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Rob Jordan, Stanford Woods Institute for the Environment
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Widespread cultivation of oil palm trees has been both an economic boon and an environmental disaster for tropical developing-world countries. New research points to a more sustainable path forward through engagement with small-scale producers.

Nearly ubiquitous in products ranging from cookies to cosmetics, palm oil represents a bedeviling double-edged sword. Widespread cultivation of oil palm trees has been both an economic boon and an environmental disaster for tropical developing-world countries, contributing to large-scale habitat loss, among other impacts. New Stanford-led research points the way to a middle ground of sustainable development through engagement with an often overlooked segment of the supply chain (read related overview and research brief).

"The oil palm sector is working to achieve zero-deforestation supply chains in response to consumer-driven and regulatory pressures, but they won’t be successful until we find effective ways to include small-scale producers in sustainability strategies,” said Elsa Ordway, lead author of a Jan. 10 Nature Communications paper that examines the role of proliferating informal oil palm mills in African deforestation. Ordway, a postdoctoral fellow at The Harvard University Center for the Environment, did the research while a graduate student in Stanford’s School of Earth, Energy & Environmental Sciences.

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An oil palm plantation in Cameroon (Image credit: Elsa Ordway)

Using remote sensing tools, Ordway and her colleagues mapped deforestation due to oil palm expansion in Southwest Cameroon, a top producing region in Africa’s third largest palm oil producing country (read about related Stanford research). Contrary to a widely publicized narrative of deforestation driven by industrial-scale expansion, the researchers found most oil palm expansion and associated deforestation occurred outside large, company-owned concessions, and that expansion and forest clearing by small-scale, non-industrial producers was more likely near low-yielding informal mills, scattered throughout the region. This is strong evidence that oil palm production gains in Cameroon are coming from extensification instead of intensification.

Possible solutions for reversing the extensification trend include improving crop and processing yields by using more high-yielding seed types, replanting old plantations, and upgrading and mechanizing milling technologies, among other approaches. To prevent intensification efforts from inciting further deforestation, they will need to be accompanied by complementary natural resource policies that include sustainability incentives for smallholders.

In Indonesia, where a large percentage of the world’s oil palm-related forest clearing has occurred, a similar focus on independent, smallholder producers could yield major benefits for both poverty alleviation and environmental conservation, according to a Jan. 4 Ambio study led by Rosamond Naylor, the William Wrigley Professor in the School of Earth, Energy & Environmental Sciences and a senior fellow at the Stanford Woods Institute for the Environment and the Freeman Spogli Institute for International Studies(Naylor coauthored the Cameroon study led by Ordway).

Using field surveys and government data, Naylor and her colleagues analyzed the role of small producers in economic development and environmental damage through land clearing. Their research focused on how changes in legal instruments and government policies during the past two decades, including the abandonment of revenue-sharing agreements between district and central governments and conflicting land title authority among local, regional and central authorities, have fueled rapid oil palm growth and forest clearing in Indonesia.

They found that Indonesia’s shift toward decentralized governance since the end of the Suharto dictatorship in 1998 has simultaneously encouraged economic development through the expansion of smallholder oil palm producers (by far the fastest growing subsector of the industry since decentralization began), reduced rural poverty, and driven ecologically destructive practices such as oil palm encroachment into more than 80 percent of the country’s Tesso Nilo National Park.

 A worker in East Kalimantan, Indonesia, loads palm fruit for transport to a factory that will process it into palm oil (Image credit: Joann de Zegher) A worker in East Kalimantan, Indonesia, loads palm fruit for transport to a factory that will process it into palm oil (Image credit: Joann de Zegher)

 A worker in East Kalimantan, Indonesia, loads palm fruit for transport to a factory that will process it into palm oil (Image credit: Joann de Zegher)

Among other potential solutions, Naylor and her coauthors suggest Indonesia’s Village Law of 2014, which devolves authority over economic development to the local level, be re-drafted to enforce existing environmental laws explicitly. Widespread use of external facilitators could help local leaders design sustainable development strategies and allocate village funds more efficiently, according to the research. Also, economic incentives for sustainable development, such as an India program in which residents are paid to leave forests standing, could make a significant impact.

There is reason for hope in recent moves by Indonesia’s government, including support for initiatives that involve large oil palm companies working with smallholders to reduce fires and increase productivity; and the mapping of a national fire prevention plan that relies on financial incentives.

