What is the role of traders in improving the sustainability of global food supply chains?
A research project
Agricultural commodity trading firms connect producers with the global market and are uniquely positioned to implement sustainability programs. Our research project aims to assess both the opportunities as well as potential challenges that arise when traders are giving a greater role as sustainability governance actors. As a starting point, we focus on three tropical commodities: Coffee, cocoa, and palm oil.
Traders: Hidden but essential supply chain actors
Traders come in many facets
The largest, multinational trading companies sit in the center of hour glass-shaped supply chains and are responsible for moving large shares of commodities around the globe.
For example, the 5 largest coffee traders trade almost half of total global coffee volumes.
Traders large and small
While multinational traders tend to handle several commodities and spread their risk accordingly, national exporters often specialize in one commodity.
In the direct trade space, ‘connective businesses’ facilitate links between high-quality producers and consumers.
Don’t forget the agents
Frequently maligned, yet essential to connect smallholder producers to global markets, informal middlemen pre-finance crops and are often the only point of contact and offtakers for small farms.
Getting them on board is essential for the success of sustainability initiatives.
Traders wear multiple sustainability hats
Our initial research has shown that traders are already engaged in a multitude of sustainability activities such as:
- Traditional CSR through own foundations
- Participation in precompetitive platforms and initiatives
- Rolling out third-party and multistakeholder certifications
- Implementation of lead company schemes
- Implementation of own-company supplier policies
- Development of own-company sustainability initiatives and producer empowerment programs
Unique advantages and challenges
Traders as sustainability champions and translaters
Given their close connection to the field level and interaction with farmers, traders are perfectly positioned to act as sustainability champions in their key sourcing regions.
Situated in the middle of the value chain, and with their expertise of connecting diverse geographies, demand and supply, they may take on core roles in translating requirements, challenges and difficulties in meeting standards between lead firms and their own suppliers.
Since they usually trade multiple products, they can also act as horizontal connectors of different commodity-focused action groups, sharing best practices and spreading innovation.
Caught in the middle between commercial and sustainability demands?
Yet, as traders take on these new roles, they may also encounter new challenges in squaring their business purpose with their sustainability mission.
Goal conflicts may occur between maintaining a large sourcing base and ensuring full traceability and sustainability assurance to their buyers. Relationships of trust may be stretched as they confront suppliers with ever-new demands. And farm-level actions seen as pre-competitive by other supply chain actors may become intensely competitive for trading firms.
Our research project aims to collaboratively explore these developments and how actors respond to these and other challenges.
Getting the conversation started
In a first step, we plan to talk to other academics and practitioners to crowdsource existing knowledge and the most pressing research questions. We do this via several events:
- An academic roundtable at the International Studies Association conference
- A transdisciplinary workshop series hosted by the University of Victoria
Who We Are
Dr. Janina Grabs is a postdoctoral researcher at ETH Zurich and incoming Assistant Professor of Business and Society at ESADE Business School, Barcelona.
Dr. Sophia Carodenuto is an Assistant Professor of Geography at the University of Victoria, Canada.
The research project aims to collaborate across disciplines with other researchers as well as with interested companies. Contact us for more details!
News and Resources
Innovation Forum podcast
The team was invited to speak about the emerging research project on an Innovation Forum podcast. Innovation Forum is the leading network of senior CR and sustainability professionals.
Research agenda published
Our kick-off article, “Traders as sustainability governance actors: A research agenda“, is in print at the journal Business Strategy and the Environment. Find a pre-print here!
SSHRC Connection grant
The team was successful in applying for a Connection grant from SSHRC, funding a three-day workshop in Victoria, BC, where academics and practitioners can brainstorm research priorities.
The project “Traders as agents of sustainability governance in global food supply chains: Initiating a research agenda” is generously supported in part by funding from the University of Victoria and its Centre for Global Studies, as well as the Social Science and Humanities Research Council of Canada via a SSHRC Connection Grant.