# The transition of animal farming in Vietnam: from semi-subsistence to commercial systems

Nathalie Hostiou

► To cite this version:

Nathalie Hostiou. The transition of animal farming in Vietnam: from semi-subsistence to commercial systems. Agri-Chains et Sustainable Development, Centre de Coopération Internationale en Recherche Agronomique pour le Développement (CIRAD). FRA., Dec 2016, Montpellier, France. 275 p. hal-01603988

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12-14 December 2016,
Le Corum, Montpellier - France

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Agri-Chains & Sustainable Development
> Linking local and global dynamics

ABSTRACTS
BOOK

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© Lilian Martorell

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Welcome to AC&SD 2016

On behalf of the Scientific and Organizing Committees, it is a great pleasure to welcome you to the International Conference on Agri-chains and Sustainable Development (AC&SD 2016). This conference aspires to widen the debate about the role of agricultural value chains towards sustainable development. Year 2015 was a critical political and diplomatic milestone: the member states of the United Nations signed a new agenda for development, with the 17 Sustainable Development Goals (SDGs) placing sustainability at the core of international efforts. Development and academic actors are since then exploring new avenues for translating the SDGs into reality and implementing global and local frameworks and partnerships. Our conference aims at joining these efforts, with the consideration that agricultural value chains form spaces where local and global challenges to sustainability connect and within which local and global actors experiment and negotiate innovative solutions.

The scientific committee has assembled a very attractive program for **AC&SD 2016** that seeks to cover and confront the diversity of realities behind agri-chains, from localized chains, embedded in specific places, to global value chains. In the parallel sessions, transformations of these agri-chains and their connections to sustainable development will be discussed by speakers from the academia, the civil society, the private sector and decision makers. This multi-stakeholder perspective will also be brought about in the plenary sessions. Here, world renowned keynotes and panelists to three high level round tables will discuss about the role and importance of evaluation, public and private institutions and innovations at different scales for transforming agri-chains towards sustainability transitions.

This edition gathers about 250 participants from 39 countries. **AC&SD 2016** owes a lot to the scientific and organizing committees for preparing the program, and particularly to Brigitte Cabantous, Chantal Carrasco and Nathalie Curiallet for all the logistics, as well as to our support team of Alpha Visa that we warmly thank for their help.

We wish us all a fascinating, successful, inspiring and enjoyable **AC&SD 2016** and we very much look forward to its result and to the strengthening of both a scientific community and a community of practice to implement the outcome!!

Estelle Biénabe, Patrick Caron and Flavia Fabiano,
Cirad Co-chairs **AC&SD 2016**
# COMMITTEES

## Scientific committee

* Estelle Bienabe, CIRAD, France**

* Julio Berdegué, RIMISP, Chile*

* Thierry Bonaudo, AgroParisTech, France

* Larry Busch, Michigan State University, USA

* Patrick Caron, CIRAD, France*

* François Côte, CIRAD, France

* Benoit Daviron, CIRAD, France

* Djiby Dia, ISRA, Senegal

* Flavia Fabiano, CIRAD, France**

* Pierre Fabre, European Commission EuropeAid, Belgium

* Bernard Hubert, Agropolis International, France*

* Patrice Levang, IRD, France

* Florence Palpacuer, Université de Montpellier, France

* Felicity Proctor, RIMISP, UK

* Ruerd Ruben, Wageningen UR, The Netherlands

* Nadia Scialabba, FAO, Italy

* Dao The Anh, CASRAD, Vietnam

* Alban Thomas, INRA, France*

* Jodie Thorpe, IDS, UK*

* Sophie Thoyer, Montpellier SupAgro, France

* Maximo Torero, IFPRI, USA

* Member of the international organising committee

** Member of the local organising committee

## Organising committees

### International organising committee

* Karen Brooks, IFPRI, USA

* Jean-Marc Chataigner, IRD, France

* Clement Chenost, Moringa Fund, France

* Thierry Doré, AgroParisTech, France

* Ronan Le Velly, Montpellier SupAgro, France

* Huub Loffler, Wageningen UR, The Netherlands

* Philippe Pipraud, French Ministry of Agriculture, France

* Lilian Puech, French Ministry of Foreign Affairs, France

### Local organising committee

* Frédéric Bourg, CIRAD, France

* Brigitte Cabantous, CIRAD, France

* Chantal Carrasco, CIRAD, France

* Nathalie Curiallet, CIRAD, France

* Frédérique Causse, CIRAD, France

* Delphine Guard-Lavastre, CIRAD, France

* Nathalie Villeméjeanne, Agropolis International, France
# Table of contents

## Session 1

### Linking public policies and agri-chain governance mechanisms to support the SDGs: lessons and challenges from and for forest landscapes

Mitigating the negative impacts of the maize boom on landscapes and livelihoods in Laos 10
Jean-Christophe Castella [et al.]

Managing Olam rubber plantation's impacts in a forest area in Gabon: rethinking the horizontal dimension of sustainable supply chain governance systems 13
Stéphane Guéneau [et al.]

Governing the beef supply chain in the Brazilian Amazon: progress and limits in shaping the transition towards a sustainable development 16
Isabel Garcia-Drigo [et al.]

Soy value chain, agriculture expansion and savannahs' conversion in Brazilian Cerrado: linking global governance mechanisms and local political dynamics 20
Pierre-Marie Aubert [et al.]

From zero-deforestation cocoa to sustainable chocolate value chains 23
Marisa Camargo [et al.]

Linking sustainable production and enhanced landscape governance in the Amazon: towards territorial certification (TerraCert) 25
Pablo Pacheco [et al.]

## Session 2

### Dairy industry sharing sustainable development goals Emphasizing the diversity of development pathways

Acknowledging social negative loops in inclusive business: an Egyptian case study of dairy sourcing 28
Annabelle Daburon [et al.]

The transition of animal farming in Vietnam: from semi-subsistence to commercial systems 31
Nathalie Hostiou [et al.]

Stabilising producers' conditions to access market through cooperative institutional innovations: the case of India 33
Marie Dervillé [et al.]

Are investments of milk corporations in developing countries likely to promote socially sustainable business? Lessons learnt from West Africa and South-East Asia 36
Guillaume Duteurtre [et al.]

## Session 3

### Climate Smart Cocoa: the emerging case for public-private partnerships in response to deforestation and climate change

Climate Smart Cocoa: building private sector engagement and investment in response to deforestation and climate change 40
Ethan Budiansky
An innovative public/private partnership for a sustainable transformation of the cocoa agri-chain in the Dominican Republic

*Olivier Deheuvels [et al.]*

43

Is our chocolate melting away?

*Christian Bunn*

45

Public/private partnerships: insights from the cocoa action partnership and the Climate Smart Cocoa programme in Ivory Coast and Ghana

*Martin Gilmour*

48

Public/private partnerships: insights from the research and development program Cacao Forest

*Pierre Costet*

49

Offsetting and insetting are needed in equal measures!

*Isilda Nhantumbo*

50

## Session 4

### Global commodity chains and sustainability in Latin America: changes towards sustainable development in trade of agrifood products

Mexican agrifood geographical indications: between productivity and sustainability

*Pablo Perez-Akaki*

52

Sustainable label and governance of global value chain: insights from coffee value chains in Latin American countries

*Jean-Francois Le Coq*

56

Sustainability in rural territories participating in global value chains. Cases of Costa Rican agroindustrial-chains

*Rafael Diaz [et al.]*

60

Global value chains for sustainable development of primary producers of coffee in Mexico

*Marisol Velazquez*

64

Agro-ecological products qualification and certification participatory initiatives effects of Brazilian public policies

*Eric Sabourin*

68

Coffee chain in El Salvador: an approach on the influence on the sustainable development of the Western Region

*Gilma Lizama*

70

## Session 5

### Strengthening the capacities needed to make multi-stakeholder partnerships for innovation in agri-chains work in practice

Scaling inclusive development: assessing the outreach and leverage of agri-chain partnerships in sub-Saharan Africa

*Sietze Vellema [et al.]*

74

Innovation platforms and value chain: technological interactions and sustainability in Ivoirian plantain sector

*Euphrasie C.M. Angbo-Kouakou [et al.]*

77

How to support innovation processes in agricultural sector? Diversity and complexity of situations of innovation in Burkina-Faso.

*Aurélie Toillier [et al.]*

81
<table><tbody><tr><td>The case of Myanmar: after 50 years of dictatorship, making the leapfrogging possible in agriculture<br>Ei Khin Khin</td><td>86</td></tr><tr><td>Transition in agricultural innovation and development: a case study of Bt cotton system in Burkina Faso<br>Eveline M. F. W. Compaore Sawadogo</td><td>89</td></tr><tr><td>Roots to empowerment<br>Toon Defoer</td><td>92</td></tr><tr><td>Organic agriculture and food security in Cameroon<br>Gerard De La Paix Bayiha [et al.]</td><td>93</td></tr><tr><td>Capacity for change: the common framework on capacity development for agricultural innovation systems<br>Christian Hoste [et al.]</td><td>94</td></tr><tr><td>Exploring capacity to innovate concepts and its assessment in Cameroon<br>Sophie Allebone-Webb [et al.]</td><td>95</td></tr><tr><td>Agriculture innovation partnerships in Angola: successful stories<br>Ana Melo [et al.]</td><td>96</td></tr><tr><td>Government vs private sector led innovation partnerships in Ethiopia: challenges and opportunities for capacity development<br>Amanuel Assefa [et al.]</td><td>100</td></tr></tbody></table>

## Session 6

### Private standards in agri-chains: evaluating their outcomes and assessing their impact

<table><tbody><tr><td>The role of certification on hired labour in banana plantations – cross country analysis of economic, social and empowerment benefits<br>Fedes Van Rijn [et al.]</td><td>102</td></tr><tr><td>Fair deal or ordeal? Enquiry into the sustainability of commercial banana production in the Lao PDR<br>Vongpaphane Manivong [et al.]</td><td>106</td></tr><tr><td>Evaluation of the FSC forest certification scheme in Brazil: a three level approach<br>Stéphane Guéneau [et al.]</td><td>109</td></tr><tr><td>Smallholders and the inclusion debates in certification schemes: perspectives from palm oil certification in Thailand and Malaysia.<br>Marcel Djama [et al.]</td><td>113</td></tr><tr><td>Fair trade for all on smallholder farmers and farmworkers<br>Martha Lilia Del Rio Duque</td><td>116</td></tr></tbody></table>

## Session 7

### Institutional innovations for sustainable food systems: practitioner experiences in 'transitions in the making'

<table><tbody><tr><td>Developing a biocultural heritage indication labeling system<br>Krystyna Swiderska</td><td>120</td></tr><tr><td>Introduction to institutional innovations<br>Allison Loconto [et al.]</td><td>123</td></tr></tbody></table>
<table><tr><td>Landscape factors influencing sustainable food agri-chain innovation: The role of place in the Toronto experience of Local Food Plus</td><td>173</td></tr><tr><td>Wayne Roberts [et al.]</td><td></td></tr><tr><td>Are food losses and waste overestimated in developing countries?</td><td>176</td></tr><tr><td>Géraldine Chaboud</td><td></td></tr><tr><td>Vulnerability and resilience of the urban food system to extreme weather: a case study of Colombo, Sri Lanka</td><td>180</td></tr><tr><td>Christina Semasinghe [et al.]</td><td></td></tr><tr><td>Resilience of rural-urban food flows in West Africa</td><td>182</td></tr><tr><td>Pay Drechsel, Hanna Karg, Richard Kofi Appoh and Edmund Akoto-Danso</td><td></td></tr></table>

## Session 10

### Innovations in approaches and tools for inclusive and efficient value chain development

<table><tr><td>Commercial and inclusive value chains: doing good and doing well</td><td>184</td></tr><tr><td>Malcolm Harper, John Belt and Rajeev Roy</td><td></td></tr><tr><td>Factors influencing successful inclusion of small farmers in modern value chains in ACP countries</td><td>188</td></tr><tr><td>Andrew Shepherd</td><td></td></tr><tr><td>Cross-border trade and women in value chain development</td><td>192</td></tr><tr><td>Florence Tartanac</td><td></td></tr><tr><td>Inclusive and efficient value chains</td><td>195</td></tr><tr><td>Maximo Torero</td><td></td></tr><tr><td>Assessing equity in value chains through a participatory guide to business models that link smallholders to markets: insights from LINK application across diverse value chain settings</td><td>196</td></tr><tr><td>Mark Lundy [et al.]</td><td></td></tr><tr><td>Household asset endowments and implications for inclusive value chains</td><td>197</td></tr><tr><td>Jason Donovan</td><td></td></tr><tr><td>Gender equity in value chain and livelihoods development: innovative approaches and tools</td><td>198</td></tr><tr><td>Dietmar Stoian</td><td></td></tr><tr><td>Innovation for inclusive value-chain development, successes and challenges</td><td>199</td></tr><tr><td>André Devaux</td><td></td></tr><tr><td>Measuring and simulating trust in value chain development</td><td>200</td></tr><tr><td>Christine Plaisier</td><td></td></tr></table>

## Session 11

### Linking global value chains and territories: conceptual insights for understanding and ensuring sustainability at different scales

<table><tr><td>Agri-chains and territories “zero-deforestation”: what role for the payments for environmental services?</td><td>202</td></tr><tr><td>Alain Karsenty</td><td></td></tr><tr><td>Vulnerability and resilience modelling for sustainable food systems</td><td>205</td></tr><tr><td>Paolo Prosperi and Thomas Allen</td><td></td></tr></table>
Assessing the potential of territoriality in advancing agricultural and rural development ............ 209
*Valerie Nelson [et al.]*

Understanding the impact of economic globalization on local sustainability
with global value chain governance – literature review and research agenda ................................. 213
*Yann Laurans [et al.]*

Sustainability assessment in local and global food chains.
A comparative study in the French wine industry ........................................................................ 215
*Jean-Marc Touzard [et al.]*

A hybrid perspective of political economy and socio-ecology to study multidimensionality
of agri-chains and complexity of sustainable development:
connecting scales and dynamics throughout selected case studies in Colombia .......................... 217
*Martín Bermúdez-Urdaneta [et al.]*

## Session 12

### Methods and challenges
*in assessing sustainability in agri-chains*

A porter diamond-based approach to assess the role of innovative local food systems
in the territorial integrated sustainable development: the case of Cilento Eco-Region .................... 222
*Cesare Zanasi [et al.]*

Practical analysis of inclusive and sustainable value chains: the case of rice value chain in Mali ... 225
*Baudouin Michel [et al.]*

Towards a harmonized framework for assessing the sustainability of agricultural value chains:
identification of key challenges and perspectives for research .................................................... 229
*Claudine Basset-Mens [et al.]*

Using SMART to compare social, economic, environmental and governance impacts
of certification at smallholder farm level .................................................................................... 232
*Brian Ssebunya [et al.]*

No time to rest on one's laurels – A SMART sustainability assessment induced
further optimisation on a banana plantation in Costa Rica ........................................................ 234
*Silvia Marton [et al.]*

Towards a harmonized framework for assessing the sustainability of agricultural chains: propositions
for building a multidisciplinary dialogue .................................................................................... 237
*Pierre Martin [et al.]*

EX-ACT VC: an innovative tool to assess multi-benefits of food value chains ................................. 239
*Bockel Louis [et al.]*

## Session 13

### Multi-stakeholder partnerships towards
*food security and sustainable value chains*

Institutional food procurement programmes: key aspects for programing and policy design ........ 242
*Florence Tartanac [et al.]*

BiomassNet: a stakeholder network for promoting innovation
in food and non-food biomass-based value webs in Africa ........................................................ 246
*Christine Schmitt [et al.]*
Local products for urban markets' supply :
experiments in the region of Seam Reap (Cambodia) 247
Martine Francois [et al.]

Development of the rice value chain in Guinea through suppport for female rice parboilers and a collective, interprofessional trademark 248
Floriane Thouillot [et al.]

## Session 14

### Connecting value chains, natural resource management and sustainable farming systems
### Participatory diagnosis and collective action

Environmental impacts of agricultural practices and water and soil conservation works: the case of the Merguellil catchment 250
Meriem Jouini [et al.]

The limits and opportunities of the entrepreneurship injunction in collective irrigation: the case of horticultural value chain in Mozambique 253
Raphaelle Ducrot [et al.]

Dealing with the challenge of sustainable water resource management in food chain development 256
Jean-Louis Fusillier [et al.]

The extent and determinants of postharvest losses: evidence from the cooking banana value chain in Uganda 259
Enoch Kikulwe [et al.]

Strategic planning for sustainable organic hillside agriculture with a farming system and value chain model in Nicoya, Guanacaste 263
Jeroen Houdijk [et al.]

A successful convergence between natural resources management and value chain development 264
Sara Melki

## Session 15

### Building sustainability in value chains
### Assessing firm strategies

On the learning curve: sustainability in the making in the Laotian coffee sector 266
Isabelle Vagneron [et al.]

Fish labels as firm's strategic tools for sustainable aquaculture and traditional fisheries 269
Paolo Prosperi [et al.]

Author index 273
Session 1

Linking public policies and agri-chain governance
mechanisms to support the SDGs:
lessons and challenges from and for forest landscapes
# Mitigating the negative impacts of the maize boom on landscapes and livelihoods in Laos

Jean-Christophe Castella<fnref n="1" />, Christine Ornetsmüller, Guillaume Lestrelin<fnref n="1" />, Peter Verburg and Pascal Lienhard<fnref n="2" />

## Introduction: boom crops in the agrarian transition

Boom crops are a global environmental challenge increasingly addressed through a telecoupling lens that emphasizes interactions between remote producers' and consumers' places at both ends of complex agri-chains. Assessments of environmental footprint of boom crops must include distant locations but also multiple temporal and socio-political scales. Indeed, changing market demands for global commodities such as rubber, oil palm, maize or cassava are having tremendous impacts on local landscapes and livelihoods. Crop boom syndrome is described here as the rapid spatial expansion of a crop and increasing economic impact through least effort and most profitable land use pathways for stakeholders along the agri-chain. Understanding underlying mechanisms of these land use changes, especially how decisions are made by smallholder producers involved in crop booms, is expected to help designing sustainable agri-food systems that would avoid boom effects.

In this presentation, we take the example of the maize boom in Southeast Asia as it largely involves smallholders and not only large-scale land acquisition by foreign corporations. As an annual crop, maize development trends are also different from plantations such as banana, oil palm, rubber or coffee which have longer production cycles. Short production cycles provide more flexibility as compared to perennial crops in terms of expansion or relocation depending on the fluctuations in the socio-ecological context of the production. Southeast Asia, and especially Laos, provides good examples of very fast land use changes driven by opportunistic behaviours.

The objectives of this presentation are to: (i) describe crop booms as trajectories of land use change, (ii) identify what can be learned from studying past boom trajectories, (iii) identify at what points in the trajectory interventions can be made to avoid negative consequences and (iv) show how to empower local communities and policy makers to better deal with boom crops.

## A conceptual framework for intervention on boom crop trajectories

Typical boom-crop pathways repeat in time and space, i.e. land degradation, poverty traps, deceived high expectations, e.g. jatropha hype (Amsalu and Zoomers, 2014), banana boom (Friis and Nielsen, 2016), rubber juggernaut (Ziegler et al., 2009). Concrete solutions can be found to avoid the same cause to produce the same effects again and again all around the region. We believe that quick and relevant interventions can avoid many adverse effects of the crop booms. Therefore, we need better methods to assess land use changes on the one hand early and fast enough and on the other hand at multiple scales from local to regional levels. In short, we need to understand boom trajectory mechanisms in order to steer the socio-ecological systems towards more sustainable trajectories.