“In all of these efforts, smallholder producers operating within a decentralized form of governance provide both the greatest challenges and the largest opportunities for enhancing rural development while minimizing environmental degradation,” the researchers write.

Coauthors of “Decentralization and the environment: Assessing smallholder oil palm development in Indonesia” include Matthew Higgins, a research assistant at Stanford’s Center on Food Security and the Environment; Ryan Edwards of Dartmouth College, and Walter Falcon, the Helen C. Farnsworth Professor of International Agricultural Policy, Emeritus, at Stanford.

Coauthors of “Oil palm expansion at the expense of forests in Southwest Cameroon associated with proliferation of informal mills” include Raymond Nkongho, a former fellow at Stanford’s Center for Food Security and the Environment; and Eric Lambin, the George and Setsuko Ishiyama Provostial Professor in the School of Earth, Energy & Environmental Sciences and a senior fellow at the Stanford Woods Institute for the Environment.

 

 

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Companies' sustainable sourcing practices play an increasing role in addressing the social and environmental challenges in agricultural supply chains. Yet the approaches companies take to regulate their supply chains continue to evolve. I use the chocolate industry as a critical case to explore how and why companies have changed their approaches to sustainable cocoa sourcing over the last 20 years. Drawing on an analysis of 205 company documents, 95 newspaper articles and over 50 in‐depth interviews, I trace the evolution of chocolate manufacturers' sustainable sourcing practices from a focus on industry initiatives to a commitment to sustainability certification and now to companies increasingly moving toward own‐supply chain programs. These shifts can in part be explained by the evolving salience of different stakeholder groups over time. This study highlights the dynamic nature of sustainable sourcing practice adoption and suggests companies are building upon previous strategies to incorporate more stakeholder voices over time.

 
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Business Strategy and Development
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Abstract: Using field survey data collected by the authors, this chapter first describes groundwater markets in northern China that have been developing rapidly in the past two decades. Groundwater markets in the area are informal, localized and mostly unregulated. There is little price discrimination, and institutional characteristics tend to be similar in both high- and low-income villages. The privatization of tubewells is one of the most important driving forces encouraging the development of groundwater markets. Increasing water and land scarcity are also major determinants. The chapter also explores the impacts of the emergence of the groundwater markets on agricultural production – including crop water use and crop yields – and farmer income in northern China. Results indicate farmers that buy water from groundwater markets use less water than those that have their own tubewells. However yields of water buyers are not negatively affected. This is probably because water buyers exert more efforts to improve water use efficiency. Results also show that other things held constant, the crop incomes of water buyers are not statistically different from those of well owners. The chapter also finds that groundwater markets in northern China are not monopolistic, supporting the notion that they offer poor rural households affordable access to irrigation water.

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Water Markets for the 21st Century: What Have We Learned?
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Jinxia Wang
Lijuang Zhang
Qiuqiong Huang
Jikun Huang
Scott Rozelle
Scott Rozelle
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Large and regular seasonal price fluctuations in local grain markets appear to offer African farmers substantial inter-temporal arbitrage opportunities, but these opportunities remain largely unexploited: small-scale farmers are commonly observed to "sell low and buy high" rather than the reverse. In a field experiment in Kenya, we show that credit market imperfections limit farmers' abilities to move grain inter-temporally. Providing timely access to credit allows farmers to buy at lower prices and sell at higher prices, increasing farm revenues and generating a return on investment of 28%. To understand general equilibrium effects of these changes in behavior, we vary the density of loan offers across locations. We document significant effects of the credit intervention on seasonal price fluctuations in local grain markets, and show that these GE effects shape individual level profitability estimates. In contrast to existing experimental work, the results indicate a setting in which microcredit can improve firm profitability, and suggest that GE effects can substantially shape microcredit's effectiveness. In particular, failure to consider these GE effects could lead to underestimates of the social welfare benefits of microcredit interventions.

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NATIONAL BUREAU OF ECONOMIC RESEARCH
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Marshall Burke
Lauren Falcao Bergquist, Edward Miguel
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Pamela Ronald was a Visiting Professor at the Center on Food Security and the Environment in 2018 and remains an FSE affiliate. She is also a Distinguished Professor in the Department of Plant Pathology and the Genome Center at UC Davis and serves as Director of Grass Genetics at the Joint Bioenergy Institute in Emeryville, California and Faculty Director of the UC Davis Institute for Food and Agricultural Literacy.

