THINKING beyond the canopy

Enhancing the sustainability of global commodity chains

THINKING beyond the canopy

The issues

• The food and energy price crises of 2007/2008 led to a rapid influx of agriculture and forestry foreign direct investment (FDI) into sub-Saharan Africa

• CIFOR research estimates that in Southern and Eastern Africa 13.08 million ha has been acquired between 2005 – 2013 (53.2% of SSA total)

• This is equivalent to 7.3% of total area available and agro-ecologically suitable (Ethiopia = 28.5%; Mozambique = 16.9%)

• In practice, most investments conflict with smallholder farmland and environmentally significant landscapes loss of food and income security, deforestation

Figure: Key investment destinations (by area acquired) Figure: Land uses displaced (by number of investments)

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1,000,000

2,000,000

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9,000,000

10,000,000

Central Africa Southern Africa Eastern Africa West Africa

Are

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ire

d (

in h

a)

0%

10%

20%

30%

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100%

Loss ofaccess tofarmland

Loss ofaccess to

pastureland

Loss ofaccess toforestland

Totalinvolving

access loss

Ethiopia(n=10)

Ghana(n=9)

Nigeria(n=14)

Zambia(n=5)

Total(n=38)

THINKING beyond the canopy

Realizing Inclusive Green Growth (IGG) through commercial agriculture and forestry

• Excessive focus on ‘land grabbing’ associated with plantation agriculture and forestry processes now well mapped and understood

• More constructive dialogue beginning to take place on how agricultural and forestry investments can contribute more meaningfully to national inclusive green growth objectives and priorities

• IGG discourse increasingly featuring in national development plans and policies and donor technical and financial assistance

IGG in agriculture/forestry through:

1. Resource substitution liquid biofuels, briquettes from residues

2. Sustainable production intensification, conservation agriculture

3. Ecosystem services carbon revenues, PES

THINKING beyond the canopy

Ongoing country-level initiatives & cases

• IGG projects & initiatives premised on the ability to attract (foreign) private capital and

establish synergies with development projects and public service delivery (e.g. PPP)

• Most large-scale projects typically involve spatial development initiatives (SDI) to

promote:

• Productive smallholder participation in high value global commodity chains

• Improved access to markets, infrastructure, inputs, and technologies

• Integrated land use planning

• Most initiatives include financing facilities to promote social/inclusive enterprise, with

substantial technical and financial support from international donor community

• Production often organized through ‘hub-spoke’ models (consolidated smallholder

farm blocks linked to commercial farms) and/or integrated service providers

• Some examples:

• Mozambique’s Beira Agricultural Growth Corridor (cereals, horticulture, sugar),

• Southern Agricultural Growth Corridor of Tanzania (rice, sugar, forestry)

• Zambia’s Farm Block Development Programme (sugar, cereals)

• Some individual investors in the sugar, rice, and oil palm sector adopting similar

‘smallholder inclusive’ business models (typically linked to IFC, EC, or IFAD funding)

THINKING beyond the canopy

Emerging global governance instruments & trends

Numerous global instruments developed to enhance sustainability of commodity

supply chains:

• Codes of conducts and guidelines to reduce negative impacts of investment AU Land

Policy Initiatives, FAO Voluntary Guidelines on Responsible Tenure, WB PRAI

• Trade-based sustainability standards EU Renewable Energy Directive, US Renewable

Fuel Standard

• Voluntary certification schemes RSPO, FSC, Fair Trade, Rainforest Alliance

• Responsible project finance principles Equator Principles, IFC Performance Standards

• Adoptions rates in Africa, especially of certification, comparatively low (except tea and

coffee), codes of conduct often necessitate excessive institutional and legal reform,

and project finance <2% of corporate financing in agriculture

• Industry, however, becoming more proactive in the adoption of explicit, time-bound,

sustainability commitments

• Major international commodity producers, traders, and consumer goods companies

(e.g. Cargill, Unilever, Nestle, Mars) have started to adopt ambitious ‘zero

deforestation commitments’ to completely eliminate deforestation from their supply

chains by 2020 (e.g. for oil palm, soy, sugar, cocoa, coffee, tea, beef, and timber)

• With most commodity chains dictated by large international buyers, these downstream

commitments are likely to have far-reaching impacts on large numbers of producers

THINKING beyond the canopy

Research needs and priorities

1. Better understand conditions under which different investment business models and

practices can contribute to IGG

• Requires analysis of direct and indirect social (e.g. local cost-benefit distribution),

environmental (e.g. deforestation, GHG emissions), and economic impacts (e.g. contribution

to FX earning, sector productivity) including trade-offs between them

• Requires thorough understanding of long-term financial viability of alternative business

models and supporting financial structures

• Such knowledge will support the operationalization and upscaling of SDI’s, identification of

funding priorities, streamlining IGG objectives with agricultural, environmental, and

investment policies, and exploiting synergies with international sustainability

initiatives/governance instruments

2. Better understand the potential risks and opportunities for national and regional IGG

objectives of increasingly stringent downstream procurement standards

• Zero deforestation commitments will increase demand for non-forest land which may create

conflicts with other socially and environmentally valuable land uses

• Zero deforestation commitments will create technical barriers to participation for smallholders,

which may lead to the exclusion of smallholders from

• Identification and quantification of risks and opportunities will support policy makers in

developing appropriate social, economic, and environmental safeguards and support relevant

corporations in improving commitment scope, implementation mechanisms, and aligning

commitments national IGG priorities and existing governance instruments (e.g. certification

schemes, codes of conduct, responsible finance standards)

THINKING beyond the canopy

Current CIFOR activities

Large scale investments in food, feed, and energy (LIFFE Options)

• Global comparative study on environmental, social, and economic impacts of different

smallholder-inclusive business models

• Focused on Mozambique (sugarcane, soy, eucalyptus), Tanzania (sugarcane, rice,

eucalyptus), Kenya (sugarcane), Brazil (oil palm, soy), and Indonesia (oil palm)

• Objective is to identify conditions under which business models employed in different

countries can best contribute to IGG and scalability within and replicatability between

countries

• Identify governance arrangements most appropriate to promoting best practices and models

Corporate Zero Deforestation Commitments (research portfolio under development)

• Analysis of commitment scope and implementation mechanisms

• Identification and quantification of social, economic, and environmental risks and

opportunities with implication for national IGG objectives

• Evaluation of complementary governance instruments required to capture opportunities and

mitigate risks

THINKING beyond the canopy

Source: http://scholar.google.com/citations?user=Whv5SG8AAAAJ