*Early recognition of a boom crop syndrome.* Land science has a tradition of post-hoc observations at the regional level (e.g. gradual process of transition from one land use pattern to another) that may not be adapted to rapid changes, or arrives too late to support intervention and thus achieves limited impacts. In addition, top-down approaches are poorly adapted to local drivers of land use changes (LUC). When observed at the local level, transitions can be extremely rapid, sometimes with unexpected drivers that do not always fit well with observations at the regional level. Local level land use changes are difficult

<footnote n="1">1. CIRAD, UPR AIDA, F-34398 Montpellier, France.</footnote>

<footnote n="2">2. CIRAD, UPR AIDA, Vientiane, Laos.</footnote>
to anticipate and sometimes also difficult to relate to broader, regional level trajectories that are usually
more easily captured and predicted. In a context of regime shift, i.e. fast transitions in socio-ecological
systems that limit predictability of LUC (Müller et al., 2014; Ramankutti and Coomes, 2016) we need
to recognize the early warning signs in order to respond timely. Early recognition is necessary to
identify ‘windows of opportunity’, i.e. locations or time periods that are favourable to intervention and
innovation (Lestrelin and Castella, 2011) and to adjust intervention modes to local contexts so as to
avoid negative consequences of boom trajectories and show alternatives.

*Opening the black box of the boom.* Disentangling underlying mechanisms of the boom is neces-
sary for meaningful intervention; since crop booms appear as an abstract, emergent entity that is
difficult to grasp. Below the regional maize trajectory many singular village LUC trajectories are
unfolding, responding differently to the same stimuli depending on their local contexts and history.
These path-dependent trajectories need to be understood if we want to effectively address the booms.
Understanding the trajectories requires studying the underlying, contextualized decisions that shape
the trajectories (Ornetsmüller *et al.*, 2016). This can help identifying leverage points for mitigating
negative consequences of crop booms and promoting alternative practices. Transformative approaches
to land use include alternative crops and practices, landscape management modes, and involvement of
agri-chain stakeholders in coordination processes.

Methods: representing and simulating the maize boom
to understand its underlying mechanisms

*Data collection.* Field surveys have been conducted in seven villages in the northern uplands of Laos located at different stages of the maize boom. Semi-structured questionnaires addressed the constraints to adoption of technical innovations in a boom context. In addition, we investigated the impacts of maize on land use changes in Sayabouri, Xieng Khouang and Houaphan through analysis of remote sensing data combined with household surveys and focus group discussions. A literature review complemented our analysis of the impacts of the maize boom on local landscapes and livelihoods (e.g. expansion of maize roads in the villages, impacts on deforestation and land degradation, process of capital accumulation and reinvestment in paddy land terracing and other diversification options).

*Participatory simulations and knowledge integration into a model of the maize boom.* Gaming experiments were conducted to capture context-sensitive decisions of farming households (Ornetsmüller *et al.*, 2016). First, LUC were investigated at the interface between macro and micro drivers of change: regional market demand versus individual decision making. A series of individual games were developed with local land users to address specific questions *e.g.* how short-term decisions and long-term investments are related (MIALU game), how farmers perceive and react to land degradation (MALAD game), how smallholders manage indebtedness and risk (MARISK game). Village and individual trajectories were elicited through field surveys that led to the game design, then specific decisions and scenarios were explored with the game and finally validated during the collective and individual debriefing sessions. Second, the individual games were organized into an integrative meta-game named Mahasaly ('higher level perspective on maize' in Lao language). The insights of the game may be further used to (i) identify opportunity windows for intervention and to (ii) virtually test transformative landscape approaches towards sustainable land uses.

Results: the maize boom from the bottom-up

*Characterizing the maize boom trajectory in Laos.* The successive stages of the maize boom, i.e. adoption, expansion, intensification, diversification, abandonment; are described as well as their positive impacts on farmers’ cash income and livelihoods and negative impacts on deforestation, land degradation, loss of biodiversity, pollution with herbicides and household indebtedness. Changes in landscapes are mainly driven by replacement of swidden fallows by maize, opening of maize feeder roads for maize expansion until the land frontier is reached, i.e. free access to common land is not possible anymore, leading to the emergence of a local land market and changes in land tenure systems.
**Analysing smallholder decision pathways.** Disentangling the boom mechanisms means understanding the context of the successive, path-dependent decisions that feed the maize boom trajectory (Ornetsmüller et al., 2016). Crucial strategic decisions are usually followed by routine decisions (business as usual – same practice used for a few years) until new signals show a need for next strategic decision. Here we present elements of context that shape strategic decisions as elicited through the role games. In all cases, villagers manage a transition period from a dominant system to another (regime shift). Overall, we found that on the individual level the available set of competitive opportunities, profitability and feasibility play a strong role in the decision-making process and that the system dynamics in the maize boom are intricately linked to income for household and family oriented goals.

**Discussion: drawing lessons for timely and relevant intervention**

*Reconciling local and regional scales, short term and long term strategies.* Farmers engaged in the boom may be looked upon as short-sighted as they are well aware of the downside effects of mono-cropping practices, deforestation and intensive use of chemical inputs. However, they usually combine short term with long term strategic decisions. Farmers use the profits from maize to invest in their children's education and in terracing paddy fields. They tend to dig into the natural resource base through intensive maize systems to secure the conditions of a transition towards more sustainable systems. Some farmers displayed unsustainable strategies during the games that aimed at stretching the maize system a few more years before the children have finished their school years and then turning to other, more sustainable cropping systems afterwards that may involve investment of capital or seem risky at first to them.

*Recognizing intervention windows.* A better understanding of farmer's perspective allowed identifying early signals of transition between the successive phases of the boom. Interventions are almost impossible during the expansion-intensification phase as long as there is no alternative that can compete with mainstream maize production modes. Two main intervention windows were identified: adoption (pre-boom) phase and diversification-abandonment (post-boom) phase, i.e. at the initial stage of the boom before villagers turn to non-sustainable mono-cropping practices and then during the crisis phase when farmers are more receptive to alternative practices as their maize systems do not perform well anymore.

*Transformative approaches to sustainable landscapes and livelihoods.* We captured the contextualized patterns of decision-making within a limited amount of time (4 months) so that scenarios of alternative behaviours can be tested with multiple stakeholder groups. As an explorative tool the Mahasaly model could be used to assess with local populations the feasibility of compensation mechanisms such as projects that would promote paddy rice terracing in exchange of not opening maize feeder roads, a main driver of maize expansion and deforestation. The feasibility of such an intervention is highly dependent on the local context and the willingness of multiple stakeholder groups to coordinate their actions.

**Conclusions**

Repeated strong calls from policy makers to address global development issues (e.g. climate change mitigation and adaptation, poverty reduction, biodiversity conservation) by tackling unsustainable land use practices (e.g. deforestation or forest degradation, overuse of pesticides) may look analytically very effective, as land use can be both cause and solution to these global issues, but they are difficult to implement on the ground as early attempts for transformative changes towards sustainable land use have repeatedly shown. Crop booms are symptomatic of these major conceptual problems with transformative approaches that would be managed from the top down. Misinterpretation of the underlying decisional mechanisms of land use change leads to scale mismatch and time-lag of large-scale assessments. We believe our proposed bottom-up approach can be harnessed for the design of more effective interventions.
# Managing Olam rubber plantation's impacts in a forest area in Gabon: rethinking the horizontal dimension of sustainable supply chain governance systems

Stéphane Guéneau<fnref n="1" /> and Jean-Philippe Tonneau<fnref n="2" />

## Introduction

Modern large-scale industrial agriculture has shown strong growth in the tropics since 2000. Agribusiness development has mainly taken the form of cultivation on new land, mainly in the tropics (Phalan *et al.*, 2013). The expansion of cash crops and plantations in the tropics has caused the conversion of large areas of natural forests to monoculture, leading to biodiversity losses and climate change impacts (Gibbs *et al.*, 2010). Until recently, the African continent was relatively untouched by this vast movement. However, this situation has changed: between 22 and 56 million hectares have been acquired by foreign capital in sub-Saharan Africa over the last 10 to 15 years (German *et al.*, 2013).

The Gabonese government has recently undertaken a programme to re-allocate land for agroindustrial projects. Since 2005, about 400,000 ha of land has been acquired by foreign agribusiness companies for investment projects in Gabon (Schoneveld, 2014). This orientation towards the development of competitive agroindustrial activity finds expression, since 2012, in the ‘Emerging Gabon’ strategic plan promoted by the Presidency of the Republic, one of whose objectives is to find ways to compensate for lower future oil revenues (Alphandéry *et al.*, 2012). They are often presented in the literature as the central point of the governance of sustainability of agribusiness global value chains (Clapp and Fuchs, 2009; Dauvergne and Lister, 2012).

Extending the “governance without government” thesis (Rosenau and Czempiel, 1992) and the ‘global value chain theory’ (Gereffi *et al.*, 2005), the concept of Sustainable Supply Chain governance systems (SSCG-systems) is defined as the “forms of cooperation of market actors in (international) supply chains (possibly together with non-market actors) in improving the environmental and social conditions of production operations in developing countries” (Vermeulen and Metselaar, 2015).

The concept of SSCG Systems is part of an aspiration to understand the structural changes in environmental and social practices of the globalized forms of production and consumption (Vermeulen, 2010). After more than two decades of implementation, the effectiveness of sustainability non-state governance arrangements remain a controversy issue about which research should address new conceptual frameworks (Guéneau and Tozzi, 2008). While the role of public actors in the governance of global value chains is usually addressed through the public policy instruments that support private initiatives (for example, through grants or public procurement) (Vermeulen *et al.*, 2010), little is said about the public-private articulation at the implementation stage.

## Methodology

The methodology we used consisted of a socio-anthropological fieldwork as part of an appraisal mission to assess the rubber plantation's environmental and social impacts. The study area is located in the north of the Woleu N'tem Province, Gabon. It is a former agricultural region, whose villages were gradually abandoned after independence (Pourtier, 1984). Our field observations were concentrated in the concession area, and outside, in the close vicinity of the plantation, particularly in two villages: Okok and Azombé. These field visits were supplemented by semi-structured interviews with over 30 stakeholders in the three main cities of the study area (Oyem, Bitam and Minvoul) and in the Gabonese capital,

<footnote n="1">1. CIRAD, UMR MOISA, F-34398 Montpellier, France.</footnote>

<footnote n="2">2. CIRAD, UMR TETIS, F-34398 Montpellier, France.</footnote>
Libreville. The interviews targeted villagers and village chiefs, local and national politicians, officers of the Gabonese administration, OLAM staff and executives, members of NGOs and consulting firms. Additionally, this methodology was complemented by a literature review that addresses the social and environmental impacts of various plantation projects in Africa and elsewhere, including some reports dealing with our case study in Gabon (e.g. environmental and social impact assessments).

## The Olam-Rubber sustainable policy: implementation issues

Several environmental and social issues have been observed in the plantation area, confirming the diagnosis reported in the Environmental and Social Impact Assessment (ESIA) undertaken before the start of the plantation project (Enviropass, 2012). The concession extends over sparsely populated areas mainly composed of regenerating forests, which were previously exploited and cleared for agricultural purposes. Even though not negligible, the loss of biodiversity due to the conversion of a large area of native forest into plantation can be put into perspective with the disturbance rate of the natural resource in the area. The plant species present on the site have a low level of endemism, but the risks of the disappearance of macro-fauna is of serious concern. Other environmental impacts are the damages caused by mechanical equipment on soils, the risk of runoff and contamination of surface and ground water, and the generation of industrial waste.

In order to mitigate the social and environmental impact of its rubber plantation, the Olam subsidiary in Gabon has implemented a series of measures derived from the 'Plantations code', an OLAM policy that serves as a reference for good plantation management practices implemented across the group (OLAM, 2014). Olam-Rubber decided to reduce the extent of the concession to avoid encroaching on village areas. Originally meant to cover 36,000 hectares, the usable area has now been limited to 28,000 hectares. Olam Rubber has delimited a 5-km buffer zone between the plantation's usable area and the villages along the roads on the periphery of the site and a strip 60 to 100 metres wide around watercourses to conserve wetlands and to preserve the waterways from possible pollution by pesticides and erosion due to runoff. Forests on very steep slopes are also preserved. Collection and storage facilities at specific locations have been set up to allow waste processing and recycling of used oils and fuels.

Consultations were held with the populations of the villages bordering the plantation to define individual and collective compensation for the loss of forest usage rights (hunting and gathering activities) and for alleviating the inconveniences caused by the plantation's operations (noise, etc.). These actions were enshrined in contracts signed by the various stakeholders. The company committed itself to three main types of actions: provision of basic infrastructure (clinics, rehabilitation of schools and housing, public lighting, water pumps, upgrading of roads, construction of bridges, etc.); the priority in hiring of local labour given equal skills; and support for income-generating activities (food-crop farming projects, for example).

Nevertheless, the sustainable development measures implemented by Olam in the neighbourhood of the plantation in a very paternalistic logic generate conflicts. A number of unanticipated effects that have not been addressed by the company exacerbates these conflicts. First, immigration flows into Woleu-Ntem province has become significant: workforce needed for the plantation, employees' families and populations of merchants and artisans whose activities are required to meet the basic needs of the plantation employees (food, retail, services, etc.). In similar configurations in other parts of Africa, the total number of migrants is four to ten times the number of employees of the plantation. The influx of population causes environmental and social problems, as it has already been demonstrated in the case of Cameroon (Assembe-Mvondo et al., 2015). The questionarises about the provision of resources and services normally associated with major urban agglomerations: food, sanitation, roads, health... Even though access to food can be ensured through wages, some non-native populations want to undertake subsistence farming. Providing land to them is an important issue as the Gabonese villagers are very attached to their ancestral usage rights and are reluctant to cede them without very high compensation. Population growth could also affect the Minkébé Park, one of the richest in large animals in Gabon. In February 2013, the Gabonese government announced the loss of at least half the population of elephants in the park.
Moreover, the compensations offered by the company to the villagers for the loss of their rights has reduced the opposition only temporarily. Yet, local people become more and more reluctant to accept the plantation, as they feel the consequences of the agribusiness activity on their daily lives. Local compensation demands are also moving more and more towards purely private actions such as clearing individual plots for food farming or assistance in construction of personal houses. Demands by local authorities exhibit the same ambiguity: they expect the company to contribute greatly to infrastructure, security, health and education.

## Conclusion

The Olam-Rubber'case shows that the effectiveness of tropical agribusinesses SSCG Systems can't be addressed solely within the plantations and their immediate vicinities. The problems that emerge beyond the physical borders of the plantation, at the landscape scale, can lead to major environmental damages, particularly on forest resources, through leakage and attraction effects. These unanticipated effects raise the issue of the shared responsibilities between the various stakeholders involved in the territory's sustainability, in particular that of the State. The State uses the circumstances of its limited resources as a pretext to delegate the responsibilities to the private sector of managing the impacts of the latter's activities. Yet, by allocating concessions or by attracting investors through tax exemptions, the State bears its share of responsibility in tackling the environmental and social changes taking place at the territorial level. These blurred of responsibility between the State and the private sector call for a rethinking of SSCG systems in a broader context of public intervention.

From a theoretical point of view, the results of this case study leads us to suggest strengthening the horizontal dimension of SSCG Systems by introducing a “territorial governance” dimension in addition to the “network” dimension. Moreover, the OLAM-Rubber’s case emphasizes the need to pay more attention to the definition of responsibilities at the stage of implementation of agribusiness plantation projects, particularly regarding the ability to conduct a structured debate on sustainable territorial development with local institutions.
# Governing the beef supply chain in the Brazilian Amazon: progress and limits in shaping the transition towards a sustainable development

Isabel Garcia-Drigo<fnref n="1" />, Marie-Gabrielle Piketty<fnref n="2" />, René Poccard-Chapuis<fnref n="3" />, Pablo Pacheco<fnref n="4" />, Marcelo Thalês<fnref n="5" /> and Ricardo Abramovay<fnref n="6" />

## Scope and purpose of the research

During the last 40 years, the beef sector has by large been the main driver of deforestation in the Brazilian Amazon. The States of Mato Grosso, Pará and Rondônia constitute the three largest producers of beef in this region. These states comprise 58 million cattle heads (28% of the total national herd) spread over 32.1 million hectares of pasture (53% of the total pastureland in the Amazon Biome). There is an extensive and growing body of work assessing the factors driving the expansion of cattle ranching in this region (Poccard Chapuis, 2004; Veiga and al., 2004; Barreto, Pereira and Arima, 2005; Pacheco and Poccard, 2011). The beef chain has been increasingly acknowledged by NGOs as the major source of deforestation (Friends of the Earth, 2009; Greenpeace, 2009). In the past, public regulations alone were insufficient to halt the expansion of cattle ranching over forests, and the major meatpacking companies did refuse to control their suppliers. Such situation, however, began to reverse. Shifting from a “shaming the corporation name” to a “building new agreements” situation, private and public actors have then engaged in a negotiation process around mechanisms for enhancing the governance of beef supply chain while explicitly embracing some sustainability goals. Scholars stress the role of state actors in this process. All kinds of private regulation must, in some way, relate to existing regulatory frameworks, in particular, national legislation. Thus, the development of a state regulatory framework can pave the way for private regulation or reinforce it (Bartley, 2007; Gulbrandsen, 2005; Rametsteiner, 2002). We analyse the private and public drivers that lead the meatpacking companies’ decisions to control their suppliers in the Amazon, the main governance mechanisms emerged, and their limits from observation on current practices.

## Methodology

Our work is based on a historical review of the process and on qualitative interviews with 61 key private and public stakeholders located in the three main beef producing Amazon States (Mato Grosso, Pará, Rondônia) and Sao Paolo and Brasilia, which were conducted between 2011 and 2015. A data display matrix for qualitative analysis was elaborated to organize and analyse patterns of response. The respondents were classified into six types: cattle ranchers, industry sector, retailers, NGO's members, public officials and other informants (e.g. academics, agrochemical sector, technicians, and private and public banks representatives). The responses were analyzed with regards to understanding around three main themes: i) main drivers of change shaping beef supply chain; ii) existing governance systems and mechanisms, iii) the limits and challenges for an effective governance of the beef supply chain in the Amazon.

<footnote n="1">1. Program on Rural Development at University of Rio Grande do Sul (PGDR), Brazil.</footnote>

<footnote n="2">2. CIRAD, UPR GREEN, F-34398 Montpellier, France.</footnote>

<footnote n="3">3. CIRAD, UMR SELMET, F-34398 Montpellier, France.</footnote>

<footnote n="4">4. CIFOR, Indonesia.</footnote>

<footnote n="5">5. Museu Paraense Emílio Goeldi (MPEG), Brazil.</footnote>

<footnote n="6">6. Universidade de Sao Paulo, Faculdade de Economia e Administração, Brazil.</footnote>
# Results

## What drove the meatpacking companies to control their suppliers?

We have identified two main drivers: i) a higher sensibility of the chain's stakeholders to pressures aimed at shaming their reputation and ii) innovative ways to enforce public regulations.

Since the end of the 90's, major Brazilian beef companies began to acquire national and multinational owned meatpacking plants in Brazil and abroad. Their goal was to increase participation in global beef trade. Two national companies stand out, Bertin Group and JBS/Friboi. In 2004, Brazil produced 80% of corned beef consumed in the world, half of it been produced by Bertin Group. The company JBS/Friboi became the main fresh beef export in the same year. In 2009, these companies merged their bovine meat operations. As a result, Bertin Group bovine meat division vanished, and JBS/Friboi became the leader in processed and fresh meat sales.

Between 2002 and 2015, the Brazilian beef exports underwent a notable expansion (245% in the period), and the country started to dispute the leadership in the world beef market with India and Australia. Beef exports originated in the Amazon (i.e. Rondonia, Mato Grosso and Para) also increased reaching about 2.6 thousand tons in 2015. While the share of the Amazon states in total Brazilian beef exports accounts for a small percent, this is growing over time (Abrafrigo, 2015 and Abiec, 2015). Thus, the context has become to change. Brazilian meat packing companies have started to establish a relationship with international stakeholders.

