Coke, Pepsi Sugar Supplies Tied To Global Land Grabs, Conflict

A new report is seeking to draw attention to the murky supply lines behind the multinational food and beverage industry.
By @clbtea |
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    WASHINGTON – Coca-Cola, PepsiCo and the broader food and soft-drink industry are failing to ensure that their global sugar supply lines are not facilitating “land grabs,” according to new research released this week.

    The global sugar industry is thought to be worth some $47 billion, with the food and drinks industry using about half of the 176 million tons produced annually. Yet even as global demand for sugar is forecast to increase by another 25 percent by the end of this decade, researchers with Oxfam, an anti-poverty group, are warning that the market is already fuelling land-related conflicts.

    And despite several companies having instituted or agreed to new safeguards in recent years, Oxfam states in a new report that these actions are not doing enough to guarantee that consumers are purchasing products made with only “clean sugar.” Further, many sugar users have also reportedly failed to take adequate steps towards ensuring transparency of these supply lines, thus cutting off a key opportunity for consumers, local communities and civil society worldwide to offer critical oversight.

    Oxfam is focusing its attention on three of the world’s largest sugar consumers: Coca-Cola, PepsiCo and Associated British Foods.

    “Many of the world’s largest food companies rely on long chains of production that maintain great distance between their corporate offices and the fields where their raw ingredients are grown,” the report says. “As a result, the biggest sugar buyers and producers have failed to keep tabs on their industry’s insatiable demand for land, and the lengths to which the third party companies they work with will go to acquire it.”

    “Land grabbing” has increasingly been in the news in recent years, fuelled by multinational companies and both foreign and domestic investors eyeing potentially significant profits in large-scale agriculture in developing countries. Such moves have become particularly lucrative in the aftermath of the global spike in food prices in 2007-08, as well as in the context of the continued growth in the biofuel industry, which uses slightly less than half of today’s sugarcane crop.

    Purchasing land outright or making often legally questionable long-term deals with governments in poor countries, such projects typically lead to large tracts of monocropped plantation.

    Despite the scope of the land-grabbing problem, exact estimates on its impact have been difficult. The Land Matrix Global Observatory, a land-monitoring database maintained by five international research organizations, currently says it has verified the exchange of about 33 million hectares worldwide in nearly 850 large-scale land acquisitions in recent years.

    Others have placed the figure far higher. According to 2011 research by the World Bank, “Compared to an average annual expansion of global agricultural land of less than 4 million hectares before 2008, approximately 56 million hectares worth of large-scale farmland deals were announced even before the end of 2009. More than 70 percent of such demand has been in Africa.”

    That same year, Oxfam suggested a figure of more than 227 million hectares having been sold, leased or licensed during the first decade of this century.

    These large tracts are most often planted with oil palm, soybeans or sugar. Yet despite the fact that sugar requires far more land than these other two cash crops, and despite the fact that demand for this product is currently growing faster than demand for the other two, sugar’s impact on local communities has received far less attention worldwide.

    In its new report, Oxfam researchers include case studies from Cambodia and Brazil. In both places, local communities have said they have been pushed off of their lands to make room for sugar plantations.

    “There were bulldozers clearing the land and we tried to stop them,” the report quotes Mon Yorm, a 57-year-old villager in Cambodia’s Sre Ambol district, saying of her community’s 2006 eviction, allegedly by Thai company Khon Kaen Sugar. “When we told them it was our land, the men on the bulldozers simply said they were following orders from the company.”


    Overlooking land

    Some 31 million hectares – an area the size of Italy – are currently planted to sugar globally. Of this, Oxfam says that around 4 million hectares is thought to have been linked to around 100 large-scale land acquisitions since 2000, though the group cautions that the true area could be far larger given the shoddiness of some information.

    “The sugar supply chain has been particularly opaque – the supply chains are much longer and we found it very difficult to make connections between the big companies and the sugar,” Chris Jochnick, director of the private sector department at Oxfam America, told Mint Press News.

     “There is a certain degree of urgency on this issue. On all of the other sustainability issues, companies have stepped up and started trying to address existing problems, but on land we’re not seeing that. These companies have fallen behind and need to catch up.”

