Agriculture

- Go to commodity standards: Soy, Palm Oil, Sugarcane, Biofuels, Cocoa, Coffee, Tea and Cotton-

Over the last decade, various efforts have been made to develop standards in the agriculture and food sectors, both on a general, sector-wide level as for specific agricultural crops and commodities. These include:

Sustainability certification

The demand for sustainably produced agricultural products is growing, yet there is no general agreement on what defines ‘sustainable agriculture'. There is now a proliferation of labelling initiatives of products, based on different sustainability criteria - including environmental, social and fair trade issues. The differences in terminology used - including organic, biological, fair trade, GMO-free and reduced impact - makes the market for sustainable agriculture products somewhat opaque.

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• In February 2008, the Sustainable Agriculture Network (SAN) published the Sustainable Agriculture Standards. The norms are based on guidelines from institutions including the United Nations, the European Union and the International Labour Organisation, and are endorsed by the Rainforest Alliance. The standards contain 14 criteria for sustainable agriculture (e.g. on waste management, labour conditions, health and safety, use of chemical and biological fertilizers and genetically manipulated seeds). Next to the standards, SAN developed the Farm Certification Criteria and a list of prohibited pesticides. Both are used in the certification process of sustainable agricultural companies. SAN is also working on a complimentary sustainable cattle ranching standard, covering specific topics and adapting earlier SAN standards on water and waste management on cattle farms.
  
  

• For organic agriculture, the International Federation of Organic Agricultural Movements (IFOAM) has developed the Norms for Organic Production and Processing. These consist of the IFOAM Basic Standards for Organic Production and Processing and the corresponding Accreditation Criteria. All producers in the world, who comply with the IFOAM norms are included in the Organic Guarantee System.
  
  

• Fairtrade certification aims to guarantee a fair price to the primary producers. The Fairtrade Labelling Organizations International (FLO) is an association of 20 Labelling Initiatives that promote and market the Fairtrade label in their countries. Products carrying the Fairtrade label are certified to meet the Fairtrade Production and Trade Standards, covering both generic standards (e.g. with respect to investment in local economies and diminishing waste) and a large variety of product specific standards (e.g. with respect to minimum pricing and quality standards).
  
  

• The Responsible Commodities Initiative (RCI), founded by the Sustainable Food Laboratory, which is supported by the United Nations Conference on Trade and Development (UNCTAD) and the International Institute Sustainable Development (IISD), is a multi-stakeholder initiative that aims to stimulate the sustainable production of agricultural produce. The RCI developed the RCI-Benchmark tool, which allows users to measure improvements in environmental and social indicators within agricultural product chains and facilitates the development of crop specific sustainability standards.
  
  

• Although the Iniciativa Brasileira only deals with the agricultural sector in Brazil, it is a best practice example of a multi-stakeholder and multi-sector initiative that could be followed internationally. The initiative aims to encourage social and environmental changes in the Brazilian agricultural sector, reducing its impacts and creating conditions for a transparent system of voluntary verification and independent certification. The process of developing these standards is on-going, with the second consultation version of the Verification Principles and Criteria published in July 2009.

Market concentration

The previously described problems in the agricultural sector are perpetuated by import requirements (e.g. low prices and high volumes) of companies in the middle of the chain - large commodity traders and food processors - and at the end of the chain - retailers.

Because of market concentration and, in a number of cases, collusion in these parts of the product chains, competition and margins of small producers early in the chain are under pressure. This contravenes important economic principles such as a fair price and fair purchasing practices. The OECD Guidelines for Multinational Enterprises state that an enterprise should abstain from agreements with competitors with respect to:

• prices;
• production quota;
• division of clients, suppliers, markets of sales channels.

Protected areas

Agricultural activities are generally not allowed in any of the protected areas covered by categories I-IV defined by the International Union for Conservation of Nature (IUCN), and areas identified by the UNESCO World Heritage Convention and the Ramsar Convention on Wetlands.