In this context, the pressure made by environmentalists NGOs was more effective. They could threaten the reputation of meatpacking companies in foreign markets. The initial action of Friends of the Earth and Greenpeace was to target international investors and international beef buyers such as the International Finance Corporation and the British supermarket chain Tesco (Harvey, 2012). Environmentalists NGOs attack the reputation of Bertin and JBS/Friboi mainly through the "shaming the corporation name" strategy. Two international reports, extensively divulged, have proven the fact that Bertin and JBS/Friboi were supplied by farmers performing illegal deforestation (Amigos da terra Amazônia Brasileira, 2009, Greenpeace, 2009).

Beyond the environmentalist threats to companies' reputation, public actors also put in place innovative strategies to force changes in the beef supply chain. In 2009, the public prosecutors decided to initiate 21 public civil suits against ranchers in the state of Pará. A public civil suit can be applied if the federal government sues a company for violations of federal law. But, the institutional innovation was that they also implicated the meatpacking companies that had acquired cattle from these ranches. Public prosecutors decided to use the concept of "shared responsibility" to hold accountable to the beef industry. The juridical concept of shared responsibility is embedded in the Brazilian Environmental Crimes Law approved in 1998. Briefly, this concept entails the responsibility of the buyers over their suppliers in the chain regarding environmental damages. Thus, if a cattle rancher perpetrates an environmental crime (such as deforestation), the slaughterhouse buying his animals can also be implicated in the crime. The public prosecutors perceived that it was more effective to prosecute the industry than several hundred cattle ranchers spread over a huge territory.

## Which governance mechanisms have emerged?

Meatpacking companies were finally forced to sign the so-called Agreement for the Adjustment of Conduct (from the Portuguese, TAC-Termo de Ajustamento de Conduta) to stop the civil actions. This legal instrument establishes responsibilities and obligations of meatpacking companies, cattle ranchers and even of the public authorities regarding the enforcement of the environmental law in cattle farms. For instance, meatpacking companies shall monitor deforestation of their supplier farms through satellite data and the screening of legal documentation such as the Environmental Rural Registry (Cadastro Ambiental Rural, CAR in Portuguese).
Beyond the official agreement with the public prosecutors, the three largest meatpacking companies operating in Brazilian Amazon also signed a private agreement with Greenpeace. The following agreement has similar terms as the TAC, yet it also demands from the industry the control of their indirect suppliers. These indirect suppliers are in general medium and small-scale cattle ranchers selling calves to large-scale ranchers. In spite of this, Greenpeace and the beef companies have agreed to postpone the control to indirect suppliers given the difficulty involved in tracing the animals spread out over millions of properties that can be very distant from the final buyer.

## What is the progress made through these mechanisms and their limits?

Some progress has been made particularly regarding deforestation mitigation and law enforcement. Both agreements demand meatpacking companies monitor deforestation of their supplier farms through satellite data. If buyers detect a non-authorized deforestation after June 2008, they cannot buy from this supplier. According to the Brazilian Forestry Code (Brazil, 2012), legal deforestation is allowed in Amazon region at the limit of 20% of the property area. But, legal deforestation has to be authorized previously. Both agreements demand the screening of legal documentation. Meatpacking companies have to verify that their suppliers hold an Environmental Rural Registry (Cadastro Ambiental Rural, CAR in Portuguese) along with an environmental license to operate. Meatpacking companies are obliged to consult two official “black lists” before buying cattle (the list of slave labor and the federal list of environmental crimes)and must refuse the produce from cattle ranchers whose names are not in those lists.

However, this system for verifying compliance with environmental regulations is not necessarily well suited to address sustainability issues more broadly. There are still significant limits. For instance, the Environmental Rural Registry is a mandatory digital registry, which aims to integrate environmental information and actual land uses in cattle ranchers’ landholdings. This information allows verifying the existence of the Forest Legal Reserve and the conservation of riparian forests. However, once the registry has been delivered, there are no additional obligations to change management decisions at the farm level. For instance, cattle ranchers are not obliged to restore the environmental passive. Besides, there are any monitoring obligations by public authorities. Only the environmental license to operate can attest that management decisions are changed toward responsible land use. But, the efforts to obtain the environmental license are still very limited because even without an environmental license cattle ranchers can access the market.

Moreover, the value chain actors and government agencies have not yet implemented a trustful system of traceability of the animals. So there is no guarantee that illegal suppliers do not launder the cattle to legal suppliers (Gibbs et al., 2015). The monitoring of the compliance of the cattle agreements is also limited. For instance, in the case of the TAC one of the clauses foresee that meatpacking companies shall participate and finance an annual audit system to verify compliance with the agreement. However, public prosecutors did not announce any progress in this step until the end of 2015. Regarding the private agreement signed between Greenpeace and the largest meatpacking companies, there is an obligation to report on an annual basis the results of the controls over direct suppliers. But, the annual reports made by the meatpacking companies do not disclose any information about the proportion of illegal meat that could be or not in the market yet.

The situation of the indirect suppliers is also problematic: indirect suppliers of calves are mostly medium and small farmers spread over a huge territory that is very costly to monitor. Moreover, some of them, particularly smallholders, are settlers living in precarious areas where the government agencies did not succeed yet to perform CAR and where deforestation still occurs (Godar and al., 2014, Piketty and al., 2015).
**Conclusion**

Scholars tend to agree governance arrangements emerge as a result of negotiations between actors in uneven social and policy arenas. Companies may have a preference toward more flexible symbolic commitments over which they have control, under the so-called *producer dominated governance mechanisms*. In contrast, social and environmental activists tend to advocate for stronger regulations with accountabilities shared by multiple parties under the so-called *multi-stakeholder dominated governance model*.

Our results show that in the Brazilian beef supply chain, the meatpacking companies are actually leading the implementation of the governance mechanism negotiated, the public and the private one. The implementation phase of the existing governance mechanisms includes the investment in some tools and procedures to make possible the verification of the compliance with laws. As mentioned above, it includes acquiring satellite images to monitor the farms of the direct suppliers and to perform the document controls. Meatpacking companies have also created specific “sustainability departments” to handle the cattle ranchers documents and analyse the satellite data at the farm level.

Nevertheless, these governance mechanisms and tools are still very limited in their scope and objectives toward sustainability goals. It is true they have included the national legislation, and its aim is the law enforcing. Further controls were established, but they do not reach the indirect cattle suppliers. Moreover, only the enforcement of legal instruments such as the Environmental Rural Registry does not lead to a better environmental management at the farm level. More efforts and investments to restore the environmental passive will be required. Finally, the most of the responsibilities still relies only on private hands. There are no public investments in monitoring system nor a trustful system of traceability of the animals. In fact, it is problematic to expect that governance mechanisms built at the level of the supply chain can tackle broader sustainability objectives beyond the zero deforestation goal.
# Soy value chain, agriculture expansion and savannahs' conversion in Brazilian Cerrado: linking global governance mechanisms and local political dynamics

Pierre-Marie Aubert<fnref n="1" />, Romain Vignes<fnref n="1" />, Margaux Llamas, Yann Laurans<fnref n="1" /> and Renaud Lapeyre<fnref n="1" />

Over the last 20 years, forest areas have been the primary sources of new agricultural land, and the situation is likely to worsen in the next decades, in a context where worldwide demand for agricultural products is expected to increase by nearly 50% by 2050 (Gibbs et al., 2010). In a recent study focusing on a few key commodities – palm oil, soybean and beef – Persson *and al.* (2014) have shown that a significant amount of the production is directed towards international markets to be used by multinational agrifood corporations, circulating in global value chains that are more and more complex.

Against this back drop, more and more actors at the global level have announced ambitious commitments to remove deforestation from their supply chains by 2020, especially regarding the use of the three above mentioned commodities (+ pulp and timber). Ben McCarthy and the Forest Trend initiative have for example tracked 566 companies operating globally and have found out that 366 of them have made a total of 579 public commitments to reducing deforestation impacts of their supply chain (McCarthy, 2016). In the meanwhile, global governance mechanisms such as the Round Table on Sustainable Palm Oil, the Round Table on Responsible Soy or the Global Roundtable for Sustainable Beef have been trying to gather major players of each sector in order to define standards for a more sustainable production (WWF, 2014). The overall aim of such initiatives and commitments is nothing but to stop converting forests to increase food production. However, two types of actors have not been so much involved in such initiatives until now: upstream food chains actors, and most notably producers themselves; and public actors, be they policy makers at the domestic level or international negotiators at the global level.

Taking the example of soy expansion in the Brazilian Cerrado, this paper proposes a cross analysis of global value chain governance and local / territorial political and agrarian dynamics to reflect on the links between agri-chains and sustainable development goals. It focuses more particularly on SDG 15, whose aims are to “protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt bio diversity loss”.

Soybean production has almost decupled over the last 40 years, from 1970 onwards. With a world population growing and a meat consumption demand increasing, the globalized cattle production system needs large protein sources which have been more and more covered by soybean. Soybean expanded quickly in South America, after the 1973 USA export embargo, who held a quasi-monopoly position until years 1970. The world faced a lack in protein sources and at that time some countries located in Latin America acquired a strong position as new soybean suppliers, one of them being Brazil.

While at the beginning soybean was cultivated in the south of Brazil, the soy-front rose progressively to the north. Currently this front turns back Amazonian forest demarcation (most notably because of the soy moratorium, see (Nepstad et al., 2014)) and soybean cultures are being progressing in another area: the Cerrado, and more precisely four states situated in the Northern part of Cerrado: Marhania, Tocantins, Piauí, Bahia, also known as “MATOPIBA”. As of now, soybean represents almost 36% of agricultural production of the entire Cerrado and has been responsible for a major part of savannah’s conversion over the last few years.

Fieldwork was carried out from May to July 2016 in Brazilia, Sao Paulo and in the Tocantins State (Palmas, Porto Nacional and Gurupi). Thirty seven persons have been interviewed to cover the whole

<footnote n="1">1. Institut du Développement Durable et des Relations Internationales (IDDRI), Institut d'Études Politiques (IEP), F-75337 Paris, France.</footnote>
range of actors involved in the soybean value chain at the Brazilian level, including decision makers and NGOs intervening in the sector. We have also attended to the 13th RTRS conference held in Brazilia on June 1st and 2nd this year.

From our preliminary result, we show that in the Tocantins, there are three interrelated mechanisms leading to savannah's conversion for soy cultivation.

* A first mechanism is linked to the international demand for soybean. Major traders operating in Brazil – ADM, Bunge and Cargill – are always seeking for greater quantity. To do so, they set each year higher objectives to their purchasing agents who, in turn, prompt cultivators to increase their areas under cultivation. As in many cases, purchasing agents are also those who sell inputs/seeds to farmers, they are well positioned to do so.

* A second mechanism is embedded in the current Brazilian financial and administrative system, which allows farmers to respond positively to such incentives in two respects. On the one hand, farmers are legally allowed to convert up to 80% of their property to agricultural production (whereas in the Amazonian region, they are only allowed to convert 20%). On the other hand, there are several ways to access to credit, which facilitates agricultural expansions in a context of growing demand.

* A third mechanism lies in the co-existence of soybean cultivators and cattle breeders on the same territory. Cattle breeders have indeed been the first to invest in the areas (1980's), well before soybean cultivation starts (2000's). In the Tocantins, they own a large proportion of the land. Over the last 10 years, they have been more and more leasing degraded pasture lands to soybean cultivators instead of rehabilitating those lands. In the meantime, they have used that money to open new forested areas for new pasture lands.

Very few actors of this system are linked to international governance mechanisms or commitments, apart from major traders (Bunge, ADM, Cargill), suggesting that the impact of such mechanisms on territorial dynamics has been relatively weak so far. This is correlated to the fact that despite the RTRS has been existing for more than 10 years now, only 0,5 to 1% of the global annual production is certified (RTRS or ProTerra certification). On the contrary, the local legislation seems to be a major driver of contemporary dynamics, as mentioned by Aubertin and Pinton in a recent paper (Aubertin & Pinton, 2013).

We can draw two types of conclusion from those preliminary results.

* From a pragmatic / political point of view, they point to the need to better integrate upstream actors and public decision makers in any initiatives to reduce the impact of soy cultivation to have a real impact on territorial dynamics;

* From a more methodological point of view, they suggest that the impact of global value chain governance on territorial dynamics can not be understood without carefully examining local social / political systems and the extent to which local actors' strategies are – or not – affected by global governance arrangements.

## References

* Aubertin C. & Pinton F., 2013. L'invention du biome Cerrado. Économie verte et sociobiodiversité. *Confins. Revue franco-brésilienne de géographie / Revista franco-brasilera de geografia* (17).

* Gibbs H.K., Ruesch A.S., Achard F., Clayton M.K., Holmgren P., Ramankutty N. & Foley J.A., 2010. Tropical forests were the primary sources of new agricultural land in the 1980s and 1990s. *Proceedings of the National Academy of Sciences of the United States of America*, 107 (38), 16732-16737.

* Mccarthy B., 2016. *Supply Change: Tracking Corporate Commitments to Deforestation-free Supply Chains*, 2016. Forest Trends' Ecosystem Marketplace, 18 p.

* Nepstad D., Mcgrath D., Stickler C., Alencar A., Azevedo A., Swette B., Bezerra T., Digiano M., Shimada J.O. & Da Motta R.S., 2014. Slowing Amazon deforestation through public policy and interventions in beef and soy supply chains. *Science*, 344(6188), 1118-1123.
Persson M., Henders S. & Kastner T., 2014. Trading Forests: Quantifying the Contribution of Global Commodity Markets to Emissions from Tropical Deforestation. *CGD Climate and Forest Paper Series*, 8,60.

WWF, 2014. *Making better production everybody's business*. Results of 5 years of WWF market transformation work. Gland, World Wide Fund For Nature, 43 p.
# From zero-deforestation cocoa to sustainable chocolate value chains

Marisa Camargo<fnref n="1" />, Nicholas Hogarth<fnref n="2" /> and Isilda Nhantumbo<fnref n="3" />

## Introduction

The concept of sustainable development suggests that economic growth should be designed to meet the needs of present generation, without jeopardizing the rights of generations to come (Brundtland, 1987). Thus, production to attend to the growing population should be developed in a manner that contribute to a green economy, and find an optimal long-term balance between economic, social, and environmental issues (Borel-Saladin & Turok, 2013).

Agriculture has been estimated to be the proximate driver of almost 80% of deforestation worldwide (Hosonuma et al., 2012). However, there is currently no sound mechanism in place to help address this challenge. The Reducing Emissions from Deforestation and Degradation (REDD+) mechanism, created to help address deforestation, has not proven sufficient so far to help curb emissions from agriculture. Indeed, a recent analysis of 115 demonstration projects revealed that the majority of initiatives focus on addressing threats to forests from small-scale agriculture and biomass energy production (Nhantumbo & Camargo, 2015). There is still a large gap in addressing drivers of deforestation associated with large-scale businesses in agriculture commodity chains, such as cocoa, palm oil, and soy, and ensuring that the benefits are equitably distributed along the chain.

Partially as a result of the slow progress of REDD+, and its limitations in significantly engaging the private sector, practitioners and scholars have turned their attention to promoting sustainability in commodities supply chains (Nepstad et al., 2014; Newton, Agrawal, & Wollenberg, 2013). Governments and large corporations have begun to voice their commitment to promote zero-deforestation (United Nations, 2014), but it is not yet clear what these commitments would mean in practice.

The goal of this paper is to explore how zero-deforestation commitments and government policies can be developed not solely focused on conserving forest plots adjacent to agriculture areas, but enhance sustainability of the landscapes where the raw material is produced as well as the rest of the value chain, from farmer to consumer. The aim is to help design commitments and policies that contribute to broader sustainability, rather than focus on a single isolated issue.

## Methodology

To achieve this aim, we analyse cocoa and chocolate production and explore the challenges associated with concomitantly increasing yield, conserving the environment, and ameliorating livelihoods. We focus on the entire chain, from farmer to consumer, to identify the other externalities, besides deforestation, that are generated before consumers can purchase the final product. We draw on original data from 70 semi-structured interviews carried out with cocoa value chains take holders and experts representing NGOs, government institutions, industry associations, corporations, private sector, standard development organizations, certification bodies and academia in Brazil, Ghana, Netherlands, Denmark, Belgium, and United States. Additionally, we review the literature on cocoa production and sustainability, as well as life cycle assessment of chocolate production.

<footnote n="1">1. INDUFOR, Helsinki FI-00100, Finland.</footnote>

<footnote n="2">2. University of Helsinki, Finland.</footnote>

<footnote n="3">3. International Institute for Environment and Development (IIED), United Kingdom.</footnote>
## Results

Our analyses show the interdependency between productivity, ecosystem resilience, and livelihoods, highlight that cocoa is not alone in the landscape; that deforestation is only one of the sustainability challenges; and that there are several other issues (such as food security and farmers dependency in one commodity) that need to be addressed before cocoa can be called sustainable. We acknowledge that private sector alone cannot solve all challenges, but it needs to design its strategies promoting more synergies with NGOs and governments actions to ensure an optimal balance between agricultural matrix, biodiversity conservation, ecosystem resilience, and improved livelihoods in the broader landscape, rather than focusing on isolated projects. We propose that a policy mix, with different types of instruments involving all sectors of society should be put in place in a coordinated manner to ensure that both supply and demand of sustainable products are encouraged.

Additionally, we argue that these efforts should not only focus on the landscape level, but resolve a broader discussion on how to internalize externalities along the chocolate chain, which have the potential to confer businesses with greener image, sustainable raw material supply, and improved investment relations. Thus, increasing the overall sustainability of value chains presents a win-win for forests, local livelihoods, and companies alike.

Our findings can inform the global policy discussions on how to develop mechanisms that effectively engage the private sector, and address deforestation while ameliorating livelihoods; and help develop guidelines for private companies to design their sustainability strategies.

## References

* Borel-Saladin J. M., & Turok I. N. (2013). The green economy: Incremental change or transformation? *Environmental Policy and Governance*, 23 (4), 209-220.

* Brundtland G. H. (1987). *Report of the World Commission on environment and development:* "our common future.": United Nations.

* Hosonuma N., Herold M., De Sy V., De Fries R. S., Brockhaus M., Verchot L., ... Romijn E. (2012). An assessment of deforestation and forest degradation drivers in developing countries. *Environmental Research Letters*, 7 (4). doi:10.1088/1748-9326/7/4/044009

* Nepstad D., McGrath D., Stickler C., Alencar A., Azevedo A., Swette B., ... da Motta R. S. (2014). Slowing Amazon deforestation through public policy and interventions in beef and soy supply chains. *Science*, 344 (6188), 1118-1123.

* Newton P., Agrawal A., & Wollenberg L. (2013). Enhancing the sustainability of commodity supply chains in tropical forest and agricultural landscapes. *Global Environmental Change*, 23 (6), 1761-1772. doi:http://dx.doi.org/10.1016/j.gloenvcha.2013.08.004

* Nhantumbo I., & Camargo M. (2015). REDD+ for profit or for good? Review of private sector and NGO experience in REDD projects. *Natural Resource Issues* No. 30. London: IIED. United Nations. (2014). 2014 Climate Change Summit – Chair's Summary. Retrieved from http://www.un.org/climatechange/summit/wp-content/uploads/sites/2/2014/05/Climate-Summit-Chairs-Summary 26September2014CLEAN.pdf
# Linking sustainable production and enhanced landscape governance in the Amazon: towards territorial certification (TerraCert)

Pablo Pacheco<fnref n="1" />, René Poccard-Chapuis<fnref n="2" />, Isabel Garcia-Drigo<fnref n="3" />, Marie-Gabrielle Piketty<fnref n="4" /> and Marcelo Thalês<fnref n="5" />

## Supporting summary

This project provides tools and knowledge to support local public and private actors in the transition towards more sustainable agricultural production (beef, milk, grains, timber, pepper, fruits, etc.), and natural resources conservation, through enhanced landscape governance in the “Green Municipality” of Paragominas, State of Pará, in the Brazilian Amazon. This research will foster innovative partnerships between the public and private spheres and help integrate production options within the cattle, timber and agricultural sectors, small and large farmers. Ultimately, this project aims to reduce deforestation and greenhouse gas emissions through the development of more intensive production and nutrient recycling.

