID Highlights the Need for an Ambitious and Effective EU Human Rights and Environmental Due Diligence Regulation”

How Will EU Sustainability and Livelihood Due Diligence Regulations Interface with Private Sector Sustainability Initiatives?

 

Summary
In response to growing consumer pressure and pending regulatory initiatives, FMCG companies are updating their policies and seeking out innovative solutions to enhance the effectiveness of efforts to halt deforestation, promote sustainable farming practices, enhance livelihoods opportunities, and improve working conditions.  This is an ambitious agenda which will need to get to grips with the twin questions related to: who bears the costs of the required innovations and how will this affect the distribution of revenues to different actors in the supply chain. To date the necessary search for technical solutions has seen these core questions set to one side. However, as mandatory ‘due diligence’ requirements come ever closer, it is increasingly important that these twin questions are systematically addressed. Read more “How Will EU Sustainability and Livelihood Due Diligence Regulations Interface with Private Sector Sustainability Initiatives?”

Banana Link Makes the Case for the Extension of Spanish Fair Producer Price Legislation to Pan-EU Banana Imports

Summary
Debates on proposed amendments to the Spanish 2013 Food Chain Law have highlighted how ‘fair pricing’ regulations need to be applied equally to domestic EU producers and 3rd country producers if competition between domestically produced and imported products is not to be distorted. Applying ‘fair price’ regulations to imported as well as domestically produced agricultural products would not only avoid distorting competition but would also provide scope for integrating ‘Green Deal’ sustainability objectives into both domestic and 3rd country supply chains serving the EU market. Read more “Banana Link Makes the Case for the Extension of Spanish Fair Producer Price Legislation to Pan-EU Banana Imports”

Uncertainties Arising from Unresolved Future EU/UK Trade Issues Generate Contract Negotiation Challenges for ACP Exporters

Summary
There area host of Brexit related uncertainties overhanging the negotiation of ACP-UK supply contracts for 2021, which threaten to increase costs to such an extent as to erode the profitability of a range of ACP exports to the UK market. ACP short shelf life product exports along triangular supply chains are likely to be most severely affected. The currency issue will also affect direct ACP exports. How these short-term issues are dealt with, could carry long term implications, especially for small scale ACP exporters. Public policy interventions to support Codes of Conduct for dealing with the distribution of additional costs, based on the principles enshrined in the EU UTP directive, could usefully be launched. In the EU, traders in short shelf life products would appear to have a long term vested interest in short term burden sharing initiatives; otherwise ACP exporters will be compelled to seek out new direct routes in serving UK markets. Read more “Uncertainties Arising from Unresolved Future EU/UK Trade Issues Generate Contract Negotiation Challenges for ACP Exporters”

Growing Importance of Raising the Farm Gate Price of Cocoa to the Elimination of Child Labour in Cocoa Supply Chains Recognised, but Strong Headwinds Faced

Summary
While proportionally the use of child labour has not increased in line with the expansion of cocoa production, data suggests some 1.56 million children continue to be employed in the Ghanaian and Ivorian cocoa sectors. NGOs campaigning on child labour issues have condemned 20 years of failure and criticised the focus on public relations rather than substantive solutions. The persistent nature of the challenge faced has been recognised, as has the central issue of net farm gate prices. While the LID payment initiative has been welcomed, a major four-fold increase in farm gate prices is held to be necessary to ‘move the dial’ on the use of child labour in cocoa farming in West Africa.  Currently the benefits of the LID payment are dwarfed by losses arising from cocoa market price volatility. Getting to grips with the net farm gate price issues, in ways which ‘move the dial’ on the use of child labour, can be seen as the critical issue to be addressed in the coming months in drawing up EU ‘due diligence’ regulations related to the cocoa sector. Read more “Growing Importance of Raising the Farm Gate Price of Cocoa to the Elimination of Child Labour in Cocoa Supply Chains Recognised, but Strong Headwinds Faced”

Nestlé Move Away from Cane Sugar Compounds Wider Sugar Sector Demand Trends

Summary
Nestle’s decision to switch to beet sugar will have a greater impact on the UK market for ACP cane sugar than the companies sugar reduction efforts since 2015. The decision of Nestle will compound the wider structural trend in the UK and elsewhere in Europe towards a reduction of human consumption of ‘hidden’ sugars. While to date, as part of its latest anti-obesity campaign launched in the face of the devastating link uncovered between obesity and serious Covid-19 infections and deaths, the UK government has resisted pressured to extent the SDIL to high sugar content food products, pressure for regulatory measures to reduce the use of ‘hidden’ sugar in a wide range of food products is only likely to increase in the coming years. The long-term structural trends towards reduced consumption of sugar and greater local sourcing, is something ACP cane sugar exporters will need to adjust to, as they look towards their future marketing options. The ability of different ACP exporters to adjust to these new market realities varies greatly and will need to be assessed country by countries and even company by company. Read more “Nestlé Move Away from Cane Sugar Compounds Wider Sugar Sector Demand Trends”