Sustainability initiatives have been organised for most of the agricultural commodities of the Pan Amazon, including palm oil, soy and beef, but also for coffee and cacao. Several of these initiatives have adopted the term roundtable in their names because it conveys the notion of inclusiveness that is a core concept in these multi-stakeholder initiatives. Typically, the stakeholders include all the participants in a supply chain, from the farmer to the retailer, but also commodity traders, consumer goods manufacturers, banks and service supplies, as well as civil society groups.

Their shared goal is to identify effective solutions to the social and environmental challenges associated with conventional production systems. The mechanism used to reform supply chains is typically a voluntary certification system that verifies that the production, trade and transformation of a commodity has complied with a set of best practices that have been agreed to by all the parties. The search for consensus is important, because it means all of the stakeholders have agreed to accept this package of solutions and commit to supporting the commercialisation of the goods that have been certified as sustainable.

Some environmental activists view these initiatives as a form of greenwash and have questioned their efficacy. Participating companies certify the production within their own supply chain, but roundtable initiatives have not succeeded in transforming their respective sectors. Demand for certified commodities has failed to attract a critical mass of producers that would actually transform the market and change the economic drivers of deforestation.

Adoption is highest for coffee (40%) and cocoa (22%), while commodities linked to industrial plantations tend to be lower: palm oil (20%), sugar (3%) soy (2%) and beef (<1%). Part of the explanation for the slow uptake of the voluntary standards is the lack of demand; typically, only about fifty per cent of certified production is actually sold as a certified commodity.

The lack of uptake is yet another manifestation of the dilemma of allocating the cost of environmental protection and social justice. Sustainability protocols cost money, which either adds to the price of a consumer good or reduces the profit margin of commodity producers. Although North American and European consumers are concerned about deforestation, most still choose a lower-cost product, while those in Asia, Latin America and the Middle East are overwhelmingly focused on price. Moreover, global commodity markets are dominated by producers on landscapes that were transformed by agriculture decades or centuries in the past, and these farmers operate without fear of being accused of environmental crimes. Consequently, traders are not motivated to pay a premium to farmers on the agricultural frontier.

A few producers seek to differentiate their products as organic, deforestation-free, fair-trade or antibiotic-free because they are selling their products into a differentiated market and receive a premium for their production in compensation for the extra cost and reduced yields that these systems [allegedly] entail. Others participate because it guarantees them market access. Most producers opt to circumvent the voluntary guidelines or sell to traders unconcerned about sustainability or just ignore the whole process entirely.

Social advocates have questioned the economic benefits of certification because they tend to discriminate against small-scale producers who cannot meet the record-keeping and logistical demands of a certification process. These protocols are negotiated by large-scale producers that dominate the roundtable initiatives and tailor the certification criteria to their supply chains. As formalisation spreads throughout national and international markets, smallholders could be increasingly marginalised within regional and even local markets in contradiction with the stated social objectives of these certification schemes.

“A Perfect Storm in the Amazon” is a book by Timothy Killeen and contains the author’s viewpoints and analysis. The second edition was published by The White Horse in 2021, under the terms of a Creative Commons license (CC BY 4.0 license).

Read the other excerpted portions of chapter 3 here:

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