This project supports multi-stakeholder dialogue at municipal and state levels, also leading to greater social inclusion. Local multi-stakeholder platforms will receive data, analysis and options needed for more informed policy decision-making. The research will also facilitate knowledge exchange between local stakeholders and public agencies at state and federal levels, as well as business platforms supporting sustainability in the Brazilian Amazon.

## The project will:

* Assess the strengths and weaknesses of the “Green Municipality” to support low-carbon cattle ranching in the context of broader trends towards more sustainable agriculture.

* Conduct assessments of the economic and technical performance of different innovative production systems and their potential to support sustainable ranching and other systems and practices, which will help to realize food security and mitigation targets.

* Establish a monitoring system to analyse agriculture and landscape dynamics with a focus on land use change, production efficiency, eco-system services, and socio-economic benefits.

## Expected Outputs

* Municipal multi-stakeholder platform

* Identification of low carbon cattle ranching practices with documentation based on literature review and field observations

* Experiments in demonstration farms and local dissemination actions

* Reference guidelines on best economic and technical production systems and practices

* Spatial database including biophysical and socio-economic information, and identification of missing information and strategy to complete and manage the dataset

* Monitoring system for assessing land use, production efficiency, eco-system services, and socio-economic benefits, and trade-offs

<footnote n="1">1. CIFOR, Indonesia.</footnote>

<footnote n="2">2. CIRAD, UMR SELMET, F-34398 Montpellier, France.</footnote>

<footnote n="3">3. University of Rio Grande do Sul, Program on Rural Development (PGDR), Brazil.</footnote>

<footnote n="4">4. CIRAD, UPR GREEN, F-34398 Montpellier, France.</footnote>

<footnote n="5">5. Museu Paraense Emílio Goeldi (MPEG), Brazil.</footnote>
* Analysis on the “Green Municipality” model to support transitions to sustainable beef cattle and landscape management and ways forward

* Public-private arrangement to advance sustainable cattle beef and agricultural production under a territorial-based certification system

## Expected Outcomes

* Develop improved technical and institutional options for the expansion of sustainable beef cattle ranching in the Eastern Amazon within a broader transition to more sustainable agriculture.

* Develop a monitoring system combining GIS tools and social control (peer to peer), like an alternative to the actual top-down system.

* Develop a multi-stakeholder platform in Paragominas agreement on a road map and common social, economic, and environmental targets to support sustainable beef production, within broader perspectives on agricultural development.

* Improved land-use and local development planning, thanks a higher integration between agricultural activities and environmental conservation, a better consensus between social groups.

## Expected Impacts

* Increase the territorial security, and restore his attractivity for investors of private and public sectors. The direct and indirect benefits of this security and attractivity, are a new way to incentive local actors for improving their practices, in terms of production, conservation, governance.

* Direct engagement in participatory action research with municipalities' agricultural and environmental decision makers, linked to state and federal level public agencies, will support adjustments of jurisdictional policy.

## Partners

The Center for International Forestry Research (CIFOR) is leading the project. CIFOR is working with Agricultural Research for Development (CIRAD), Brazil's Ministry of Agriculture, Livestock, and Food Supply (EMBRAPA), Museum Paraense Emilio Goeldi (MPEG) and public administration of the Municipality of Paragominas and Redenção in the South of Pará State.
Session 2

Dairy industry sharing sustainable development goals
Emphasizing the diversity of development pathways
# Acknowledging social negative loops in inclusive business: an Egyptian case study of dairy sourcing

Annabelle Daburon<fnref n="1" />, Veronique Alary<fnref n="2" />, Ahmed Ali<fnref n="3" /> and Vincent Martin

Agri-chains have a key role to play to progress towards more sustainable future in accordance with the recently adopted Sustainable Development Goals (SDG). Societies are increasingly aware of the many services they provide, for example: food supplies, employment, creating landscapes, energy sources, etc. Agri-chains are evolving rapidly, linking diverse actors from the public and private sector, as well as civil society at multiple levels, from local to global. In this context, an increasing number of inclusive businesses (IB) are emerging, particularly in countries with high economic growth potential. According to the United Nations Development Programme, an IB is a: “*Commercially viable model that benefits low-income communities by including them in a company's value chain on the demand side as clients and consumers, and/or on the supply side as producers, entrepreneurs or employees*” (UNDP, 2008). These initiatives are often promoted in association with Non-Profit Organizations (NPO) and claim to develop economic, as well as social values. Major agro-industries, including transnational groups, are flocking to emerging countries where demand trends offer promising prospects. In those ones, the majority of agricultural production still comes from family farming and rural poverty remains extremely common. Although large companies rely on global markets, they implement strategies to promote the use of local supplies in order to reduce their vulnerability to world prices instability. They promote large or mega-farms and/or try to link up with local family farms, often associated with NPOs. Both NPOs and companies aim to ensure that the quality and quantity of products collected meet industrial requirements. Although this type of project represents numerous opportunities for companies and NPOs, as well as the community hosting the project, it also involves risks for businesses and sustainability. These hybrid partnerships are a new phenomenon and their local benefit is still questionable, especially regarding the social dimension of sustainability (Bolwig, 2011). From a development research perspective, converting IBs into more powerful sustainable development tools involves a number of challenges, including identifying the links between the IB's social impact and business activity (Porter *et al.*, 2011). Indeed these connections can be found along an agri-chain at macro-level (labels that allow businesses to access new global markets), meso-level (local authorities favour businesses that create local employment) and micro-level (job creation in a family stimulates a positive brand image among potential consumers). Our analysis focuses on the meso- and micro- levels.

Besides economic value creation for the promoting company, an IB model is designed to reach certain socio-economic impacts (direct positive impacts) on community members. It will also generate indirect impacts: positive or negative. These can generate in return feedback on the business performance (positive or negative) (Sundkvist *et al.*, 2005). We will focus our analysis on the loop constituted by socio-economic negative indirect impacts (SENII) generating in return negative feed-back on business activity at local level (Figure 1). Acknowledging this negative loop in the management strategy at the local level could both improve business performance as well as limit negative socio-economic impacts on the community hosting IB models. Ultimately, it encourages companies engaged in IB to adopt strategies that integrate better social concerns at meso and micro levels.

We examine the case study of an IB in Egypt. The potential for growth in the Egyptian dairy market is tremendous. A transnational company, specializing in dairy products, entered the market in 2006 and by 2016 was one of the leading companies in the national yogurt market. It owned two plants, a mega-farm (4000 dairy cows) and collected milk from dozens of large dairy farms on new reclaimed land. In 2011, the company initiated a milk collection project among small-scale farmers in association with an invest-

<footnote n="1">1. CIRAD, UMR SELMET, F-34398 Montpellier, France.</footnote>

<footnote n="2">2. CIRAD, UMR SELMET, Rabat, Maroc.</footnote>

<footnote n="3">3. Animal Production Research Institute, Agricultural Research Center (APRI-ARC), Egypt.</footnote>
ment fund and an international NPO. By promoting milk collection centres (MCC) in small villages within the framework of local public farmers' associations, the company sought to secure its supply of raw material while to contribute to rural community development. Producers had mixed crop-livestock production systems with limited production assets (< 2ha and one or two dairy animals). In 2016, 12 MCCs were operating mostly located in Middle Egypt. Since 2014, the project has been the subject of an in itinere "impact study" regarding socio-economic and technical aspects. Data were collected at farm, community and supply chain levels in a total of 5 villages over 3 years (with and without MCC). One of them is the case study village of Halabeya. It has been involved in the project longer than the other villages (one of the first MCC opened in 2011) and project promoters consider it to be one of the best business models. Data related to this village will mainly feed our analysis. Semi-directed interviews, focusing on socio-economic impacts of the MCC, were conducted every year on an original sample of 28 farmers from Halabeya, 9 milk independent collectors from the area and 2 MCCs (Halabeya and Nowera at a distance of 10km). Three participatory workshops were also organized between May and June 2016. From 9 to 15 key stakeholders related to dairy sector were gathered (farmers, veterinary, agricultural cooperative employees and managers, MCC staff members, milk trader and a feed trader) to identify project impacts on the local community. On site discussions and observations completed our data collection and were used in a qualitative approach. Inductive process led to negative loops identification. SENII, as a decreased business activity (profit creation, volume collected or customers...), decreased human capital, or credit access were investigated. Feed-back on business image, milk supply (quantity and quality) and services attractiveness were considered. Our results are presented as follows: first we describe the business model and its impact pathway as conceived by the project promoters; we provide a brief description of the impacts, as well as the main issues involved; then, we identify the negative social externalities falling out of the scope of project managers. The resulting negative feedbacks on business activity are then reviewed. On this basis, we suggest ways of integrating the negative loops into the management strategy.

In theory, the MCCs were supposed to collect cow milk from small farmers to satisfy company requirements (milk quantity and quality). In exchange for setting up the MCC and providing agricultural services (training, low cost feeds, etc.), a 5-year contract was established to ensure that the MCCs delivered exclusively to the company. NGO was in charge of project implementation. The company offered prices that were supposed to generate profits that the MCC could reinvest in agricultural services for local suppliers. For the company, the aim was to develop lasting commercial partnerships. The project's impact pathway targeted three levels of intervention: farms, supply chain and community. By providing funding to set up the MCC and quality expertise, promoting training for suppliers and staff members, and by relying on NGOs and the cooperative social networks, the company expected to improve milk quality and quantity, increase farmers' incomes, create jobs and empower women. MCC management was supposed to become autonomous. Several objectives have been achieved in Halabeya. Milk quality has improved according to both local farmers and project promoters. Milk prices improved locally and, thus, increased farmers' incomes. However, the income generated by milk remains marginal within the family's global economy. Jobs have been created within the MCC and some women have been employed. The project helped diversify local marketing channels and, thus, increased the resilience of small local producers. But in 2016, the MCC economic model was extremely precarious, with a gradual decline in the quantity of milk collected over the years.

During the impact assessment, we observed several negative loops that affected MCC business performances. Some women rented milk skimming devices to other women before MCC, playing a key role in the local social network. They decreased their business activity as the MCC collected milk among their customers. In return, these influent women conducted smear campaign against the MCC within the community. Similarly, some independent milk collectors' activities were threatened at the opening of the MCC (losing some of their suppliers and decreasing their profit to compete with MCC prices). In reaction, as they were not acknowledged in the MCC business model, they "defended" their activity by threatening in return MCC activities. Raising milk prices to challenge MCC prices and milk collection,
altering milk to spoil MCC collect, smear campaign against the project were some of their “violent”
reactions. MCC had difficulty to keep a sufficient pool of farmers and milk adulteration resulted in
dead loss weakening the precarious economical balance of cooperative. Moreover, these milk collectors
played a key role in the agricultural activity by providing financial services to farmers. By selling to
MCC, farmers were cut off of one of the main local financial services. This limited the farms’ capacity
to invest, including in high quality feeds or high quality dairy animals, going against theoretical project
impact pathway. Similarly, local feed retailers were threatened by punctual MCC feed sales to their
suppliers. These key actors in the agricultural activity conducted smear campaign against MCC’s feed
quality, deeply challenging the interest of farmers in these services and by this challenging the attrac-
tiveness of MCC model largely based on agricultural services promotion. The most virulent reactions
happened in the early months of MCC activity.

If a manager had to consider the negative loop when making decisions, this would imply: looking for
this loop across the entire community in a dynamic process. It appeared that the early stages of the busi-
ness implementation are crucial. Thus preventing negative loops creation and strengthening appear to be
a key factor to ensure success of IB. One prerequisite, during the early stage of business model concep-
tion could be the involvement of a wide range of community members to assess the potential negative
loop and adjust the business model to the local context following shared value logic (Porter and Kramer,
2011). Promoting iterative management mechanisms appears also essential (Porter et al., 2011). To
properly acknowledge negative loops evolution, managers have to collect this information on a dynamic
basis. One solution could be to identify key actors in the community who can collect and channel infor-
mation on negative loops, from the community to local managers. Using the recent research of Banerjee
and his colleague on the identification of individuals able to diffuse best information in a community
could be interesting (Banerjee et al., 2014). Are the individuals able to spread information in a commu-
nity also the best ones to collect it? Exploring this question would be valuable furture researchs.

References

Banerjee A. V., Chandrasekhar A., Duflo E., Jackson M. O. "Gossip: Identifying Central Individuals in a Social Network". *SSRN Electronic Journal* [En ligne]. 2014. Disponiblesur:<http://dx.doi.org/10.2139/ssrn.2425379> (consulté le 2 septembre 2016)

Bolwig S., Ponte S., Du Toit A., Riisgaard L., Halberg N. "Integrating Poverty and Environmental Concerns into Value-Chain Analysis: A Conceptual Framework". *Development Policy Review*. 2010. Vol. 28, n°2, p. 173-194.

Porter M. E., Hills G., Pfitzer M., Patscheke S., Hawkins E. "Measuring shared value". *How to Unlock Value by Linking Social and Business Results*. 2011. p. 10–11.

Porter M., Kramer M. “Creating shared value”. *Harvard business review*. 2011. n°89, p.6277.

Sundkvist Å., Milestad R., Jansson A. "On the importance of tightening feedback loops for sustainable development of food systems". *Food Policy*. April 2005. Vol. 30, n°2, p. 224239.

UNDP. *Creating value for all: strategies for doing business with the poor*. New York, United States of America: United Nations Development Program, 2008.
# The transition of animal farming in Vietnam : from semi-subsistence to commercial systems

Nathalie Hostiou<fnref n="1" />, Khanh Pham Duy<fnref n="2" />, Jean-Daniel Cesaro<fnref n="3" />, Huyen Le Thi Thanh<fnref n="4" />, Guillaume Duteurtre<fnref n="3" />, Dinh Nguyen Tien<fnref n="2" />, Pascal Bonnet<fnref n="3" /> and Sylvie Cournut<fnref n="5" />

Since Doi Moi economics reform in the late 1980s, Vietnam's agriculture is changing from semi-subsistence to commercial production systems. Growing domestic demand for food stuffs has pushed Vietnamese farmers to increase their level of productions, especially for animal products. Livestock in Vietnam has been particularly affected by those changes. On the production side, livestock industrialization can be characterized by 4 major dimensions:

(a) Increase of animal production, (b) intensification of production systems; (c) up-scaling of farms, and (d) specialization/diversification. The aim of this study is to show and characterize the industrialization ie the evolution of livestock production from subsistence with animals for "animal power/ draught animal" to "production for consumption" for these 4 dimensions, using literature review and national data base.

Since 1994 animal production has increased at national scale. From 1994 to 2011, the number of agricultural and rural households has increased from 12 to 16 millions, but the number of households with animals (one animal and more) has decreased from 10 to 9 millions. Different trends according animal species were observed. The number of animal per farm has also increased by + 100% for pig production and + 10% for dairy production.

Vietnam is now facing the challenge of animal intensification with better animal technical performances and higher productivity (8 to 12,3 piglets per sow for example) due to improved feed, buildings and equipment, and exotic breed. Milk productivity of dairy cattle in Vietnam is still limited in comparison with neighbour countries. However, the milk yield and the total milk output have been considerably improved in few current years. In livestock farms, more and more animal feed is produced by feed industries. For 2013, Vietnam had imported 5.84 million tons of animal feed and ingredients, representing 48% of the raw material (corn, Soya bean and wheat) needed to satisfy the demand. From 2001 to 2015 animal feed produced by companies increases from 21% to 66%.

At present, small-scale production predominates. However in 2008, the Government adopted a new National Livestock Development Strategy to 2020. Priority was given to large-scale farming system and livestock production is expected to scale up. This new orientation was confirmed and expanded in 2014 by the adoption of the "Restructuration plan of the livestock sector towards enhancing added value and sustainable development". This new plan aims at encouraging a rapid scaling-up transition: instead of having 20,000 small-scale dairy farms (of 5 cows on average) that produce 900 tonnes/day, which was the situation in 2010, the country aims at having only 2,000 large-scale farms (of more than 20 cows) which will produce 2,500 tons/day by 2020. The number of cows raised in large-scale farms of more than 1,000 cows, which was insignificant in 2000, is expected to reach 1/4th of the national herd. Since few years, some dairy companies (Vinamil, TH Milk, Duchtlady) have built their own large-scale farms, especially in the north of the country.

Diversification of activities remains important in Vietnamese farms. Revenue of rural household is composed by a diversity of agricultural and non-agricultural activities. Livestock activity represents 13%

<footnote n="1">1. INRA, France.</footnote>

<footnote n="2">2. RUDEC, Vietnam.</footnote>

<footnote n="3">3. CIRAD, UMR SELMET, F-34398 Montpellier, France.</footnote>

<footnote n="4">4. NIAS, Vietnam.</footnote>

<footnote n="5">5. VetAgro Sup, France.</footnote>
of the revenue in 2013 (and the contribution was quite stable since 1993). Opportunities for non-farm
employment and other non-farm income sources will likely compete for household labor available for
animal raising – an issue for scaling up

A huge industrialisation trend of livestock sector occurs in Vietnam, but with different features were
observed according to regions (North/South; highland/lowlands).
# Stabilising producers' conditions to access market through cooperative institutional innovations: the case of India

Marie Dervillé<fnref n="1" />, Claire Aubron<fnref n="2" /> and Bruno Dorin<fnref n="3" />

## Rational for the research

India has since the late 1990s the world's largest milk producer, with 135.6 million tons in 2013.

This leading position is the result of continued growth in milk production (+ 4% / year) since the 1970s. It is at least partly due to the “white tide operation” (Operation Flood), launched by the National Dairy Development Board (NDDB) in 1964 (Alary, 1999; Dorin and Landy, 2002). The program was based on an original use of food aid: the sale of milk powder donations to domestic urban populations to finance structuring a wide cooperative network on the model experienced by AMUL in Gujarat, north-West country. This cooperative model is based on the articulation of three complementary structures: i) the village cooperatives responsible for the collection, ii) the Unions processing the milk at district level and iii) the federation marketing the products produced in the state. Ten years after the launch of this operation, 13270 village cooperatives were created. They are 162186 in 2013 according to the NDDB. The structuring of these cooperatives and the associated dissemination of inputs and services have supported the development of production, increased the surplus that can be collected and sold on the market and provided an additional income for families. Cooperatives have collected 12.5 million litres of milk in 2013, i.e. a little less than half of the formal circuit. Although their relative share decreases, self-consumption and informal channels, in particular in the outskirts of cities, remain the cornerstones of the Indian dairy industry amounting to 40% of the production each.

Beyond its growth, the inclusiveness of the Indian dairy sector appears as a major achievement. Three indicators can be mentioned: i) the partial spatial complementarity between the white and green revolutions; ii) the increase of per capita dairy products availability (from 120 grams per day in 1970 to over 300 today, which is close to the world average) and iii) market and services access facilitated even for very small farms (average herd of less than 3 animals) including with restricted access to land (70% of cattle and buffaloes belong to the farms with less than one hectare of cultivated land, some of them being landless).