The High Conservation Value (HCV) concept was originally devised in the context of forest certification (High Conservation Value Forests or HCVF), but it is also applicable to all kinds of ecosystems and habitats. The HCV Resource Network has developed national implementation guidance, local projects, trainings and workshops.

See the issue page on Biodiversity.

Genetically Modified Organisms

The Cartagena Protocol to the Convention on Biological Diversity sets out labelling and notification provisions with respect to GMOs, and the traceability of GMOs in the process chain. For example, trade in living modified organisms is prohibited without the approval of the importing country. Signatories are also supposed to apply the precautionary principle to the production and use of GMOs. As technologies and new knowledge about GMOs are in constant development, the parties to the Protocol continue to address and develop standards with respect to GMOs.

See the issue page on Biodiversity.

Land rights of local and indigenous communities

The UN Declaration on the Rights of Indigenous Peoples grants indigenous peoples rights to the lands, territories and resources that they have traditionally owned, occupied or otherwise used or acquired. Agricultural companies need to respect and guarantee the rights of indigenous peoples to protect their land, societies, cultures and livelihoods, by respecting their rights and acknowledging their sovereignty and self-determination.

This same principle is also acknowledged in the Convention on Biodiversity (CBD), which addresses the fair and equitable use of biodiversity resources, and requires that the traditional knowledge of indigenous and local communities may only be used with their explicit "approval".

Amplifying the protection of land and territorial rights, the United Nations Economic and Social Council, in its Working Paper on FPIC has described the right of indigenous peoples to Free, Prior Informed Consent (FPIC) with respect to all developments affecting their lands and natural resources.

See the issue page on Indigenous peoples.

Rights of women and girls

The Convention on the Elimination of All Forms of Discrimination against Women (CEDAW) was adopted in 1979 by the UN General Assembly. It provides the basis for realizing equality between women and men through ensuring women's equal access to, and equal opportunities in, political and public life. Acknowledging their own responsibility in this field, companies and banks active in the agricultural sector should promote women's social and economic rights; ensure safe and healthy working conditions for women workers; ensure equal compensation for both men and women when land and property are appropriated; acknowledge and value both women's paid work and women's unpaid reproductive labour within households.

Labour rights

Working conditions in the agricultural and food sector are often poor. Wages are generally low and bargaining rights regularly disrespected. Adherence to best international standards on labour rights therefore is very important. Best international standards are currently embodied in the ILO Declaration on Fundamental Principles and Rights at Work and the Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy. March 2006.

See the issue page on Labour.

Pesticides

Regarding the use of pesticides the UN Food and Agriculture Organisation (FAO) issued the International Code of Conduct on the Distribution and Use of Pesticides, setting out voluntary, internationally accepted standards for the handling, storage, use and disposal of pesticides.

See the issue page on Toxics.

Animal well-being

The European Convention for the Protection of Animals kept for Farming Purposes (accepted in 1976 and revised in 1992 by the European Council) puts minimum guidelines for livestock farming. The European Convention for the Protection of Animals during International Transport (accepted in 1968 and revised in 2003 by the European Council) puts guidelines for transport of animals. The World Organisation for Animal Health (OIE)- the intergovernmental organisation responsible for improving animal health worldwide-has adopted five animal welfare standards for inclusion in the OIE Terrestrial Code. Finally, the Norms for Organic Production and Processing include rigorous standards for animal welfare.

Specific commodity standards

For a range of important agricultural products, guidelines for sustainable production and trade are, or are currently being, developed. These guidelines are increasingly developed by so-called multi-stakeholder initiatives or roundtables, which include researchers, companies active in the sector, financial institutions, civil society organisations and other relevant stakeholders.

Although these initiatives attempt to set relevant standards for specific crops, it remains to be seen in how far the various roundtables will achieve their goal of making the global production of a specific crop sustainable. Not all the initiatives sufficiently include the different voices of civil organisations (or sometimes not at all in the industry-led initiatives which also claim to be roundtables). Even where social and environmental interests are sufficiently acknowledged, the roundtable process obviously leads to compromises with other interests. All roundtables also struggle very hard with controlling and maintaining the agreed standards and setting up effective accountability mechanisms.