    In particular, Oxfam is calling for industry leaders to commit to United Nations principles, endorsed in 2011, offering guidance on how land tenure issues should best be dealt with surrounding global food production. These include the recognition of tenure rights even under informal systems. Oxfam notes that the World Bank has reported that a central characteristic linking countries experiencing the most large-scale land acquisitions has been weak protection for rural land rights.

    Jochnick says that the big U.S. companies, including Coca-Cola and PepsiCo, expressed keen interest in working with Oxfam and other civil society groups to ameliorate some of these issues. He also notes that advocates inevitably target these big-name corporations because they’re more susceptible to consumer pressure – unlike the middleman companies that are much closer to the producers.

    One of those middleman companies – the U.S.-based Bunge, a Coca-Cola supplier – has been involved in a controversial situation surrounding a sugar plantation in Brazil. Since 2008, Bunge has processed sugarcane grown on lands that continue to be claimed by an indigenous group called the Guarani-Kaiowa. While that case remains under examination by the Brazilian authorities, Bunge says it will continue the operation in question.

    “The company’s position is rooted in the concepts of fair legal process and compliance … As of now, the [Brazilian] government has not made a decision designating the lands as indigenous. This is a crucial step in any official process,” a Bunge spokesperson told Mint Press News.

    “As such, the company continues to honor legal contracts with growers, signed prior to our acquisition of the mill, to source sugarcane from these lands. We have, however, pledged not to renew these contracts as they expire, which all of the remaining agreements will in 2014. If the lands are designated as indigenous before that time, we will stop purchases immediately.”

    Bunge says it is not aware of conflict on the farms from which it sources sugarcane in Brazil.

    A spokesperson for Coca-Cola, meanwhile, told Mint Press News that it does not source sugar from the Bunge mill in contention.

    The company is “asking our suppliers to recognize and safeguard the rights of communities and traditional peoples to maintain access to land and natural resources,” the spokesperson says. “We are working to promote respect for human and workplace rights by the farm and the employer of workers at the farm, whether or not the employer is the farm itself.”


    Increasing transparency

    Perhaps the most prominent indication of the food and beverage industry’s level of seriousness about dealing with rights concerns regarding its sugar supply lines is a certification initiative, spearheaded by Coca-Cola, known as Bonsucro. Created in 2007, the Bonsucro standard covers issues related to the environment, labor, and free and informed consent for communities affected by plantations.

    But corporate sugar supply chains have yet to open up to substantive external scrutiny, Jochnick warns.

    “We’re not seeing any real movement on transparency – that’s a big sticking point and one that companies should immediately address,” he says. “We don’t know which countries or suppliers a lot of companies buy from. Indeed, companies have yet to begin acknowledging land as a significant risk – it’s hard to find any mention in the corporate sustainability reports on land grabs.”

    Bonsucro acknowledges that work remains to be done to increase transparency within the sugar sector, but says companies are starting to address the issue.

    “The sugar supply chain is complex. For many companies, they are in the early stages of mapping their sugarcane supply chain,” Natasha Schwarzbach, head of engagement for Bonsucro, told Mint Press News.

    “A key aspect of our mission is to help our members continuously improve. We do this by working with our members to help them map their supply chain so we can work together to help address the sustainability challenges.”

    Coca-Cola told Mint Press News that it has committed to a transparent global operation and has submitted a proposal to Oxfam that “outlines key areas of concrete action, including potential impact assessments and providing a higher level of supply chain disclosure.”

    Yet observers on the ground express concern that, in the past, corporate-led attempts to clean up the sugar industry have not led to strong implementation.

    “Industry-led ‘sustainability initiatives’ and certification schemes like Bonsucro do not tend to do a very good job of getting companies to act ethically,” David Pred, managing director of Inclusive Development International, a Cambodia-based advocacy group, told Mint Press News.

    Pred points to two sugar companies that have had recent operations in Cambodia, the British Tate & Lyle and the Thai giant Mitr Phol. Both of these had signed up to the Bonsucro code of conduct, but then, Pred says, they “engaged either directly or through their supply chains in land grabbing, forced evictions and child labor.”

    While Bonsucro did suspend Tate & Lyle in July, Pred complains that doing so took two and a half years of significant public pressure.

     “The grievance mechanism was not equipped to help the affected communities obtain redress from Tate & Lyle Sugars,” he says, “whose suppliers stole their land and destroyed their crops, forests and livestock, forcing many of their children to drop out of school to work on the plantations.”

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