India, little present on international markets and protected by a growing inner market isn't really exposed to the world price instability. Furthermore, having a low global level of support to its agriculture, the signing of the GATT agreements in 1994 had little effect on the level of protection of the Indian market (Dorin and Landy, 2002). Nevertheless, liberal reforms in India since the 1991 financial crisis and, especially the end of the Milk and Milk Products Order in 2003, gradually changed the functioning of the sector: criteria for private companies to enter the sector were relaxed and cooperative exclusive zones were lifted, leading to the development of the private sector. Private companies have positioned themselves on high value added segments and entered into competition with cooperatives. In addition, agriculture and agro industries, including food distribution, have been opened to FDI in June 2016. Today the growth in private collection is faster than that achieved by the cooperatives. Producers companies following a juridical status created in 2003 are also developing rapidly (Alagh, 2007; Singh and Singh 2013). How to explain this trend? Do financial and decision-reactivity provides a competitive advantage to private and producers companies? This could be an explanatory factor especially as the

<footnote n="1">1. École Nationale de Formation Agronomique (ENFA), F-31326 Castanet-Tolosan, France.</footnote>

<footnote n="2">2. Montpellier SupAgro, F-34062 Montpellier, France.</footnote>

<footnote n="3">3. CIRAD, UMR CIRED, F-75116 Paris, France.</footnote>
Indian cooperatives are constrained by the strong and often counter productive involvement of Admin-
istration (Dorin and Landy, 2002; Singh and Singh 2013). Is this trend risky for the inclusive model of
development of the Indian dairy sector? Are PCs inclusive? These questions arise especially as special-
ized farms and larger (ten animals) based on irrigated forages grow presumably changing competitive
relations for small and very small dairy farms.

**Conceptual framework and methodology**

The main research studies on the Indian dairy sector are disciplinary and focussed on a particular scale of analysis (country, farm, herd) (for example: Singh, 2000; Sharma et Gulati, 2002; Patil, 2006; Birthal et al., 2008; Kumar et Staal, 2010). Nevertheless, several studies have highlighted the relevance of multi-scalar approach and interdisciplinary work to analyse transition phases, as sector dynamics rest on vertical and horizontal interactions between various production systems (Dufumier, 2007; Aubron et al., 2009; Geel, 2009; Dervillé et Allaire, 2014).

In this perspective, to shed light on the microeconomic impacts of macroeconomic and sectorial
developments, we adopt a systemic approach and elaborate a multi-actor and multi-level framework,
combining agrarian-diagnosis and markets institutional analysis. Considering that sectorial dynamics
result from individual but also collective innovation strategies as well as from public action, the aim
of the communication is to shed light on the coordination devices that frame conditions to access dairy
markets. How are quality criteria, volume, prices and bonus set in the traditional cooperatives? Do they
really contribute to the inclusiveness of the Indian dairy sector development? Are they threatened by the
liberalisation? What are the conditions to access market in PC?

The work of characterization of structural (mobilization of land, irrigation, livestock, labour, equip-
ment level, etc.) and institutional (rules governing the establishment of dairies, rules payment for milk
quality...) changes is based on an analysis of the literature (journals, reports, legislation) and thorough
interviews with the different actors of the sector (farmers, groups of farmers, collectors, cooperatives
and private dairies, public, consumers) in the state of Gujarat in particular.

**Main results**

The agrarian diagnoses conducted in contrasting regions of India (Gujarat and Bihar) has clarified that the dairy farms development trajectories result from the specific pace of implementation of dairy and land policies and dissemination of technical innovations such as water access (Aubron *et al.* 2015). The spatial differentiation of these paths suggests an effect of the biophysical environment, the productive structure, the local institutions and the presence of cooperatives on the rhythm and way of development of the diary sector.

The second set of results concerns cooperative organisational innovations and highlights the role of their
hybrid governance on the sustainability of the model.

Beyond the three stages that seem possible to reconcile economic efficiency and inclusion, the cooper-
ative model, under the benevolent guidance of the NDDB, appears as a vast network of complementary
structures: i) the “Mother dairy” founded in the launch of the operation flood not only supply the cities
with liquid milk but also play an essential role in regulating the production via the production and
storage of the powder; ii) cooperatives and their cooperation, notably with the support of well-estab-
lished cooperatives (which ranked first AMUL), which play as an incubator providing expertise and
brands until new cooperatives gain autonomy; iii) Villages cooperatives appear a vector of local develop-
ment, providing training, social regulation and services, especially with the development of village shop;
iv) development of feed manufacturing plants and their distribution at cheap rate enhancing the profita-
bility of production and finally v) the system of rules ensuring the coherence of this hybrid network. If
the Indian government does not directly support milk prices, it seems that the cooperatives, with their
milk and input prices setting system, play a role in stabilizing the dairy market (at least in Gujarat where
they play a very pivotal role).
Finally, the last set of results concerns the cooperative adaptive strategy to the strengthening of competition; it appears to be institutional. In 2003, the private companies legislation was amended with the addition of a chapter on Producers' company. Also supported by the NDDB and Mother Dairy, the creation of PCs in areas where traditional cooperatives haven't emerged or are inefficient aim to balance the growth of private enterprises. PCs are only open to producers and remain on the mutualist principle of one-man one vote, but, compared to traditional cooperatives, their governance is more business oriented (the role of patronage is strengthened in terms of financial incentives and representativeness, milk collection and processing is delegated to a private operators, most of the transactions are computerised to increase transparency...). In addition, in order to strengthen their competitiveness, PCs can operate at national level, have an access to more diverse financial sources, have the obligation to create reserves and may create subsidiaries. They are, however, unlike cooperatives, taxed by the state.

In a context of global instability which tends to shift the risk on the weakest link of the chain, mainly producers (Hueth and Marcoul, 2003; Jongeneel et al., 2010), the originality of the Indian cooperative model and its renewal offer interesting perspectives in terms of

## References

Alagh, 2007, On producers company, http://www.pradan.net/images/news/profykalagh.pdf

Alary V., 1999. Le système coopératif laitier en Inde à l'épreuve de la libéralisation. Économie rurale 252 : 35-41

Aubron C., Lehoux H., & Lucas C. (2015). Pauvreté et inégalités en Inde rurale. Réflexion à partir de deux diagnostics agraires dans l'État du Gujarat. *EchoGéo*, (32).

Aubron C., Cochet H., Brunschwig G., Moulin C.H., 2009. Labor and its productivity in Andean dairy farming systems: a comparative approach. Hum. Ecol. 37: 407-419

Birthal P.S., Jha A.K., Tiongco M.M., Narrod C., 2008. Improving farm-to-market linkages trough contract farming: a case study of smallholder dairying in India. IFPRI Discussion Paper, No. 00814, IFPRI, Washington D.C.,Washington.

Dervillé M., Allaire G., 2014. Change of competition regime and regional innovative capacities: Evidence from dairy restructuring in France. Food Policy 49 (1): 347-360

Dorin B., Landy F., 2002. Agriculture et alimentation de l'Inde : les vertes années (1947-2001). Éditions Quæ, Versailles.

Dufumier M., 2007. Agriculture comparée et développement agricole. Revue Tiers Monde. 611-626

Geels F.W., 2009. Foundational ontologies and multi-paradigm analysis, applied to the sociotechnical transition from mixed farming to intensive pig husbandry (1930-1980). Technology Analysis & Strategic Management, 21(7) : 805-832

Hueth B., & Marcoul P. (2003). An essay on cooperative bargaining in US agricultural markets. *Journal of Agricultural & Food Industrial Organization,1* (1).

Jongeneel R., Berkum S. van, Bont C., Bruchem C. van, Helming J., Jager J., 2010. European Dairy Policy in the years to come. Quota Abolition and competitiveness. The Hague, LEI, part Wageningen UR: 58p.

Kumar A. et Staal S.J., 2010. Is traditional milk marketing and processing viable and efficient? An empirical evidence from Assam, India. Quarterly Journal of International Agriculture 49: 213-225

Patil, 2006. Dynamics of livestock development in Gujarat, India: experiences of an Indian NGO.Wageningen University Research, The Netherlands, Wageningen. 170 p.

Sharma V.P. et Gulati A.P.P., 2002. Trade liberalization and Indian dairy industry. CMA monograph no. 196, 283p.

Singh K., 2000. Co-operatives and rural development in India. IRMA 17 research paper. 57p. Singh S., Singh T., 2013, Producer Companies in India: A study of organization and performance, CMA n°246, 118p.
# Are investments of milk corporations in developing countries likely to promote socially sustainable business? Lessons learnt from West Africa and South-East Asia

Guillaume Duteurtre<fnref n="1" /> and Christian Corniaux<fnref n="1" />

In emerging and developing countries, many international corporations are investing in dairy processing industries. Some of those businesses support the development of milk powder imports, resulting in upgrading the local value chains but also resulting in direct competition with local milk producers. Some other firms invest in local milk sourcing, and contribute to the local development of the dairy industry as a whole. In that context, multi-national dairy corporations are increasingly questioned on the impact of their business on sustainable development of the dairy industry. Based on 2 complementary field studies conducted in West-Africa and in South-East Asia, we assess in which conditions those new investments from dairy business firms might result in socially sustainable businesses.

The dairy profiles of developing and emerging countries refer primarily to their specific historical trajectories. Most South-East Asian countries are relatively “new” milk producers with an emerging sector highly connected to milk marketing schemes. Most farms are commercial farms that started milk production in the last 15 years, with a majority of them being very small. In Indonesia, the average size of dairy farms is around 4 dairy cows; in Vietnam, it is around 6 dairy cows. On this base, milk production has risen tremendously in the region. On the opposite, West African countries are traditional dairy producers, with most of the milk being consumed locally and very little being collected for processing. Apart from a small number of commercial dairy farms located around the main cities and raising specialized dairy cows, most West-African producers are agro-pastoral households. They raise multi-purpose animals producing around 1 litre per day and per milk cows, but with a very high capacity to cope with to the local agro-climatic environment. Those farms do participate in traditional dairy marketing channels by selling fermented milk, butter or raw milk on rural markets or in the vicinities. Those marketing strategies might vary according to the herd mobility on short or long distances. But they lack capacity to participate to formal milk collection schemes connected to processing industries. In West-Africa, cow milk production is estimated to 1.5 million tons, but less than 5% of this milk is collected by dairy processing units.

In this context, milk is recognized as a “social” product in both types of those emerging and developing countries. And local dairy policy programs have been highly concerned with supporting rural livelihoods. In East Asia, dairy policies have focused on small farms support programs through credit, trainings and cooperative promotion. And in West Africa, social oriented dairy development policies have focused on developing rural milk collection schemes through networks of “mini-dairies”.

However, this global context is changing rapidly. New international trade agreements have brought increased competition from imported powder milk. And more and more domestic dairy development programs are oriented towards large farms that are more eager to provide milk to large processing units. Those shifts in international and domestic policies have resulted in less interest for smallholders. And this new vision, focused on promoting a modern dairy industry with lower impact on rural development, has been strongly challenged by international NGOs and producers organizations. In this situation, there is a need to clarify the role of international firms in the development of the milk sector. In particular, the social impact of the international dairy businesses must be assessed with attention.

Built on several research programs conducted in West Africa and South-East Asia, we identify 2 main inclusive business models involving international firms in those regions.

<footnote n="1">1. Cirad, UMR SELMET, F-34398 Montpellier, France.</footnote>
The first one relies on large-scale industries that develop their sourcing from local milk in addition to powder milk. Those units justify their local milk sourcing strategy by expected economic benefits (in particular regarding volatility of powder milk prices) or by for specific processing lines that valorize locale milk (cheese, white cheese, butter, ripened cheeses or high quality milk).

## Example of firms collecting fresh milk in East Asia and West Africa

<table><thead><tr><td>Firms</td><td>Country</td><td>Milk collection in litre/day (year)</td><td>Specific processing lines</td></tr></thead><tbody><tr><td>IDP</td><td>Vietnam</td><td>30 000 (2014)</td><td>Certified “local” UHT milk</td></tr><tr><td>Vinamilk</td><td>Vietnam</td><td>500 000 (2014)</td><td>UTH milk “100% fresh milk”</td></tr><tr><td>Danone Dairy Indonesia</td><td>Indonesia</td><td>60 000 (2015)</td><td>Lactic acid beverages</td></tr><tr><td>Mali-lait</td><td>Mali</td><td>5 000 (2015)</td><td>White cheese</td></tr><tr><td>Kirène</td><td>Senegal</td><td>800 ? (2015)</td><td>UTH milk “from local cow”</td></tr><tr><td>Danone / Laiterie du Berger</td><td>Senegal</td><td>4 000 (2015)</td><td>Fermented milk</td></tr></tbody></table>

The second inclusive business model relies on industries involved in corporate social responsibility projects to support their local credibility, but with no direct relation between the business strategy and the local milk sourcing. In these situations, the investments of the firm in supporting local communities are not restricted to milk producers. They might concern any community that represents an eligible target for the funds used for local development projects. Those programs are most of the time managed by NGOs and are limited to a restricted period of time. The impacts of those “social projects” do not directly affect the business of the firm (though some of the programs might concern milk producing communities) but can still have an impact on the ground. They also affect the reputation of the firm.

<table><thead><tr><td>Corporation</td><td>Country</td><td>Type of CSR actions</td><td>Relationship with milk producers</td></tr></thead><tbody><tr><td>Vinamilk</td><td>Vietnam</td><td>Scholarships, community development</td><td>Few</td></tr><tr><td>Sari Husada</td><td>Indonesia</td><td>Community development</td><td>Few</td></tr><tr><td>TH milk</td><td>Vietnam</td><td>Scholarships, community development</td><td>No</td></tr></tbody></table>

Aside with those initiatives of large scale firms, the dairy sector in emerging and developing countries is structured around a large number of small and medium enterprises (SMEs). Some of those small-scale dairy companies are involved in milk collection, and they play a significant role in securing outlets for producers. However, those SMEs have very few relations with international firms.

The new investments of private corporations offer opportunities to promote sustainable development of the local dairy industry in the developing world. In the future, new partnerships between producers' organizations, private firms and NGOs could support the development of inclusive dairy value chains. The Round Table organized on 3-4 November 2016 in Abuja (Nigeria) by the partners of the “Milky Way Alliance” is a good example of such initiatives. Investments in cooling centres and other milk collection facilities, when managed in a sustainable way, could foster the social role of international private firms in those fragile rural economies.

## References

* Corniaux C., Duteurtre G. et Broutin C., 2014. Filières laitières et développement de l'élevage en Afrique de l'Ouest : L'essor des minilaiteries, Karthala, Paris, 229 p.

* Duteurtre G. and Pannier E., 2016. “Local trajectories in the Vietnamese transition to market economy: Alliances between firms, farmers and government officials in the livestock sector”, communication to the SASE 28th Annual Conference, SASE (Society for the Advancement of Socio-Economics), June 24-26, 2016 – University of California, Berkeley, 24 p.
<figure><img src="image_5.png" /></figure>
## Session 3

*Climate Smart Cocoa: the emerging case for public-private partnerships in response to deforestation and climate change*
# Climate Smart Cocoa: building private sector engagement and investment in response to deforestation and climate change

Ethan Budiansky<fnref n="1" />

## Background

Cocoa is an important agricultural commodity for rural communities and the private sector. Globally, roughly 50 million people are involved with and depend on the cocoa value chain for their livelihoods. Nearly all cocoa producers grow other crops, including food crops and timber, which support livelihoods and non-cocoa industries. Cocoa plays a special role in West Africa and has critical implications for food security, economic growth and environmental sustainability. West Africa accounts for over 70% of global cocoa output. The crop supports an estimated two million households, most of them small holders with three hectares or less. Côte d'Ivoire, in particular, produces 40% of global supply representing 15% of GDP and employing 5% of Ivoirian households. For Côte d'Ivoire and Ghana, the health of the cocoa sector has broader implications for the national economies and budgets. Global businesses source over $6 billion worth of cocoa from the region annually.

Central America's cocoa sector is significantly smaller, but production has been increasing rapidly and the region is of growing interest for the private sector – particularly small and medium enterprises (some locally based, and others international). Central America is where cocoa was first cultivated and cocoa continues to play an important role in the local culture.

Changing weather patterns associated with climate change threaten the reliability of farmers' yields and thus their incomes, the national economies of the main cocoa producing countries, and the sustainability of the cocoa sector as a whole. It has an impact on the whole farming system including the other components of the agroforestry system and food crops. The impact on food crop production will have a greater negative impact on women farmers as they are responsible for 85% of food crop production in cocoa growing areas in West Africa. Recent studies show that land suitable for cocoa production, particularly in Ghana and Côte d'Ivoire, will decrease significantly in the near future as a result of climate change.

Historically, cocoa expansion has played significant role in deforestation in West Africa. With increasing demand for cocoa and climate change reducing current land suitable for growing the crop, future cocoa production threatens the remaining forests, particularly in protected areas. There is evidence that cocoa farms and farmers are already encroaching on numerous protected areas in Côte d'Ivoire, the number one producer of global cocoa. Deforestation not only threatens biodiversity but over all cocoa sustainability and farmer livelihood in the region.

## Role of the Private Sector

The private sector plays an integral part in the long-term sustainability of the cocoa sector, and the private sector is the natural entry point to reaching smallholder farmers, few of whom are organized into cooperatives. In the past 10-15 years, the private sector has been especially concerned with the sustainable growth of the cocoa sector to meet future demand. The cocoa industry is already committed to one of the pillars of CSA-sustainably increasing agricultural productivity and smallholders' incomes. While modest progress has been made in improving overall production, the sector's long-term productivity, sustainability and impact on forested areas, particularly in light of a changing climate, are in question.

<footnote n="1">1. World Cocoa Foundation (WCF), Washington D.C. 20005, USA.</footnote>
The private sector often provides technical assistance to farmers in many countries – both directly through their own agronomists and indirectly through support of public extension and NGOs. The private sector also engages with governments to influence national strategy on cocoa sector development, and this engagement can be expanded to include climate change and deforestation. There are significant opportunities to leverage and optimize existing industry investments in cocoa sustainability with a view to adapting and building resilience to climate change among farmers and protecting forested and protected areas. However, up until now there has been little coordinated effort to do so. How the private sector deals with these issues has implications for food security, national economic growth, and the sustainability of production in these landscapes.

## Problem Statement

Climate change will impact the cocoa sector in West Africa and Central America with consequences for both the millions of smallholder farmers who grow cocoa, national economies of the main cocoa producing countries, and for the global cocoa/chocolate industry. As the global demand for cocoa increases and land suitability shrinks, the risk of deforestation grows. Action is needed to accelerate industry investment in measures that will enable farmers and the industry to adapt to climate change pressures. A landscape approach is particularly important given that cocoa is commonly grown in agro-forestry systems and its proximity to protected forest areas. Increasing the private sector's investment in CSA is integral to the long-term sustainability of the cocoa sector and the long-term livelihoods of the smallholder farmers who depend on this crop. However, the industry currently lacks a clear sector wide platform for developing a climate smart cocoa strategy and sharing risks in investing in solutions. Moreover, despite the recognized threat to cocoa sustainability posed by deforestation, there is a lack of a concerted effort across the cocoa value chain to address this threat.

## Program Overview

In May, 2016 WCF launched the Feed the Future Partnership for Climate Smart Cocoa with support from the United States Agency for International Development and WCF member companies. The vision of this Program is that smallholder farmers are empowered to use CSA practices that improve supply chain and ecosystem resilience. The overall goal of the Program is to increase private sector investment and engagement that promotes and supports the adoption of climate smart agriculture (CSA) among smallholders in cocoa-producing landscapes.

To achieve this goal, the Program will focus on two objectives. First, the Program will implement a shared cocoa/agroforestry strategy for addressing climate change threats to farmer livelihoods and ecosystems in cocoa-growing regions. In order to develop the strategy, the Program will carry out the following key activities:

* **Report on the Cocoa-Climate Landscape:** Build knowledge on the impact of climate change on the cocoa sector, and the current landscape of private sector investments in CSA.

* **Cocoa Agroforestry Market System Assessment:** Assess cocoa agroforestry market system to identify end-markets and market incentives for cocoa agroforestry products and key capacity building needs.

* **Governance/Structure for CSA Dialogue:** Support/establish multi-stakeholder CSA platform/work-group to begin strategic dialogue.

