Oxfam’s survey points to failures in the supply chain monitoring of the traders from the most known food brands
“The current food system is not working well for everyone. Millions of women and small food producers lack guaranteed rights to the lands on which they depend. They are becoming vulnerable to deforestation and land grabbing by governments and private sector investors who want to expand agricultural commodity production. Greenhouse gas emissions and climate change cause severe impacts mainly on small food producers. (…) Women producers do not usually have access to formal jobs, markets, land or credit.”
This is the beginning of a Oxfam’s report about the supply chain of major food brands. The organization published on Thursday (7) the evaluation it made of the social and environmental commitments agreed by corporations such as The Coca-Cola Company, Nestlé, Pepsico and Unilever with their consumers and the international community. The results are far from satisfactory.
The document draws conclusions from the monitoring of the supply chain of these companies and sheds light on their traders. Oxfam went after the actions that the suppliers of big brands take to solve social and environmental conflicts in five themes: 1. women, 2. land, 3. climate, 4. small producers, and 5. transparency and accountability.
In other words, Oxfam questioned what companies are doing in their supply chains to: 1. mitigate gender inequalities; 2. solve disputes related to the right to land tenure; 3. adhere to protocols against climate change; 4. economically strengthen small food producers; and 5. oversee and elaborate procedures to solve the problems listed.
The report evaluated seven agribusiness multinationals: Archer Daniels Midland, Barry Callebaut, Bunge, Cargill, Louis Dreyfus Company, Olam International and Wilmar International. Together, they generate more than 290 billion dollars in revenue per year and, despite their size, are far from respecting social and human rights to ensure the sustainability of their economic activities.
The publication (available here) is a follow-up to Oxfam’s “Behind the Brands” campaign, which investigated the corporate policies and delivery practices of the world’s top ten food and beverage companies. The focus in this new document is to publicize the other part of the story: who traders are and how they sell their commodities.
On the report, Oxfam sets a scale of 0-100% to evaluate what actions these corporations take to ensure that their economic activity does not lead to negative social and environmental impacts, as well as suggests how to improve the five assessed themes.
“The verdict: there is a lot of room for improvement (…) More than 90% of these companies’ scores are below 50%. (…) Agribusiness has a responsibility and an opportunity to improve major gaps in traders’ commitments to policies and implementation plans”, the report says.
In general, there is a bigger problem not solved in each of the five evaluated materials. For women, companies failed to have corporate policies to get along the gender barriers imposed on women farmers or on women working on the food sector. About the subject of land, the report shows that the advance of economic activity of this companies damages the territories of traditional communities, such as indigenous, quilombolas and others, all over the world.
The climate issue was the only one in which the corporations got a better score, according to the evaluation criteria. “But”, Oxfam says, “on average, corporate earnings are still modest. With the exception of Olam and Barry Callebaut, none of these agribusiness traders has set science-based emission reduction targets.”
The small producers topic received the worst evaluation. “None of the evaluated companies has committed to improving the ability of small producers to earn a decent income in their agricultural commodity supply chains as a whole”, the document says. Finally, in the topic of transparency and accountability “the traders evaluated have not publicly demonstrated a strong commitment to transparency, accountability and respect for human rights.”
Gustavo Ferroni, Oxfam’s policy and advocacy advisor in Brazil, says to Joio that the evaluation concentrates efforts on traders because these are companies as big as the brands but much less known. “They do not have direct product sales. They are not companies that demand strong marketing or whose consumer has some kind of affective relationship with their products. They react little to consumer demands. ”
Bringing to the surface the related problems to these companies can therefore help them to take more social and environmental responsibility measures. “As they do not invest in consumer relationships, traders are more impervious. Some have open capital, they are more sensitive, but others do not. Sometimes what you can do is limited”, says Gustavo.
For him, it is important for brands to monitor the situation of their suppliers and also cover improvements. “You have an economic power relationship. It is difficult to influence traders, even brands. But what we see, and the report says, is that brands need to be more active with the role of monitoring the supply chains”, adds the Oxfam advisor.
The United Nations has a document, Guiding Principles for Business and Human Rights (UNGPs), that sets out what commitments the companies must have to ensure respect for human rights, and many of the evaluated ones are signatories. These principles make clear the responsibilities of corporations, including those of agribusiness. The monitoring, with active inspection, of the brands on the supply chain, is one of them.
“There’s no way a big company says it cannot monitor its supply chain, that’s unacceptable. There is not any international mechanism that omits this, all agreements refer to this responsibility. If you are in the chain, you have the obligation to do the due diligence. You have to know your chain and spread your information”, says Gustavo.
Systemic issue
On the report, Oxfam also notes that the problems in the brand’s supply chains are related to the Market concentration. Remember: we are talking about a few brands and traders, in other words, only a handful of companies that control a big slice of the world food production. “Short supply chains are a complementary alternative to the agro-food business model”, says the document.
This production model eliminates intermediaries. It increases the share of producers and reduces costs to the consumers. Also, production becomes more diverse and helps to develop farming communities, creating jobs and developing the place of production.
“When you have a very large concentration of the market, you have an imbalance of the actors. When you have concentration, whoever controls one part will crush the other parts of the supply chain. You end up taking the end of the chain to complicated situations. You have a systemic problem. The more concentrated, the more you have actors who impose on others. This is not desirable”, says Gustavo.
Besides pinpointing the issues, Oxfam gives recommendations for traders and brands to improve solutions to the problems the report has detected. Placing women’s empowerment at the heart of operations, respecting the land rights of traditional communities, reducing the climate impacts of economic activities, providing decent remuneration for farmers and rural workers and improving transparency and supply chain monitoring are some of them.