For these reasons the roundtables are not acknowledged by all relevant social and environmental organisations as authorative and legitimate. The standards set by the roundtables should therefore be seen as first steps in a process, which need to be further developed in dialogue with, and endorsed by all relevant stakeholders. For now, they generally lack sufficient rigor to be considered adequate sustainability standards. Nevertheless, they provide some guidance on what is considered best practice when benchmarking companies active in this specific commodity sector.

The most important examples of specific commodity standards set by roundtables are:

• Soy: Large scale soy production causes serious environmental and social damage, mainly in Latin America. The Basel Criteria for Responsible Soy Production, developed by WWF and Coop Switzerland, provide standards and guidelines for legislation, environmental management and traceability. The Basel Criteria are further refined in the widely used ProTerra Standard.
  
  Other standards for responsible soy are the Sustainable Agriculture Network Standard (SAN), Fairtrade Production and Trade Standards, organic farming standards, EcoSocial certification and the Social Responsibility Criteria for Companies that Purchase Soy and Soy Products, developed by the Brazilian Soy Platform, which also puts a clear responsibility with banks and other financial institutions that invest in soy producers.
  
  The Roundtable for Responsible Soy (RTRS), founded by organisations and industries in the soy sector, aims to stimulate more responsible soy production, with less stringent requirements than Basel Criteria and other standards. The temporary RTRS Principles & Criteria for Field Testing that RTRS convened in April 2009, recognize the environmental and social problems in the soy chain.
  
  The Amazon Moratorium is an initiative of Brazilian soy processors and traders. Under pressure from Greenpeace the sector decided in June 2006 to no longer buy soybeans from land that was deforested in the Amazon rainforest after July 24, 2006 or from farms which make use of forced labour. During the Moratorium the sector will work with entities representing society (mainly environmental and social NGOs) to develop and implement a governance structure with rules for operations in the Amazon Biome. The Moratorium was extended twice, the last time to July 2010.
  
  

• Palm Oil: In October 2007, the Roundtable on Sustainable Palm Oil (RSPO) - a multi-stakeholder initiative with over 100 members representing more than one-third of the global palm oil trade - accepted the Principles and Criteria for Sustainable Palm Oil Production (P&C). The P&C contain clear standards regarding environmental aspects (use of soil, water and chemicals) and social issues (land rights, labour conditions, etc.) Based on the RSPO P&C a certification system has been launched.
  
  

• Sugarcane: Apart from the food sector, sugar cane is increasingly used as feedstock for the biofuel ethanol. The multi-stakeholder Better Sugarcane Initiative (BSI), founded by WWF, unites a range of stakeholders in the sector, and has as an objective to develop international guidelines for sustainable sugarcane production, that can be used by companies and investors worldwide. The initiative is still underway and currently the BSI Standard offers few tangible norms for sustainable production.
  
  

• Biofuels: Palm oil, soy as well as sugarcane are increasingly used as feedstock for biofuels. In October 2009, the Roundtable on Sustainable Biofuels published a pilot testing version of Global Principles and Criteria for Sustainable Biofuels Production, which contains norms on social and environmental issues based on a.o. the UN and the ILO. The Sustainable Food Laboratory is also in the process of developing a comprehensive assessment of the most sustainable sources of biofuels that allows useful comparisons between biofuels from different agricultural crops.In 2007 a commission in the Netherlands developed sustainability criteria for biofuels. These so-called Cramer Criteria were formalised in March 2009 together with the Dutch standardization body NEN as the NTA 8080:2009 Sustainability criteria for biomass for energy purposes.
  
  

• Cocoa: The Harkin-Engel Protocol was established in 2001 to prevent the worst forms of child labour on cocoa plantations. Despite the adoption of the Protocol by a large section of the industry, examples of child labour on African cocoa plantations have continued. Furthermore, the cocoa production chain is characterised by highly unequal power relations, which drives prices down for small cocoa farmers. In October 2007, the first meeting of the Round Table on a Sustainable World Cocoa Economy was held, in which farmers, traders, processors, governments and civil society organisations came together to tackle the sustainability issues in the cocoa sector. Other initiatives are the World Cocoa Foundation (WCF), which supports programs to promote sustainable cocoa farming. The Sustainable Tree Crop Development Forum aims to shape a common agenda for the development of sustainable cocoa, coffee and cashew tree crop systems in Africa.
  