* **CSA Framework & Investment Plan:** Identify short-, medium-, and long-term investment actions for addressing climate change in the cocoa sector that includes investment opportunities in CSA pilots and innovations.

The second objective of the Program is to develop innovative pilots in CSA and use lessons learned from successful pilots to guide private sector investment in targeted CSA activities to improve resilience
for farmers, other supply chain partners, and ecosystems. This will be carried out by the following key activities:

* **Identification and Design of Pilots:** Identify and link sector actors with specific interest in piloting CSA relevant projects, to refine and design pilots.

* **Implementation of Pilots:** Facilitate implementation of CSA pilots.

* **Identification of Key Questions:** Identify key learning questions to guide pilot M&E and additional studies/analysis.

* **Lessons Learned:** Compile lessons learned from pilots in accordance with identified sector needs.

* **Promotion:** Refine and promote successful pilots to attract additional investment.

While the majority of the pilot projects will be identified through the Strategy component of the program, initial pilots have been selected to be started immediately. These include:

* Facilitation of market linkages to support agroforestry system development.

* Adaptation of training manuals and curricula to reflect relevant CSA information.

* Screening and breeding for drought and heat tolerant cocoa planting material.

Aligned with the Climate Smart Cocoa Program, WCF is exploring approaches to address deforestation along the cocoa supply chain. As part of this process, WCF is compiling learnings from other platforms and commodities, such as oil palm, to identify opportunities for the cocoa sector.
# An innovative public/private partnership for a sustainable transformation of the cocoa agri-chain in the Dominican Republic

Olivier Deheuvels<fnref n="1" />, Pierre Costet, Marianne Martinet, Patrick Jagoret<fnref n="2" /> and Stephane Saj<fnref n="3" />,<fnref n="4" />

Most of the world cocoa production (95%) comes from the 5 million smallholders and their families who depend upon cocoa cultivation for their livelihoods. In this non-mechanised cash-crop, cultivated on small surfaces between 0.5 and 3 hectares, production costs are mostly, if not only, generated by workforce and, to a lesser extent, by the use of fertilizers and pesticides. In the Dominican Republic, as in other producing countries, the increase of production is mainly the consequence of the extension of cultivated areas, and, to a lesser extent, of yield improvement. Government's strategies to improve cocoa yields traditionally rely on genetic improvement and capacity building on pests and disease management. Both strategies have proved to fail, in particular because of a lack of knowledge about actual farmer's practices. As in most producing countries over Africa, Asia and Latin America, these practices are ruled by strategies of diversification where timber and/or fruit trees are incorporated into the cocoa field and cultivated together with the cocoa trees on the same plot. This association of trees, whether they are perennial crops such as cocoa or timber/fruit species, with other annual and/or multiannual crops, form what is currently known as Agroforestry Systems (AFSs).

A recent study conducted by a public/private alliance has shown that the Dominican cocoa farmers are faced with four challenges of considerable importance:

* (i) the low education level and the ageing of cocoa farmers (72% are over 50 years old, and 80% have not studied further than primary school) and the loss of attractiveness of inland cocoa farming for the new generation that is more and more channelled by the tourism sector on the paradisiac Dominican beaches (only 20% of the cocoa farmers have their children actually living on the farm);

* (ii) the genetic heterogeneity of the ageing cocoa trees in the Dominican cocoa fields (56% are more than 25 years old), that partly explains the low yields. The lack of knowledge on this genetic diversity is also a major risk because the country will, probably sooner than later, have to face diseases having a high impact on production, such as Monilia (Moniliophtora roreri) or Witch's broom (Crinipellis perniciosa). There is no national selection program that would produce resistant or tolerant varieties, and farmers are not prepared to recognise the symptoms and have no technical knowledge for the control of these diseases;

* (iii) the high diversity of plant species associated to cocoa (more than 40 species have been inventoryed), the lack of efficient design in their repartition on the plot (cocoa tree's density varies between 100 and 1600 trees per hectare, along with the density of associated plants) and the farmer's lack of knowledge, both in shade design and management adapted to cocoa production and to the strong climatic risk associated to hurricanes in particular, makes it a striking necessity to implement innovative agroforestry systems with productive shade adapted to strong winds;

* (iv) the low production volumes and the important lack of connections to markets, especially for the products generated by the associated plants in the cocoa-based agroforestry systems, whether they are fruits or timber. More than 65% of the associated plants in the cocoa fields are producing edible fruits and only 1% is oriented to timber production. In addition, more than 30% of the associated plants are cultivated only because they provide shade to the cocoa trees, as it is the case for the

<footnote n="1">1. CIRAD, UMR SYSTEM, Lima 12, Peru.</footnote>

<footnote n="2">2. CIRAD, UMR SYSTEM, F-34398 Montpellier, France.</footnote>

<footnote n="3">3. CIRAD, UMR SYSTEM, F-34060 Montpellier, France.</footnote>

<footnote n="4">4. IRAD, Programme Plantes stimulantes, Nkolbisson, Cameroon.</footnote>
famous Dominican “Amapola” (*Erythrina poeppigiana*). Among the fruit producing species, only 6 (coffee, plantain, banana, avocados, mandarine and “sapote”) are sold locally by a small number of farmers. However, most of the fruits are either self-consumed or left to rot in the cocoa field. A better productive and multi-service shade design, but also improvements both in transportation and access to market are key issues to raise the income generated by cocoa and non-cocoa products in the Dominican agroforestry systems.

These conclusions led to a public/private partnership which primary objective is to design an innovative project for the cocoa agri-chain in the Dominican Republic. Based on the identification and quantification of the products generated by the Dominican coca-based AFS, academic centres, fair trade and organic certification agencies and French chocolate, pastries and oil factories are joining efforts with public and private research and development institutions under the CACAO FOREST program. This program offers to:

(i) **implement** participatory investigation to co-design and implement with farmers, local experts, the local agro-industry and investigation centres, innovative cocoa-based cropping system with locally improved cocoa varieties and productive associated plants with enough production for local markets. These innovative cocoa AFS will be tested in the field and compared to current and intensive full sun monoclonal models, following two protocols: (a) a plot creation demonstration network, created from non-forested land uses, and (b) a path change demonstration network, where current practices will be modified to innovative practices in a 4 years' time step-by-step process;

(ii) **create and strengthen** links between cocoa and non-cocoa products and local and international value chains that could absorb them, in particular in regions like touristic areas where the demand is strong. In particular, the Cacao Forest program will induce local businesses to assess opportunities for buying associated products from cocoa AFS and will encourage local cooperatives to promote such products locally and internationally;

and (iii) **combine** this market-oriented approach with an objective of environmental and social sustainability including the improvement of ecosystem services provided by these AFS, such as mitigation enhancement by increasing C-capture, biodiversity conservation, soil and water conservation, and pollution improvement.

The Cacao Forest project seeks transforming the cocoa agri-chain in the Dominican Republic by making the cocoa production an attractive alternative to the tourism sector for the next generation of farmers. This 6-years long innovative program started in the Dominican Republic in 2016. It is currently being adapted to Peru, and will be starting in Ecuador, Ivory Coast and Madagascar in the coming years.
# Is our chocolate melting away?

Christian Bunn<fnref n="1" />

Using the latest climate impact modeling technology and through a collaborative partnership with WCF, CIAT will present update and refined maps of the potential zones of impact of climate change on cocoa. The presentation will explain how through the use of technology and in partnership with national regulators in Côte d'Ivoire and Ghana, CIAT has been able to update and ground-truth data elements to arrive at more precise and predictable set of outcomes for the impacts. The presentation will demonstrate how multi-stakeholder processes can yield powerful tools for policy makes, industry and farmers.

## Introduction

The cocoa tree, *Theobroma cacao* originated from the wet forests of South America, very close to the equator. In general, for optimal conditions maximum temperatures should not exceed 32°C and not drop below 18°C. Temperatures below 10°C can be lethal. The cocoa crop requires high precipitation of about 1500 – 2000 mm throughout the entire year. In its natural habitat rainfalls are heavy and the temperature is relatively uniform. However, in its major production regions in West Africa production systems have been adapted to a climate with one or two dry seasons per year. Months with less than 100 mm are considered dry months (Lass and Wood 1985), as little as 60 mm is tolerated. While a dry season induces uniform flowering, overall yields are higher without such a period.

Because of the specific climatic requirements of the cocoa tree any change of climate is likely to have effects on its cultivation. Previous studies have investigated such impacts using spatially explicit suitability indicators for Ivory Coast and Ghana (Läderach et al., 2013) or a regression study for Ghana (Anim-Kwapong and Frimpong, 2005). The first study used the machine learning based species distribution modeling approach Maxent to model the impacts of climate change on the geographic distribution of suitable climate conditions for cocoa production. Losses of suitability were mostly projected towards the Savanna (Läderach et al., 2013) caused by increased dry season temperatures (Schroth et al. 2016). Multiple regression analysis of time series from the Tafo cocoa region in Ghana also suggested negative total production effects (Anim-Kwapong and Frimpong, 2005). The study linked a regression model with results of global climate models that projected reduced annual precipitation and higher mean temperatures to conclude that climate change will have negative impacts on cocoa production in Ghana.

However, these previous studies were limited in their use to guide adaptation. Läderach *et al.* (2013) present relative suitability changes that are difficult to interpret, other studies reported on regional drivers of impact that don't account for local variation (Schroth *et al.*, 2016), while Anim-Kwapong and Frimpong (2005) report their regression model for a single district without accounting for differences in local environmental limits. It is therefore not possible to develop locally specific adaptation strategies based on these previous studies.

## Theoretical framework

We here sought to guide adaptation strategies by using a multiclass suitability distribution model. A gradient of impacts was developed to differentiate fundamental types of adaptation strategies: *cope*, *adjust*, or *transform*. The first two categories will remain climatically suitable for cocoa production in the future. It is differentiated between production locations that will not change fundamentally their climatic characteristics, *i.e.* they remain in the same AEZ. These sites will be able to *cope*. Agronomic practices can remain largely similar. On the other hand, sites that will transition from one AEZ to a different AEZ between current to 2050s climate conditions are described as *adjustment* sites. At these

<footnote n="1">1. CIAT, Colombia.</footnote>
locations agronomic practices will have to change to adapt to the new cocoa AEZ. Some areas were found to become unsuitable for cocoa production in the future. These sites will need to *transform*. Production in these zones will likely become unviable and other cultivars should be considered. Last, locations that are currently unsuitable but show a more favorable climate in the future are described as *opportunity* sites. At these sites cocoa production could be established in coming decades if soil conditions and protection status don't prohibit this.

## Methodology

Suitability types for cocoa production in Ghana were defined using a combination of spatial climate data from WorldClim and a database of occurrences of cocoa production. The database of occurrences was assembled from data used in (Läderach et al., 2013), (Schroth et al., 2016) and received from private sector partners. The RandomForest algorithm was used to identify suitability zones within the occurrence data and to extrapolate their spatial distribution under current and future climate. Input variables were 20 bioclimatic variables at 2.5' resolution from WorldClim (Hijmans et al., 2005) for current conditions and the respective data for 2050s in the intermediate RCP6.0 emissions scenario from the CCAFS climate portal (Ramirez and Jarvis, 2008).

Regional experts evaluated and verified cocoa occurrence data for model input, prioritized climate and soil variables for modeling use and confirmed the validity of the resulting model.

Random Forests (Breiman, 2001) are machine learning classifiers that are formed by ensembles of classification trees. Random Forests (RF) are very popular because of their efficiency on large datasets without over fitting. We used the randomForest package (Liaw and Wiener, 2002) in the statistical software R (R Core Team, 2014) that implements the RF approach.

We here used the RF classifier in three distinct applications. (1) We initially used it to produce a dissimilarity measure to group occurrence locations into suitability clusters with similar climate characteristics in an unsupervised variation. (2) We then used the RF classifier to classify climate data of current and future conditions into the resulting suitability types. (3) We then used RF to evaluate individual or sets of climate variables to distinguish insignificant changes in climate from changes that pose hazards to cocoa production.

## Results

Fig. 1 – Distribution of climate change impact zones and dominant adaptation typology in Ivory Coast: dark green are opportunity areas, light green areas adjustment or incremental adaptation, yellow areas are designated systemic adaptation zones: for orange areas climate projections are not unambiguous and should increase resilience, red areas will transition to other crops without substantial changes in production systems.

The extrapolation of suitability types and their changes with future climate confirmed previously reported projections. Impacts of climatic changes threaten the viability of cocoa production towards the Southern and Northern margins of the cocoa belt in Ivory Coast (Fig. 1). The central cocoa zone will be least affected with only incremental adaptation requirements. Towards Ghana and to the Northwest of Abidjan systemic changes will be necessary to keep cocoa production viable. Towards Ghana the projected climate change impact is highly uncertain because of disagreement between global climate models. This region will require an adaptation strategy that aims at increasing the resilience of the system.

The most affected region in the Northwest was characterized by mean temperatures that are below the national average at cocoa locations under current climate conditions. However, dry season precipitation was lower than elsewhere and the number of consecutive dry months is higher than further South. The less affected regions along the cocoa belt have high mean temperatures under current conditions, but precipitation is higher.
We evaluated sets of bioclimatic variables as indicators for projected hazards. Instead of look-ing-at changes of individual variables we evaluated the resulting change in suitability for cocoa production. Suitability of heat indicators showed unambiguous negative impacts. Severity of drought is highly likely to increase, while the likelihood for negative changes in the length of the dry season is only 60%. Uncertain is the projected trend for total annual precipitation with some models suggesting increases, and other decreases.

## Conclusions

We here presented impact gradient mapping as a decision support tool for climate change adaptation at cocoa's most important origin, the Ivory Coast. Our research suggested that drought, caused by reduced rainfall in the dry season and increased temperatures threatens the viability of current cocoa growing areas. The most affected regions were found to currently benefit from lower than average temperatures which makes cocoa production feasible despite unfavorable drought conditions. Projected climatic changes suggested that total precipitation will increase, but an increase in high temperatures outweighs this positive effect, and as a result conditions for cocoa production will worsen. With current production practices in the transformation region cocoa would no longer be a suitable crop in coming decades.

These findings are in line with previous research for the region that identified similar regions of high impacts (Läderach et al., 2013) and also suggested increased dry season temperature as the most likely cause (Schroth et al., 2016). Previous research however, limited itself to presenting relative changes of suitability which made it difficult to discern significant from insignificant impacts. Furthermore, GCM model disagreement masked the possible impact of changed precipitation in the previously chosen "most likely" impact scenarios. Here we made this uncertainty explicit and showed for which regions this uncertainty is highest and production systems will require measures to increase general resilience.
# Public/private partnerships: insights from the cocoa action partnership and the Climate Smart Cocoa programme in Ivory Coast and Ghana

Martin Gilmour<fnref n="1" />

The cocoa and chocolate industry are increasingly concerned about the effects of climate change on the production of cocoa, especially in the main growing region of West Africa. The potential effect of climate change on cocoa production needs to be better understood and studies should be linked to what is actually happening on the ground in the areas identified by modelling studies as at risk.

The industry is very interested in cacao farming systems which have greater resilience to a changing environment and what will be necessary for cacao planting material to achieve high productivity as a result of these changes. This could also mean that different cacao farming systems with a mix of tree crops would be appropriate and shade tree management could become more important. The effect of climate change parameters on cacao tree physiology is beginning to be understood better but more needs to be done in order to better understand the characteristics necessary to breed more resilient cacao. CSSV disease in West Africa is already recognised as a huge threat and the effects of climate change on exacerbating this need to be understood better. The cocoa and chocolate industry has come together under the CocoaAction partnership to work with the cocoa authorities in Côte d'Ivoire and Ghana on cocoa sustainability issues, and this will be a good framework to understand climate change effects better and implement solutions, at least in west Africa. Aligned with CocoaAction, the recently launched WCF USAID ACDI/VOCA Climate Smart Cocoa programme is an excellent start at beginning to tackle the threats of climate change to the cocoa sector.

<footnote n="1">1. Mars Chocolate, Slough, UK.</footnote>
# Public/private partnerships: insights from the research and development program Cacao Forest

Pierre Costet<fnref n="1" />

Valrhona is a French premium chocolate manufacturer. It has recently launched a pioneering project called Cacao Forest which brings together private and public sector actors to reinvent the way cocoa is produced. The project's scope spans four countries over the course of six years. It was launched in 2015 in the Dominican Republic, and has recently extended activities to Peru with plans to begin work in two African countries in the near future.

By drawing upon local practices and knowledge, extensive scientific research, and the input of people all along cocoa and associated species' value chains, Cacao Forest aims to develop lasting agroforestry-based solutions that work for all involved. All of the members of Cacao Forest have different priorities relating to cocoa production, such as ensuring sustainable family farming, preserving the diversity of cocoa varietals and improving cocoa quality. Valrhona has brought these different factors to bear in creating the ambitious research and development program that is Cacao Forest. It places innovation at the heart of everything it does, drawing on modern agro-ecology and agroforestry principles to inform our scientific activities, to creating bottom up management structures, to the way it disseminates research results.

During the session on climate smart cocoa, they will address some of following questions:

* How can we balance private sector ambitions with the processes and goals of public research organizations?

* How can we develop projects and ensure they have a positive impact on producers, local actors, as well as other stakeholders?

* How can we build a “cluster” approach and involve different agricultural and transformation value chains, such as those of cocoa, fruit and timber?

* How can we finance all this?

<footnote n="1">1. Valrhona, Tain-l'Hermitage, France.</footnote>
# Offsetting and offsetting are needed in equal measures!

Isilda Nhantumbo<fnref n="1" />

COP 21 has indeed brought an impetus to climate change action above and concerted effort to engage all stakeholders into taking responsibility for mitigation and adaptation to climate change including more resilient agriculture.

Companies and smallholders often play a complementary role in crops such as cocoa in West Africa where smallholders' supply the commodity to a series of actors including large conglomerates along the supply chain. The industry is committed to sustainable and climate smart agriculture represents a new business imperative that demands collective action. Such commitment is certainly fundamental to staying below 2C temperature raise.

Both offsetting and offsetting are essential for delivering the sustainable development agenda namely the SDG 13 on climate action including REDD+ policies and programmes; SDG 15 particularly the support for sustainable use of terrestrial ecosystems, degraded land restoration and equitable benefit sharing mechanisms for integrated land uses and more resilient landscapes. Additional contributions to SDG2 on food security and sustainable agriculture as landscapes in which cocoa is produced are intertwined with food crops and often compete for land and labour; SDG5 on gender equality to ensure that technological solutions and policy incentives address the needs/roles of both men and women; and, SDG8 on inclusive, sustainable growth and productive and decent employment to deliver economic and social benefits. This seemingly mammoth ambition demands an integrated approach and definition of key levers and indicators of success complementing the bottom line.

The study conducted by IIED on sustainable supply of cocoa/chocolate highlights:

* Implementation of policies and incentives for offsetting and offsetting emissions in both producing and consuming countries. All actors along the supply chain should introduce efficient technologies and contribute finances sustainable farming systems including agroforestry systems and restoration to reduce deforestation. Farmers are generally disenfranchised to transform production systems and practices. Empowering farmers to inset emissions and support land use changes towards resilient production systems and landscapes require adopting the notion of investing in locally controlled enterprises, that is, strengthening tenure rights (land, trees and carbon), strengthening producers organization; building business capacity and enabling access to financial resources.

* Market premiums from certified products and performance based payment for reduced emissions are critical for sustained transformative change.

* Investors and financing institutions hold carrots and sticks as financing can be linked with accountability to critical indicators of climate change and SDGs.

Therefore, a landscape approach is necessary to achieve sustainable and zero deforestation cocoa/chocolate. West Africa still lags behind in vertically integrated industry. Yet that could add further to climate smart cocoa/chocolate. The outcomes can be reduced emissions from transportation and contribution to achieving SDGs 5 and 8. This would meet the transformative agenda of the CocoaAction. Tradeoffs, viable options or scenarios should be discussed to provide a compromise solution for sustainable cocoa/chocolate. The decision on course of action has to be collective including governments of producing and processing/consuming countries, farmers, investors, agriculture extension services, CSOs and the myriad private sector actors along the value chain.

