To influence commodity market actors, it is necessary to identify which companies or entities are handling the commodities from specific territories with supply chain information. How do actors perform in the supply chain? Which companies are exposed to risk?
Agricultural supply chains generally involve a myriad of actors at both ends of the chains, i.e. producers and consumers. In the middle, though, far fewer actors handle, transport, process and export the commodities. In Côte d’Ivoire for instance, just five corporations export about half of the country’s cocoa produced by almost a million of smallholder farmers, through a few thousands of intermediaries, local traders and cooperatives.
Starting with the middle segment of supply chains
Tracking the middle segment of supply chains is an excellent starting point for supply-chain transparency. Tracing commodities from their point of export up to their first point of aggregation (mills, silos, cooperatives, etc.) enables linking supply chain actors to the subnational jurisdictions where commodity deforestation is monitored.
The middle portions of these internationally-traded commodity supply chains are generally regulated and monitored, if only for fiscal purposes, even if this information is rarely made available to the public.
That data is generally spread across different and disconnected reporting channels – for instance, the ownership of industrial assets might be reported to the fiscal administration, the monthly volumes of production per asset are reported to the Ministry of Agriculture, per-shipment export data is with the customs administration, etc.
- Best situation. In some cases, a national institution centralises all the data, facilitating supply chain governance. This is notably the case for organisations in charge of coordinating or monitoring the implementation of national certification schemes (e.g. the Malaysian Palm Oil Certification Council)
- Second-best situation. Relevant data to track supply chain connections is scattered across different administrations, and some of it may even only be held by private actors. For this type of situation, the methods used by the Trase initiative provide a solution adaptable to each context. Learn more about the method.
Tracking the middle segment of supply chains as starting point for supply-chain transparency. Source: EFI
Towards farm-level data in high-risk places
Regarding the upstream portion of the supply chains, the availability of farm-level sourcing information heavily depends on the supply chain and country. Numerous traceability efforts have been made by agribusinesses to trace sourcing back to individual farms. This more detailed traceability, from public and private endeavours, and its possible disclosure, can be the focus in high-risk places.
It should be noted that companies’ traceability investments generally end with their direct suppliers. Indirect sourcing, through other suppliers, traders, cooperatives, is rarely monitored, although it can represent a very significant proportion of agribusinesses’ supply chains. In Côte d’Ivoire for instance, the six biggest cocoa traders (marketing 74% of the production) source 60% from indirect sourcing and none of this is traced.