Ronald’s laboratory studies the genetic basis of resistance to disease and tolerance to stress in rice. Together with her collaborators, she has engineered rice for resistance to disease and tolerance to flooding, which seriously threaten rice crops in Asia and Africa. For example, Ronald and collaborators discovered the rice XA21 immune receptor and the rice Sub1A submergence tolerance transcription factor. In 2015, five million farmers planted Sub1 rice varieties developed by breeders at the International Rice Research Institute. In 1996, she established the Genetic Resources Recognition Fund, a mechanism to recognize intellectual property contributions from less developed countries.

She and her colleagues were recipients of the USDA 2008 National Research Initiative Discovery Award for their work on rice submergence tolerance. She was awarded a Guggenheim Fellowship, the Fulbright-Tocqueville Distinguished Chair and the  National Association of Science Writers Science in Society Journalism Award. She is an elected fellow of the American Association for the Advancement of Science. In 2011, she was selected as one of the 100 most creative people in business by Fast Company Magazine. In 2012, Ronald was awarded the Louis Malassis International Scientific Prize for Agriculture and Food and the Tech Award for innovative use of technology to benefit humanity. In 2015 Scientific American selected Ronald as one of the world’s 100 most influential people in biotechnology. In 2016, Grist magazine named Ronald as one of 50 innovators who will lead us toward a more sustainable future.

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Food retailers and manufacturers are increasingly committing to address agricultural sustainability issues in their supply chains. In place of using established eco-certifications, many companies define their own supply chain sustainability standards. Scholars remain divided on whether we should expect such company-led programs to affect change. We use a major food retailer as a critical case to evaluate the effectiveness of a company-led supply chain standard in improving environmental farm management practices. We find that the company-led standard increases the adoption of most environmental best management practices among the company's fruit, vegetable and flower growers in South Africa. This result is robust across two identification strategies: a panel analysis of over 950 farm audits and a cross-sectional matching analysis using original survey data. In-depth interviews suggest that the program's unique focus on capacity building through audit visits by highly trained staff, coupled with a close business relationship between the retailer and their growers help to explain the increased effectiveness of the program as compared to other private environmental standards. Contrary to the argument that company-led initiatives are mere window dressing, this study provides a critical example of the positive role private governance mechanisms can play in improving environmental farm management practices globally.

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Global Environmental Change
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Jens Hainmueller
Eric Lambin
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A critical question for agricultural production and food security is how water demand for staple crops will respond to climate and carbon dioxide (CO2) changes1, especially in light of the expected increases in extreme heat exposure2. To quantify the trade-offs between the effects of climate and CO2 on water demand, we use a ‘sink-strength’ model of demand3,4 which relies on the vapour-pressure deficit (VPD), incident radiation and the efficiencies of canopy-radiation use and canopy transpiration; the latter two are both dependent on CO2. This model is applied to a global data set of gridded monthly weather data over the cropping regions of maize, soybean, wheat and rice during the years 1948–2013. We find that this approach agrees well with Penman–Monteith potential evapotranspiration (PM) for the C3 crops of soybean, wheat and rice, where the competing CO2 effects largely cancel each other out, but that water demand in maize is significantly overstated by a demand measure that does not include CO2, such as the PM. We find the largest changes in wheat, for which water demand has increased since 1981 over 86% of the global cropping area and by 2.3–3.6 percentage points per decade in different regions.

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Nature Climate Change
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Daniel W. Urban, Justin Sheffield
David Lobell
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Policies that promote biofuels in major agricultural economies raise important questions for food prices and food security at local to global scales. Global biofuel output rose from 38 billion liters to 131 billion liters between 2005 and 2015, boosting the demand for annual- and perennial-crop feedstocks such as maize, sugar, soy, rapeseed, and palm oil. Although ethanol volume was three times that of biodiesel in 2015, the share of biodiesel in total biofuel output rose from 10% to almost 25% over the course of the decade (EIA, n.d.; REN21, 2016). Biodiesel production increased 700% between 2005 and 2015 and is expected to rise by another 35% by 2025 (OECD/FAO, 2014). In this paper, we examine the linkages between biodiesel, oil crop, and energy markets, and ask: What are the food security implications of biodiesel policies in major agricultural economies? How do governments adjust biodiesel policies in response to international commodity prices, trade opportunities, and their changing economic and environmental priorities?