Other information including drawing on lessons from other commodities will be brought as appropriate based on interventions of the key note speakers of this panel.

<footnote n="1">1. IIED, London, UK.</footnote>
Session 4

*Global commodity chains and sustainability in Latin America: changes towards sustainable development in trade of agrifood products*
# Mexican agrifood geographical indications: between productivity and sustainability

Pablo Perez-Akaki<fnref n="1" />

Geographical indications (GIs) have become one of the most important strategies in promoting rural development, both in developed and developing countries, as is the case of Mexico. However, experience in the latter is full of contradictions and unfulfilled promises, because despite the large volumes that have achieved exports of Tequila and Mezcal, they have a limited benefit to farmers, key players in the agri-chain. As the case of Tequila and Mezcal, the rest of the Mexican experiences in GIs have serious conceptual difficulties, technical, operational and administrative, that has prevented them from operating.

GIs can be defined as institutional structures that connect the specific quality and reputation of a well with a certain territory (Belletti and Marescotti Touzard, 2015). They are valued by consumers, as well as many other goods, GIs goods walk long ways to connect producers and consumers and their chains include many agents interacting in order to realize these economic flows.

To date in Mexico there are 14 approved DO, among which the DO Tequila is by far the greatest in visibility and international recognition. However, it is criticized for its questionable results for the benefit of the regions where the agave is produced, the raw material that allows distillation of the famous drink. The rest of the DO of Mexico are presented in Table 1, which further identifies the Mezcal, well that could incorporate the Tequila in its definition, as well as other agricultural products and even craft goods, as Olinalá and Amber.

<table><caption>Table 1. Appellations of Origin in Mexico, 2016</caption><thead><tr><td>Denomination</td><td>Date</td><td>Applicant</td><td>Authorized states</td><td>NOM</td></tr></thead><tbody><tr><td>Tequila</td><td>Dic 09, 1974</td><td>Tequila Herradura and the Cámara Regional de la Industria Tequilera de Guadalajara</td><td>Jalisco, Nayarit, Tamaulipas, Michoacán and Guanajuato</td><td>NOM-006-SCFI-1994</td></tr><tr><td>Olinalá</td><td>Nov 28, 1994</td><td>Unión de Artesanos de Olinalá</td><td>Guerrero</td><td>Pendiente</td></tr><tr><td>Mezcal</td><td>Nov 28, 1994</td><td>Cámara Nacional de la Industria del Mezcal</td><td>Guerrero, Oaxaca, Durango, Zacatecas, San Luis Potosí, Guanajuato and Tamaulipas</td><td>NOM-070-DCFI-1994</td></tr><tr><td>Talavera</td><td>Mar 17, 1995</td><td>Talavera de Puebla S.A.</td><td>Puebla and Tlaxcala</td><td>NOM-132-SCFI-1998</td></tr><tr><td>Bacanora</td><td>Nov 6, 2000</td><td>Gobierno del Estado de Sonora</td><td>Sonora</td><td>NOM-168-SCFI-2004</td></tr><tr><td>Café Veracruz</td><td>Nov 6, 2000</td><td>Consejo Veracruzano del Café</td><td>Veracruz</td><td>NOM-149-SCFI-2001</td></tr></tbody></table>

<footnote n="1">1. Universidad Nacional Autónomade México, Naucalpan, Estado de México, Mexico.</footnote>
<table><thead><tr><td>Denomination</td><td>Date</td><td>Applicant</td><td>Authorized states</td><td>NOM</td></tr></thead><tbody><tr><td>Ámbar de Chiapas</td><td>Nov 6, 2000</td><td>Gobierno del Estado de Chiapas</td><td>Chiapas</td><td>NOM-152-SCFI-2003</td></tr><tr><td>Sotol</td><td>Jun 12, 2002</td><td>Gobiernos de Chihuahua, Coahuila y Durango</td><td>Chihuahua, Coahuila and Durango</td><td>NOM-159-SCFI-2004</td></tr><tr><td>Mango Ataulfo del Soconusco Chiapas</td><td>Ago 4, 2003</td><td>Secretaría de Desarrollo Rural del Gobierno del Estado de Chiapas</td><td>Chiapas</td><td>NOM-006-SCFI-2005</td></tr><tr><td>Charanda</td><td>Ago 12, 2003</td><td>Asociación de productores de Charanda Michoacán NOM-144-SCFI-2000</td><td></td><td></td></tr><tr><td>Café Chiapas</td><td>Ago 12, 2003</td><td>Comisión para el Desarrollo and Fomento del Café de Chiapas</td><td>Chiapas</td><td>NOM-169-SCFI-2007</td></tr><tr><td>Vainilla de Papantla</td><td>Feb 24, 2009</td><td>Secretaría de Desarrollo Rural de Puebla and the Consejo Veracruzano de la Vainilla</td><td>38 municipalities from Veracruz and Puebla</td><td>NOM-139-SCFI-1999</td></tr><tr><td>Chile Habanero de la península de Yucatán</td><td>Jun 4, 2010</td><td>Chile habanero de Yucatán, A.C.</td><td>Yucatán, Campeche and Quintana Roo</td><td>NOM-008-SCFI-2002</td></tr><tr><td>Arroz del Estado de Morelos</td><td>Feb 16, 2012</td><td>Secretaría de Desarrollo Económico de Morelos and Unión de productores de arroz de Morelos AC</td><td>22 municipalities from Morelos</td><td>NA</td></tr></tbody></table>

Source: Own elaboration based on data from the Mexican Institute of Intellectual Property.

IG goods generally participate in large food chains, reaching distant regions of the world. In these chains many actors over them cooperatively work together to consolidate the flow of goods but also competitively seeking greater participation in the value added of the goods in question are normally involved. Then, the study of agricultural chains (food chains, global commodity chains – CGM, global value chains – CGV) has become very important to understand these global economic dynamics, which drastically affect the local conditions.

In this sense, the theoretical and methodological construction for the study of the CGM initiated with the pioneering work of Gereffi et al. (1994) which includes 4 dimensions of analysis: input and output, which studies the flows of goods and their characteristics and the accumulation of value of goods in the process of accumulation; geographical analysis, which details economic spatially along the chains, something that can help better understand the other two remaining dimensions processes; governance, which is perhaps the most interesting in the case studies, as it aims to identify strategies used by economic actors to seek to improve their position in the chains against other participants, ie, strategies for exercise domain or achieve greater decision space; institutional framework, that studies the rules governing relations between participants in market chains and agencies were created to understand how to achieve that economic processes are given.
## Agrifood chains and their contribution to sustainable development goals

The Sustainable Development Goals (SDG) emerge from the Summit on Sustainable Development of 2015 where an agenda for development by 2030 was set, aim to intensify efforts to end poverty, reduce inequality and fight climate change (UN, 2016).

These goals are going to be achieved through 17 goals, many of them directly linked to the agrifood chains of goods with GI: no poverty, decent work and economic growth, Inequalities reduced, responsible consumption and production, climate action, life on land, peace, justice and strong Institutions and partnership for the goals. The rest are indirectly, but also related, with agri-chains.

Particularly in the case of goods with GI, emphasis on rural development, regional development is greater. That's why good with GI have stronger relationship with social and environmental objectives than chains of agricultural goods not recognized.

A recent view on the goods with GI to understand them as public goods sums in favor of SDG. In this interpretation, the GI assets belong to all citizens who live in a certain territory, who have a cultural heritage and are able to market it to ensure their survival (Vandecandelaere et al. 2010). Therefore, it is in the public interest to promote such initiatives, to achieve to remain competitive in the long term because they contribute to the economic and social stability of the territory. In this light, Belletti, Marescotti and Touzard (2015) identified five justifications for considering GIs as public goods:

* They are closely related to traditional public goods such as water, air, natural resources, etc., as well as human and social aspects such as knowledge, skills, historical roots, etc. They can be considered specific to the different places local public goods.

* They are able to drive positive effects on social and economic aspects in the territory, as in the case of income, employment and social cohesion, which could be considered public property by the effects generated in society. To these can be added, for example, business knowledge, female labor inclusion, leading to consolidate local social capital.

* Because of the reputation achieved at national and international level, are territorial public goods themselves in their local area, connected to natural public goods and social public goods as such fame generates positive effects on other activities, such as tourism, food and crafts.

* They are public goods in global commodity chains since they encourage the institutionalization of production and trade, guaranteeing a standard of quality and traceability of goods. This behavior extends to other participants in the marketing chain.

* They are symbolic cultural public goods and / or which have right to existence. These are symbols of national identity, represent cultural heritages and thus have a positive effect on exports and consumption.

The public status of goods with IG requires strong public regulation to ensure that there is an appropriation of some agents of the benefits generated by trade in chains and closely monitor that attainment of the goals of sustainable development that nations have committed and generate the desired prosperity in rural areas.

## Mexican assets with IG and its relevance in the development

Although Mexico has a stake in the IG decades, its results are not very encouraging to date, since they have not been able to fulfill prominently with overcoming poverty, protecting the environment, reducing inequalities, boost consumption and responsible production or the formation of cooperatives to generate profound changes in marketing chains and local societies.

As shown in Table 1, the number of GI increased significantly in Mexico in the first decade of this century, although its results are not observable or satisfactory. Therefore, what is analyzed in this work is the way in which the agro-food chains GI goods have been transformed into the incorporation of SDG
to generate profound changes in local societies. This analysis will highlight experiences in different Mexican cases with GI, such as Tequila, Mezcal, Chile Habanero and Cacao.

## Bibliography

Belletti G., Marescotti A., Touzard J.M. (2015), "Geographical Indications, Public Goods and Sustainable Development: The roles of actors' strategies and public policies", World Development, doi:10.1016/j.worlddev.2015.05.004

United Nations (2016), Sustainable development Goals, available in www.un.org/sustainabledevelopment/, consulted August 3rd, 2016.

Vandecandelaere E., Arfini F., Belletti G., Marescotti A. (2010), "Linking people, places and products. A guide for promoting quality linked to geographical origin and sustainable geographical indications", FAO-SINERGI, Rome
# Sustainable label and governance of global value chain: insights from coffee value chains in Latin American countries

Jean-François Le Coq<fnref n="1" />,<fnref n="2" />,<fnref n="3" />

During the last decades, the private standards has been of raising importance in the agro-food sector, the raise of private standards, as new governance mechanisms, has influence on the structure and *modus operandi* of supply chains (Henson et Reardon, 2005) and raised many debates regarding their impacts on the farmers (especially small farmers) or on environment (especially for eco-labeling).

In this debates, Coffee agro-food system has been largely analyzed, as so-called sustainable coffee demand experimented a rapid growth in the last 2 decades (Ponte, 2002; Pierrot et al., 2010), leading to the development of a wide range of private standards focusing on social and/or environmental features (Raynolds et al., 2007; Soto et Le Coq, 2011). Authors described and compared the governance these new coffee standards (Muradian et Pelupessy, 2005; Raynolds et al., 2007) and analyzed the implication of their raise on the governance of the coffee global value chain (Ponte, 2002; Ponte, 2004; Giovannucci et Ponte, 2005; Muradian et Pelupessy, 2005). Other authors analyzed more specifically the process of adoption private standards and their impact on producers, especially in Latin American countries where the development of coffee certification was particularly noticeable<fnref n="4" /> (Barham et Weber; Kilian et al., 2006; Soto et al., 2010; Barham et al., 2011). Recently, regarding the process of diffusion of private standards in producing countries, authors show that the national condition matters in the adoption process (Manning et al., 2011).

In line with this literature, this communication aims at exploring the relationships between private standard diffusion, institutions and public policies in the case of coffee labels in Latin American countries.

Based on the analysis of secondary data and direct interviews to stakeholders of the coffee sectors in five Latin American countries (Costa Rica, Nicaragua, Guatemala, Salvador and Colombia), we argue that the pace and pattern of development of private standards depends on existing value chain structures and national institutions, which is the results of historical dynamics and public policies. In turns, we argue that the effects of sustainable standards development on the governance of the value chain depend on existing structure and policy context in producers' countries.

## Conceptual framework, material and method

Global value chain (GVC) has been proposed as a concept to capture the different functions from production to consumption of good. Global value chain concept enables to capture relationships of power between actors among international value chain, and led to distinguish between demand-driven and s producer-driven (global) governance of value chain (Gereffi, 1994). Further, to better grasp the (micro) governance of value chain, Gereffi et al. (2005) proposed a typology of governance according to the complexity of the transfer of information and knowledge involved by the transactions within the chain, the level of codification of this information, and the capacity of the suppliers to meet the requisites of the transaction. They identified 5 types of governance: market, modular, relational, captive, and hierarchical.

Following Porras et Salazar (2013), we tend to balance between these two approaches of GVC governance (macro and micro) to grasp the governance of coffee GVC and implication of the raise of the sustainable coffee demand on value chain in producers' countries.

<footnote n="1">1. CIRAD, UMR ART-DEV, F- 34398 Montpellier, France.</footnote>

<footnote n="2">2. Universidad Nacional de Costa Rica, CINPE, Costa Rica.</footnote>

<footnote n="3">3. CIAT, DAPA, 763537 Cali, Colombia.</footnote>

<footnote n="4">4. Nowadays, 76% sustainable coffee come from Latin American producing countries, where as only providing 59% of conventional coffee (regional team latin america, 2011).</footnote>
We first reviewed academic literature regarding coffee value chain and sustainable labels, as well as non-published materials and reports to capture the structure and trends of evolution of coffee sectors in the selected Latin American countries. Then, we carried out on between 2010 and 2015 national case-studies of the coffee national value chain in these countries. These case studies were aiming at identifying and characterizing types of actors involved in the national coffee value chain with a specific insight on national and transnational actors. Direct interviews to the different actors (traders, millers, producer's organizations) of the national value chain were conducted to capture their strategy of regarding marketing and sustainability labels adoption, and the trend of evolutions of their relationships. Additionally, a desk review of policy and legal documents and interviews to public administrations and organizations leaders involved in the regulation of the national value chain was implemented to capture the institutional framework in which coffee value chain evolved. Finally, interviews to actors involved in services supply to the direct value chain actors as well as sustainable label promoters and certification agencies were conducted. This information was analyzed to defined the strength and weaknesses of national value chain regarding in the adoption process of sustainability labels.

Finally, a comparison of national case studies has been carried out to identify the key factors (including political, institutional, actors’ strategies) that enable or limit the sustainable labels adoption, and explained the changes in the governance of national coffee value chains.

## Results

*Sustainability label: the strengthening of demand driven global governance of coffee GVC*

The analysis of dynamic of development of sustainability label (such as UTZ certified, Fair Trade,- CAFÉ Practice, 4C, Nespresso AAA, Rainforest Alliance) in the national coffee value chain in selected countries shows that these labels have been promoted by international trade firms upstream toward the national producers and national producers countries. These raise of sustainability label has thus strengthen de demand-driven nature of the coffee global value chain global governance.

*Sustainable label: A "forced opportunity" for strengthen national actors*

As a response to this new market demand emanating from consumer countries, producers and producers’ organizations were pushed to adopt these labels to maintain their market share. However, in the studied countries, this has not modified drastically the national value chain governance toward more hierarchical governance driven by multinational. Instead, in the Latin American countries understudies, the national coffee value chains are still following a market, modular or relational governance mode.

## Key factors to withstand transnational use of sustainability standard to enhance their power: National policies and regulations, and farmers' collective action capacities

In the countries understudies, different factors enable the national value chain actors to overcome the risk of further empowerment of international multinational thanks to the sustainable coffee label development. In Costa Rica, national regulation as well as collective action (cooperative movement and creation of new cooperative consortium) enabled the small producers to adopt sustainable labels and include it has an additional tool to enhance their products marketing and added value. In Nicaragua, although public policies support was been limited, international cooperation supports enable cooperative movement to strengthen, increasing coffee quality and sustainable coffee standard adoption. In Colombia, strong cooperative movement enables a large adoption of sustainable standards including small producers.

## Discussion

Our analysis confirms the finding of Manning *et al*. (2012) regarding the importance of national contexts in the raise of sustainability labels. Furthermore, we identified some factors that enable to avoid transnational strengthening through sustainable label development.
Our finding contrasts with other studies conducted in Africa, such as Kenya (Le Coq et al., 2011; Pinard et al., 2011), where lack of farmers’ organizations capacities and inappropriate national market regulations enabled the transnational firms to the promotion of sustainable coffee label to gain power in the national value chain.

The implications of the raise of sustainability labels on the GVC governance and especially the capacity for local actors to withstand transnational integration and power concentration though sustainable label promotion depend also on the characteristics of the commodity. Indeed, our observations on coffee contrast with the trends on other commodities such as banana or pineapple where transnational firms had further integrated productions (Vagneron et al., 2009) and the raise of sustainability standards was not prone to provide new marketing opportunity or new added value to producers (van der Waal et Moss, 2013).

## Conclusion

The raise of sustainability labels in coffee markets tends to increase the demand driven governance of the coffee GVC. However, at national level, value chain governance is not strongly affected by the raise of sustainability label and local actors thanks to national regulation and/or collective action could withstand the upstream integration process of multinational and, even, could use sustainable label to reinforce their marketing capacities and market positions.

These conclusions, specific to coffee, underline the importance of sound policy and regulation as well as consolidation support to farmers’ organizations to take advantage of new markets dynamics (here, the sustainability label demand) to promote small farmer integration in global markets.

## Bibliography

Barham B. L., Callenes M., Gitter S., Lewis J., Weber J. (2011). *Fair Trade/Organic Coffee, Rural Livelihoods, and the âœ Agrarian Questionâœ: Southern Mexican Coffee Families in Transition*. World-Development, n°39:1, 134-145.

Barham B. L., Weber J. G. *The Economic Sustainability of Certified Coffee: Recent Evidence from Mexico and Peru*. World Development, n°40: 6, 1269-1279.

Gereffi G. (1994). *The Organization of Buyer-Driven Global Commodity Chains: How U.S. Retailers Shape Overseas Production Networks*. in: Commodity Chains and Global Capitalism. Gereffi G., Korzeniewicz M., Praeger: 95-122.

Gereffi G., Humphrey J., Sturgeon T. (2005). *The governance of global value chains*. Review of International Political Economy, n°12: 1, 78-104.

Giovannucci D., Ponte S. (2005). *Standards as a new form of social contract? Sustainability initiatives in the coffee industry*. Foodpolicy, n°30: 3, 284-301.

Henson S., Reardon T. (2005). *Private agri-food standards: Implications for food policy and the agri-food system*. Food Policy, n°30:3, 241-253.

Kilian B., Jones C., Pratt L., Villalobos A. (2006). *Is sustainable agriculture a viable strategy to improve farm income in Central America? A case study on coffee*. Journal of Business Research, n°59:3, 322-330.

Le Coq J.-F., Pinard F., Gathoni E., Soto G. (2011). *The raise of eco-label coffee: a comparative study of their effects on Costa Rican and Kenyan cooperative coffee sector*. 23rd International Conference on Coffee Science (ASIC 2010), October 03-08, 2010, Bali, Indonesia, s.l., s.n.

Manning S., Boons F., von Hagen O., Reinecke J. (2012). *National contexts matter: The co-evolution of sustainability standards in global value chains*. Ecological Economics, n°83, 197-209.

Manning S., Frank B., von Hagen O., Reinecke J. (2011). *National contexts matter: The coevolution of sustainability standards in global value chains*. Ecological Economics.
Muradian R., Pelupessy W. (2005). *Governing the Coffee Chain: The Role of Voluntary Regulatory Systems*. World Development, n°33:12.

