Don’t cut out the middlemen! Food system sustainability might depend on them

New research suggests that the knowledge of traders, brokers and other “midstream actors” in the global food supply chain could be crucial for long-term sustainability.

Janina Grabs
Sophia Carodenuto

Research led by Janina Grabs (former Assistant Professor at Esade and current Associate Professor at University of Basel) and Sophia Carodenuto (Associate Professor at University of Victoria, Canada) has stressed the importance of “midstream actors” in agri-food supply chains. 

The research, published in the journal Nature Sustainability, highlights the power of the midstream actors in the supply chain. These include multinational traders, brokers, managers, but also smaller suppliers and supply chain partners who sit between commodity producers and global food corporations. 

Acknowledging the crucial roles of traders, say the 15 authors of the journal article, is essential in supporting sustainability. Their findings include core takeaways for policymakers, civil societies, businesses and researchers. 

Unique abilities

A growing body of legislation is attempting to temper the environmental and social impact of food supply chains. The European Union’s Deforestation Regulation (EUDR) and Corporate Due Diligence Directive (CSDDD) provide important milestones, with similar measures being debated in the United States, Canada and Australia.  

Midstream actors possess a deep level of knowledge about the needs and production conditions of producers

But to be effective, the authors say, legislation must be based on an in-depth understanding of the needs and production conditions of producers. Midstream actors possess this deep level of knowledge: their ability to navigate local, national and international cultural and political contexts places them in an ideal position to influence supply chain sustainability.

But what expectations can be placed on these companies, and how can they be supported in their sustainability efforts? To find out, Grabs, Carodenuto and their coauthors collected expert insights with a focus on the cocoa, coffee and palm oil sectors.

The researchers held three virtual events and a three-day in-person workshop involving 47 experts, connecting representatives from mid-stream supply chain companies with academics in disciplines including business, geography, economics and land-use scientists.

Complex functions

The findings highlight the complexities of the agri-food supply chain. Midstream actors perform a wide range of functions across the supply chain, including transportation and storage, farmer support, data management, compliance assurance, and technology development. However, many of these critical functions remain unseen and thus, underappreciated. Especially their role in implementing sustainability benchmarks such as those related to the EUDR, is not fully understood. 

Rather than a single element of the supply chain, intermediaries should be viewed as independent entities with valuable local insight

Recognizing the diverse nature of these organizations is the first crucial step in supporting them, say the authors. The sustainability pledges made by global corporations rely on the understanding and cooperation of every player in the supply chain. Intermediaries provide a vital link in ensuring not just the movement of products, but a two-way flow of information

To aid this knowledge flow, intermediaries should be viewed as independent entities with valuable local insight, rather than a single element of the supply chain. A systemic investment of resources into localized compliance and on-the-ground collaboration can help to unite competitors in achieving common sustainability goals, say the researchers. 

In-depth understanding

The strength of the intermediary lies in their local presence, liaison abilities and unique knowledge. These strengths should be amplified throughout the midstream ecosystem, with companies encouraged to play a much greater role in the delivery of services and the management of information

Intermediaries are uniquely placed to deliver training, share best practices, strengthen standards and increase accountability. Their understanding of both upstream and downstream activities also makes them invaluable in leading a culture of transparency. This collaboration is a crucial aspect of addressing the increasing challenges related to data collection and management and protecting producers from exploitation.  

Formidable power?

According to the authors, the “formidable bargaining power” of intermediaries in connecting farmers to market has the potential for unscrupulous activities, but their influence on the ground can help sustainable practices to become adopted as standard, they add.  

Mid-stream companies are uniquely placed to ensuring farmers remain the focus of sustainability measures, rather than the victims of them

Still, practitioners stress that the mere fact of handling large volumes of products does not always translate into great power in determining pricing conditions or purchasing criteria, as their own terms and conditions are frequently dictated by their customers (consumer goods manufacturers and retailers). Improving supply chain sustainability thus requires efforts from across the value chain. 

In addition, policy makers from both consuming and producing countries have an important role to play. External governance plays an important role in meeting sustainability goals, but the most direct way to enable sustainable practices is to strengthen policies and their enforcement on the ground. Direct financial support for the implementation of sustainability measures, financing linked to sustainability and locally relevant policy can all help to create a more level playing field.  

Uncomfortable truths

While legislation plays a key role in global sustainability standards, it should be designed to incentivize rather than penalize. Making activities illegal can create a cover-up culture that negatively impacts those who have the least power to act. Mid-stream companies are partners who are uniquely placed to understand global challenges while ensuring farmers remain the focus of sustainability measures, rather than the victims of them

The companies in the middle of the supply chain are a critical link, but their role in sustainability is vastly underestimated. Rather than seeking to remove these links from the chain, they should be strengthened by acknowledging and embracing the unique skills, knowledge and expertise these companies possess. 

Failing to do so, the authors warn, threatens the impact of supply chain sustainability policy

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