  

• Coffee: For many years, organisations such as Max Havelaar and - more recently - Utz Certified, focus on certifying coffee. Max Havelaar in particular addresses the small coffee producers and assuring minimum prices for them. The Common Code for the Coffee Community (4C), which came into being in 2004 and was revised in February 2008, offers an extended framework in which both environmental and social issues are addressed. The International Coffee Organization (ICO) has developed standards for responsible coffee for 40 years. The latest agreement of the ICO is the International Coffee Agreement 2007. Other coffee initiatives can be found in the Coffee Certification Database.
  
  

• Tea: Tea production is highly labour intensive and the industry creates jobs in inaccessible rural areas. Millions of people in the world are dependent for their livelihoods on being involved in tea production. Prices on the tea world market have dropped dramatically over the last 20 years, resulting in large social problems in the production areas. The Ethical Tea Partnership, a sector initiative of 17 traders, has monitored the labour conditions on large tea plantations since 1997. Other certification systems are Fairtrade, Rainforest Alliance and Utz Certified.
  
  

• Cotton: The Better Cotton Initiative (BCI) is a global multi-stakeholder initiative, involving a wide range of representatives along the cotton & textiles value chain. In July 2009, version 2.0 of the BCI Global Principles, Criteria and Enabling Mechanisms was published, offering guidelines for sustainable and fair production of cotton. These Production Principles and Criteria will apply for an initial implementation period through 2012 and will be reviewed at the end of this period.
  
  

• Other standards: Sustainable Agriculture Network (SAN) and Fairtrade Labelling Organisation (FLO) have developed crop specific standards, next to their generic standards. SAN published Additional Criteria and Indicators for cocoa and coffee. FLO developed Product Standards for coffee, tea, chocolate, vanilla, fresh fruits, rice, sugar, flowers and others. The Sustainable Agriculture Initiative Platform describes principles and practices for cereals, coffee, dairy, potatoes, vegetables and fruits.

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Banks play an important role in the agricultural sector, providing capital to producers and processors and as financiers of traders of agricultural produce. Banks are also directly involved in commodity trading, and may actively take part in speculation which can lead to increasing food prices. Given this role, they carry a responsibility to ensure that the sector operates in a sustainable manner. By critically selecting their clients in their investment and lending portfolios and by creating mechanisms to induce best practices, banks have the power and the responsibility to promote sustainable practices.

The bank will only invest in companies that:

• Respect the (land) rights of local communities and indigenous peoples (see page on indigenous peoples);
• Respect basic labour rights (see page on Labour) and avoid discrimination of women;
• Work towards fair pricing schemes and fair purchasing practices.
• Do not carry out agricultural activities in protected areas and areas with a High Conservation Value (see page on Biodiversity);
• Minimise production and use of genetically modified organisms (GMOs) and require or establish labelling and traceability of GMOs in their supply chain;
• Carefully and minimally use pesticides in producing agricultural products;
• Avoid deforestation and apply best practice technologies to ensure strong reduction of greenhouse gas emissions (see page on Climate change);
• Minimise the use of water and avoid water pollution;
• Respect minimum standards of animal welfare for farm animals during production and transport.

A bank will:

• Engage actively in multi-stakeholder initiatives that propose standards for various agricultural products;
• Promote social and environmental certification of agricultural produce and production systems according to standards set by multi-stakeholder initiatives.

Banks may either develop an integrated agriculture policy that pays due regard to the specific characteristics of individual commodities or agricultural sectors, or develop policies that are tailored for individual commodities or agricultural sectors, as long as the content of these policies is responsive to the crosscutting issues described in other paragraphs and integrates at least the elements listed above. A bank should be able to demonstrate that the policies on individual commodities cover at least 90% of its total investments in the agriculture sector.