Pierrot J., Giovannucci D., Kasterine A. (2010). *Trends in the Trade of Certified Coffees*. in: International Trade Centre, geneva.

Pinard F., Le Coq J.-F., Aithal A. T. (2011). *Coffee sector efficiency and equity: lesson learned from a comparative commodity chain analysis of Costa Rican and Kenyan coffee sector*. 23rd International Conference on Coffee Science (ASIC 2010), October 03-08, 2010, Bali, Indonesia, s.l., s.n.

Ponte S. (2002). *The ‘Latte Revolution’? Regulation, Markets and Consumption in the Global Coffee Chain*. World Development, n°30:7, 1099 – 1122.

Ponte S. (2004). *Standards and Sustainability in the Coffee Sector: A Global Value Chain Approach*, IISD, 52.

Porras R.D., Salazar J.A.V. (2013). *Gobernanza en las Cadenas Globales de mercancías/valor: una revisión conceptual*. Economía y Sociedad, n°17:41.

Raynolds L. T., Murray D., Heller A. (2007). *Regulating sustainability in the coffee sector: A comparative analysis of third-party environmental and social certification initiatives*. Agriculture and Human Values n°24, 147-163.

Soto G., Haggar J., Barrios M., Quilo A., Jerez R. (2010). *Análisis de la Crisis de la Caficultura Orgánica*. Turrialba, CostaRica,

Soto G., Le Coq J.-F. (2011). *Certification process in the coffee value chain. Achievements and limits to foster provision of environmental services*. in: Ecosystem services from agriculture and agroforestry: measurement and payment. Rapidel B., De Clerck F., Le Coq J.-F., Beer J., Londres, Earthscan Publications: p.319-345.

Vagneron I., Faure G., Loeillet D. (2009). *Is there a pilot in the chain? Identifying the key drivers of change in the fresh pineapple sector*. Food policy, n°34 5, 437-446.

van der Waal J. W. H., Moss J. R. J. (2013). *Just Green Bananas: towards Full Sustainability of the Export Banana Trade*. in: International Ishs-Promusa Symposium on Bananas and Plantains: Towards Sustainable Global Production and Improved Use. Van Den Bergh I., Amorim E. P., Johnson V., 986: 287-300.
# Sustainability in rural territories participating in global value chains. Cases of Costa Rican agroindustrial-chains

Rafael Diaz<fnref n="1" />, Jorge Valenciano and Carlos Carranza

## Introduction

This paper deals with a balance of implications for the sustainable development of rural regions of Costa Rica, regarding their participation in global value chains. The discussion is based on cases of agro-industrial chains, with presence of foreign direct investment: coffee, bananas, tourism, pineapple and flowers.

The analysis is developed considering as a reference the book of Gallagher, Chudnovsky, y Porzecansi, (2009) and the specific analysis of Costa Rica by Cordero and Paus (2009), in which the relationship between sustainable development and FDI is analyzed. Gallagher, Chudnovsky, and Porzecansi, (2009: 10-11) depart from the spillover effects that generate multinational companies (MNCs) via learning and transferring of knowledge processes that allow to build skills and technological capabilities by local firms, as well as the transmission of the best environmental practices.

In this presentation such relationships are analyzed in the context of global agro-industrial chains, paying special attention to the consequences or restrictions that face local growers within the governance system of the global value chains.

## Case Methodology

Cases of Costa Rican agro industrial chains are considered in the analysis, following Diaz and Valenciano (2012) proposal to analyse FDI and sustainable development when global agribusiness chains are operating. These authors depart start from the perspective that FDI automatically does not generate sustainable development. Positive impact depends on a set of value chain factors al local and the global value chain itself. Internal factors refer to the social and productive pathway of the activity in the place where it is embedded, and global value chain factors depend on its governance structure. Then the meaning of FDI regarding the power structure of the chain constitutes the framework of the analysis. The kind of impact on the local sustainable development is captured by an index calculated at the local (district) level, which allows to characterize different states of (in) stability. More general (macro) effects are considered in terms of costs and expected benefits.

When asked about the indicators required to catch the link of MNC operations in country with economic growth in hand with environmental sustainability and social equity, the Vachom and Mao (2008) framework is considered. They use the strength of the supply chain notion that at domestic level is defined as the availability and quality of its participating organizations. Vachom and Mao (2008, p. 1552-1555), proposed empirically to link this concept with the dimensions of sustainable development, in terms of environmental performance, environmental corporate practices and social sustainability. This has been considered through the relationships between the supply chain management with the environmental management, by its various terminologies (green chains, design product, reverse logistics, life cycle assessment, etc.).

## Discussion

In that sense, specific features of the agro chains are analyzed considering various relevant elements to observe positive or problematic effects regarding FDI.

<footnote n="1">1. Universidad Nacional de Costa Rica, CINPE, Lagunilla, Heredia, Costa Rica.</footnote>
Considering the expected benefits, in the case of traditional export activities (coffee and banana), national competitiveness depends less on FDI, to the extent that national institutional development gives a relatively independent local support allowing local producers to boost economic and social development in the communities where they operate. The opposite occurs in the case of non-traditional agri-chains such as pineapple, whose integration into national production, followed export objectives, has been nuanced by the enclave in Buenos Aires de Osa (southern region of Costa Rica), and a strong command of MNCs in the production and marketing of pineapple in the North zone. That control on marketing channels allows multinational companies to exercise governance over local producers, conditioning contracts, product quality requirements and prices.

In considering the costs of value-added trap in low value options, is clear that this is a feature of agri-chain with FDI presence. This is the case of the pineapple chain, with Costa Rican low participation in the industrialized production or commercialization by local producers, and with little local development of research activities. On the contrary, the coffee chain presents lesser domain of FDI and more sophisticated institutional local development, by the presence of productive diversification in the hands of growers, coffee mills and localroasters.

Another important cost refers to the process of local firm crowding out, which places two scenarios. In the coffee chain FDI has increased its participation since the crisis of the sector during 90's that has reduced national capital participation, mainly in coffee mill and export chain segments. In other activities such as the pineapple chain, FDI integration has affected both spaces, producers of pineapple and others agriculture activities, many of them family based, oriented to local market. This has resulted in an increase in the opportunity cost of the land use, which led to small local producers sell or rent their lands to multinationals, displacing local production of traditional goods that gave support to country's food security.

Cordero y Paus (2009), when analyzing the case of Costa Rican free zones found that the impact of FDI has been positive at macro level, but at the micro level, regarding linkages and spillover effects are small in absolute and relative terms (limited local supply and limited national absorption capacity). These authors detected that the relative success of the attraction of FDI hides the absence of active longterm policies regarding market failures (imperfect coordination and coordination failures), that have limited possibilities of national producers to participate as competitive suppliers. Besides this, incentives for attracting FDI in high technology is not compatible with trade liberalization, while tax exemptions to industrial and tourism sectors, have limited government capacity of funding to create and maintain country specific country attractiveness required to attract FDI, such as the areas of conservation and protection of wildlife in relation to the tourism (Lamb and Paus, 2009: pp. 116-122).

Finally, it is interesting to consider the balance of the results obtained following Vachom and Mao (2008) methodology, returning to its starting point, the strength of the supply chain concept as a basis for assessing the sustainability of the chain at an international comparative analysis.

According to Vachom and Mao, this fortress refers to a quantitative dimension in terms of availability of suppliers, facing market potential, and a qualitative dimension concerning operational capabilities of suppliers and the sophistication of the buyers in the supply chain (Vachom and Mao, 2008: 1553). In the case of agro-industrial international chains, it involves an analysis of a supply chain that links FDI taking advantage of natural advantages of the agriculture and availability of labor. These elements give support to national actor participation as suppliers in the chains agro-industrial. The fortress, analyzed from a quantitative perspective as raised by Vachom and Mao, would arrive to the conclusion that in agro-industrial chains where there is presence of domestic producers, and even more so of small producers, constitutes the case of a chain with national strength.

On the other hand, the qualitative dimension is referred to the satisfaction of sophisticated buyers, which depends on the type of participation of national stakeholders. In the agro-industrial chains the country role is located in agriculture, however, depending on the type of participation in the marketing chain, the
national strength varies. In all cases requirements of the buyer are decisive, however the structure of the chain in which dominant quality standards (conventional markets) are associated to more vertical chain governance structures, as in the case of pineapple, banana, flowers and coffee conventional. However, in the case of producers participating of niche chains, the national fortress of their participation in those chain is superior, while they are growers endowed with more sophisticated technologies. And they have more potential for shortening of the chain because they may negotiate with actors closer to the consumer, by passing some intermediaries, as in the case of some coffee and flowers chains.

Vachon and Mao analyzed the relationship between the fortress in the supply chain with the development sustainable, by a comparative study using international data and a survey to executives of companies. They confirm the hypothesis of Porter with a positive relationship between the strength of the chain and environmental practices that lead to innovations. Also found a positive relationship between the management of supply chains and its social sustainability, through the involvement of companies with local communities (Vachon and Mao, 2008: 1556-1558).

The mentioned approach is applied in this paper as shown in table2, which sets that link in other terms, at the level of community sustainable development observed where are located the analyzed agro-industrial chains. Synthetically, as shown in table 2, the relation with economic growth is considered positive, because these activities injected the economy dynamism via exports and local employment. Depending on local embeddedness, by the participation of growers in the chains, the chains will constitute clusters with greater potential, such is the case of coffee. On the other hand, the relationship with social development is considered between unstable and fragile. Although the followed approach does not allow to distinguish the effect of a production chain in particular on the locality location (county), it let assert that features analyzed by Vachon and Mao are relevant in the areas where the analyzed chains are operating with participation of FDI, and governance structure itself, while it shows the quality of grower participation in the chains.

## Final remarks

The results of the present study suggest for the purposes of formulation of political attraction of FDI with links in them spaces rural, the following elements.

### Enchaiments

Participation of rural spaces in agro-industrial chains mean very clear linkages: they constitute the participation of small farmers, the contribution of labor force, and in any case the use of natural resources. How to promote an improved participation, or more realistically, how to avoid an impoverishing enchainment?

### Resource Development

For regions participating in global agro-chains as suppliers of labor, training processes, and capacity-building are fundamental. This prevents participation in activities whose competitiveness depends on the abundance and low-wage labor.

### Explicit consideration of the governance chain

The efforts raised by modern trade policies, in order to make small producers to participate in global value chains, are important in the processes of growth. However, those policies not only must enable grower participation in global chains, but they must consider those elements that subordinate growers to the power centers of value chains. For this purpose, it is important to have clear wisdom about the full operation of the chain, in order to consider the key elements that are used by these centers of power to exercise coordination, and on this base to establish strategies that allow to balance commercial relations along the chain.
## Local and international institutions

The institutional framework is also a fundamental mechanism in determining the competitiveness of small local producers. Local institutional support becomes fundamental in both encouraging and strengthening local actors through programs of differential access to credit, technical assistance and market intelligence. In this sense is fundamental to strengthen sectoral institutions linked to agricultural and rural development, at region level while this allow to promote the participation of small producers in global chains. It is also relevant to understand the relationship of external financial agents with producers in different segments of the chains, as well as the financial flows that provides the FDI, because of the effects of funding on competitiveness and the governance structure.

## Foreign direct investment and comparative advantage

IED in rural area is natural resources oriented; mainly cheap, fertile soils and climatic factors. This search for advantage brings multinational companies, related to agriculture and tourism, to set up processes in developing countries. It is clear that the primary purpose of these companies is to pursue profits, but there is not a clear relationship of the contribution of these enterprises to the sustainable development of rural regions. It is recognized the benefit in the employment generation, however in issues as environmental sustainability and social equity there is not clear evidence about the positive contribution of these companies. There is another type of FDI on a small scale, especially at the level of the production of flowers and small tourist enterprise.
# Global value chains for sustainable development of primary producers of coffee in Mexico

Marisol Velazquez<fnref n="1" />

This study was developed under two projects, my PhD thesis —"Commercialization and consumption of coffee in Mexico"— and the Latin American Network of Research in Global Value Chains.

It is the aim of this paper to demonstrate how the methodology of Global Value Chains can help primary coffee producers in making decisions about the best choices for production in terms of sustainable development. Research took place in the coffee-growing region of Pluma Hidalgo in Oaxaca, Mexico, where coffee production is one of the main economic activities and is located in a protected environmental zone.

## Theoretical framework

The analysis is carried out under the framework of Global Value Chains proposed by Gary Gereffi and Korzeniewicz (1994) in the nineties and its various developments to date (Gereffi, Spencer and Bair, 2002; Gereffi, Sturgeon and Humphrey, 2005; Gereffi and Lee, 2009; Bair, 2009; Ponte and Sturgeon, 2014; among others). It frames the study of productive chains from production to marketing, including not only the description of what is done in each link but the economic relationships between nodes. The approach is to study the production chain from four analysis dimensions: input-output, which refers to products chained in a sequence of value-added services in each economic activity; spatiality, which is the level of concentration or dispersion of economic activities and includes economic geography of production and consumption; institutional framework, based on the institutional context in which it is framed; governance, which initially (1994) referred to the ownership or control of the chain by the producer or the buyer; then was understood as coordination or linkage (2005) between the company and suppliers and; then it arose as normalization (2014), i.e. how the set of norms, rules and standards — understood as conventions — controls the chain. Governance domain is determined in a macro-level way and by indicators that encompass the general behaviour of all the links in the chain. Governance by linking or coordination is determined by the interaction of three variables: 1) the complexity of the information and knowledge that is required to sustain a particular transaction, specifically with the product and process specifications, is measured by the existence of instructions, manuals and specifications rules; 2) the extent to which the information and learning can be encoded and transmitted efficiently, without the necessity of invest of the acting parties. This variable is measured by existence and type of contracts; 3) the potential and actual capabilities of suppliers to react to the requirements of the transaction, evaluated from the set of certifications, acquired knowledge and production capacity of suppliers. The combination of these three variables results in the degree of coordination between suppliers and firms, as well as the degree of power asymmetry. Governance, in this sense, can be market, modular, relational, captive and hierarchical. The application of this model allows to evaluate changes in a type of governance or another overtime. (Gereffi et al., 2005; Pérez Akaki, 2010). The third form of governance is the normalization or regulation and it is explained by conventions backed by external agents which determine the way in which consumers choose the product. In commercial terms, it is the control exercised by the imposition of normativities, rules and standards of certain companies or institutions to the chains (Ponte and Gibbon, 2005; Gibbon, Bair and Ponte, 2008). This last one arises from the Theory of Conventions (Dupuy, 1989; Bessy and Favereau, 2003, Eymard-Duvernay, 1992) and was proposed as a solution to problems of coordination in business. Conventions are born as guides to action and collective systems to legitimize such actions (Ponte and Gibbon, 2005). They mean that a group decides actions to be taken and are valued by all. The problem is that when this is applied to markets, a little group, which appear

<footnote n="1">1. Universidad Panamericana, Distrito Federal, Mexico.</footnote>
as institutions or organizations, determines how to regulate the product. It is not consumers who decide, but organisms in which consumers trust absolutely. Gibbon and Ponte (2005) developed governance by normalization and propose 6 types of conventions: commercial, defined by market value and where the price difference is explained by the quality of the product; domestic, in which long-term relationships and brand awareness determine the choice of product and are referred to tradition; industrial, explained by production efficiency and quality which is measured by means of norms and standards evaluated by a third party; civic, influenced by the collective, social or environmental well-being; inspirational, where creativity, innovation and uniqueness are considered art or craft and influence the choice; opinion or reputation, in which the judgments of experts give value to the product. It is noteworthy that these conventions should be endorsed, certified or recognized by external agents to be accepted. Under this logic, there are rules and regulations supervised by institutions which ensure that a product or service meets the requirements agreed by those conventions. In the methodology proposed in this paper the consumer is added as part of one of the dimensions relating to space and it tries to combine the three proposed forms of governance into one, in order to cover the study of the chain from a macro level, to analyse the entire chain; middle, noting the link between firms and suppliers and; micro, to establish what conventions are presented in each node.

Methodology

Each of the dimensions has a set of variables and indicators to analyse the chain, as shown below.

1. Dimension Input output

1.1 Characteristics of export product

1.1.1 World coffee exports

1.1.2 World coffee exports of green coffee, extracts of coffee and roasted coffee

1.2 Income distribution along the chain

1.2.1 Final price

1.2.2 Unit value of imports of green coffee

1.2.3 Added value in the global chain of coffee

1.2.4 Price obtained by the producer

1.2.5 Costs of transport and storage costs

1.3 Structure of the global chain

Participants in each link

2. Spatiality and Economic geography Dimension

2.1 Concentration and spatial dispersion

2.2 Geoeconomic structure of production

2.2.1. Coffee production

2.2.2. Socio Economic characteristics of producers

2.3 Geoeconomic structure of consumption

2.4 Geography of export

Destination of export

3. Institutional framework dimension

3.1 Historical context

3.2 Quality
# Results

The result has been the characterization of the coffee chain in the Pluma Zone in Oaxaca, Mexico. The
principals results are:

## 1. Dimension input-output

### 1.1 Characterization of the national product and export

* Intense flavour, aroma from mild to moderate

* Cultivation under shade

* The sea breeze brings the grain quality attributes

* Low or no use of agrochemicals

### 1.2 Local or global marketing

* The medium producers in the area traded locally in the tourist resort of Huatulco and Puerto Escondido, regional in Oaxaca and national in specialty coffee shops

* Small producers in the area sold to medium producers and / or marketers or large assemblers as Becaísa or Alsea

* Of the final price medium producers obtain 100% as value added, while small producers get only 15%

## 2. Spatial dimension and economic geography

### 2.1 Concentration and spatial dispersion

* Coffee production is concentrated in distant lands to the municipal head. The roasted and ground processing is done in the municipal head

* The area has an average altitude of approximately 1000 meters above sea level which means a medium average and is classified as highland coffee

### 2.2 Economic geography of production (year 2016)

* Planted area: 5706 hectares

* Harvested area: 5331 hectares

* Production of coffee: 3307 tons

* Production of organic coffee: 1750 tons

* Producers: 451

* Production units: 301

## Socio-economic characteristics of producers

Basic Services: Piped water: 84% production units. Drainage: 41% production units. Electric energy: 85% production units. Gas for cooking: 37% production units. Indigenous Language: 2% production units. No level of education: 63% production units.

### 2.3 Consumption

* Each producer drinks, on average, a litre of coffee a day

## 3. Institutional framework dimension

The institutional framework of the coffee chain is reduced to the Mexican Association of the productive chain of coffee (Amecafe) and only support in terms of advice, training and sometimes promoting coffee consumption through competitions, workshops and exhibitions.

## 4. Governance dimension

* Small producers belong to a chain control by the buyer, while medium drives their own chain.

* For small producers there are relational links, with medium levels of coordination and asymmetry measured by a highly complex transaction, low skill coding and high responsiveness of suppliers. In the other way, the medium producers would be under medium levels of coordina-
tion, but with captive links controlled by themselves, with highly complex transactions, high
coding ability but low responsiveness because themselves produce. Conventions or standards
are domestic, referring to a product that is consumed by tradition; civic, in the case of producing
organic; industrial, since it requires some specific quality and; into a lesser extent, opinion for
those who are interested in the quality of the grain.

The main contributions are shared with producers in the region in order so that they can make decisions based on information about their own chain, generating sustainable development together in that place from coffee production. This can be possible in four aspects that distinguish this region from other coffee growing areas: 1) Most of the coffee plantation is located within a protected environmental area, giving a special attribute to coffee from these farms; 2) coffee Pluma has historical reputation for quality and taste, this is a domestic convention; 3) the kind of producers, unlike everywhere else in Mexico, are medium producers with an average between 2.5 and 100 hectares of land and 4) Pluma Hidalgo is a town that produces organic coffee. With these features and information about the behavior of the chain, the producer can decide whether to globalize their product or continue supplying nationwide, organic coffee produce or not and to determine the final selling price.