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Global Food Security
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Rosamond L. Naylor
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The rise in global biodiesel production: Implications for food security
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Food security experts identify government support, policy implementation, private sector engagement and investment in smallholder farmers as keys to Africa’s agricultural future.

Food security experts from the Alliance for a Green Revolution in Africa (AGRA) gathered to discuss transforming food production in Africa at Stanford on Nov. 29. The symposium, hosted by the Center on Food Security and the Environment (FSE) examined the challenges, strategies, and possible solutions for catalyzing and sustaining an inclusive agriculture transformation in Africa. 

Moderator Ertharin Cousin, FSE visiting fellow and previous World Food Programme director with more than 25 years of experience on hunger, food, and resilience strategies, launched the panel by outlining Africa’s plight. “Today some 100 million of the farmers across Sub-Saharan Africa farm less than 2 hectares of land. Some 80 percent of those living in rural areas are poor. More than 30 percent of the rural population is chronically hungry and 35 percent of the under-five-year-olds are stunted. By 2050, the bulk of the world's population growth will take place on the continent. In fact, some project that 1.3 billion will be added to the continent, and Nigeria’s [population] will grow larger than the size of the United States between now and 2050,” Cousin said

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While Africa continues to experience the highest occurrence of food insecurity worldwide, the continent also contains over 60 percent of the worlds uncultivated but fertile land. AGRA formed in 2006 to fulfill the vision that Africa can feed itself and the world. Panelists included Agnes Kalibata, AGRA President and former Minister of Agriculture and Animal Resources of Rwanda; Kanayo F. Nwanze, AGRA board member and immediate past president of the International Fund for Agricultural Development; Usha Barwale Zehr, AGRA board member and Director and Chief Technology Officer of Maharashtra Hybrid Seeds Company Private Limited; and Rajiv Shah, AGRA board member, Rockefeller Foundation President and former Administer of USAID.

Kanayo F. Nwanze stressed the importance of agricultural transformation for Africa’s future. “No country in the world ever transformed itself without going through an agrarian change. No country. Europe, 17th; Japan, 18th century; 19th century was the US, your country; China, 20th century. Why should they be different from Africa? So, first and foremost, we have to have total agricultural transformation,” Nwanze said.

AGRA president, Agnes Kalibata, also spoke to the need for policy implementation and government support in helping drive change. “AGRA as an institution can only do so much. But these governments have the potential and the capacity to reach every corner of their countries. The problem is they are challenged by capacity to do that, by capacity to design proper programs, and by capacity to implement these programs,” Kalibata said.

Expanding on governments' ability to impact and drive change, Usha Barwale Zehr highlighted Asia’s success, specifically with strategic partnerships. “…we've done a lot of talking about public/private partnership. Not so much on the ground on implementing it in a manner, which happened in Asia, for instance, where there was policy, and, most importantly, government will. The government was willing to do whatever it took to make sure that agriculture was transformed at the end of it,” Zehr said.

Beyond government and policy support the panelists also addressed the need for innovation and access to seed technologies. “Why is it that the African farmer and the Indian farmer should not have access to what the American farmer has access to today and reaps benefit from it? …So it's the hybrids, the varieties, the GM technology. Tomorrow it'll be the gene-edited products. And after that we will talk about the satellite-based imaging data that we will use for developing drought-tolerant crops for that very, very small micro environment that existed in the one district in Nigeria,” Zehr said.

"By 2050, who is going to feed Africa? … It's the youth of today. But they're not going to be using the same technologies that exist today. Just think of what IT can do, aggregation, organization of farmer's groups. So, the elements are there. I see the agriculture of tomorrow meeting the challenge – for Africa meeting that challenge is Africa being at the forefront of feeding the world. Africa has to be able to feed itself first. And we have all the opportunities there,” Nwanze said.

This is the first installment of the Global Food Security Symposium series hosted by Stanford University's Center on Food Security and the Environment and generously supported by Zach Nelson and Elizabeth Horn. FSE is a joint initiative of the Stanford Woods Institute for the Environment and the Freeman Spogli Institute for International Studies.

 

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