Unfair trading practices| Markets and Trade – Food and Agriculture Organization

 

Analysis of Unfair Trading Practices in Agri-Food Supply Chains and Their Impact on Sustainable Development Goals

The Challenge of UTPs to Global Sustainability

Unfair Trading Practices (UTPs) within business-to-business agricultural supply chains represent a significant impediment to achieving the Sustainable Development Goals (SDGs). Factors such as trade liberalization, vertical integration of food systems, and geopolitical disruptions have concentrated market power, amplifying bargaining imbalances. These imbalances directly threaten the progress of several key SDGs by undermining the stability and equity of the global agri-food system.

Economic Ramifications and SDG Alignment

UTPs impose severe economic burdens that compromise fundamental development objectives. The prevalence of these practices directly obstructs progress on the following goals:

• SDG 1 (No Poverty) & SDG 2 (Zero Hunger): Practices such as delayed payments and unilateral contract modifications compromise the financial stability of farmers, particularly in developing nations. This economic vulnerability pushes rural communities further into poverty and limits their capacity to invest in productive, resilient agriculture, thereby threatening food security.
• SDG 8 (Decent Work and Economic Growth): UTPs undermine the principles of decent work by creating inequitable business relationships and fostering labor informality. They stifle inclusive and sustainable economic growth by preventing operational efficiency and discouraging innovation within the agricultural sector.
• SDG 10 (Reduced Inequalities): The core issue of UTPs is the exploitation of power imbalances. This practice exacerbates inequalities between small-scale producers and large downstream actors, hindering the ability of farmers in developing countries to capture value from their participation in global value chains.

Socio-Environmental Consequences and SDG Linkages

The impact of UTPs extends beyond economics, creating significant social and environmental challenges that are intrinsically linked to the SDGs.

• SDG 5 (Gender Equality): The economic precarity caused by UTPs often compounds existing social issues, including gender inequality, disproportionately affecting women farmers and workers who may have less bargaining power and access to resources.
• SDG 12 (Responsible Consumption and Production) & SDG 13 (Climate Action): When suppliers are forced to absorb unforeseen costs, they may resort to unsustainable practices, including resource exploitation. Furthermore, diminished financial capacity restricts producers’ ability to invest in climate-resilient technologies and practices, thereby reducing the agricultural sector’s overall resilience to climate change.

FAO’s Strategic Response and Contribution to Global Goals

Recognizing the multidimensional threat posed by UTPs, the Food and Agriculture Organization (FAO) has initiated a strategic response aimed at fostering more equitable and sustainable agri-food systems. These efforts are designed to support the achievement of multiple SDGs through a structured approach:

1. Evidence-Based Research: FAO is investigating the prevalence and impact of UTPs to generate robust data. This supports evidence-based policymaking, a critical component for building effective institutions as outlined in SDG 16 (Peace, Justice and Strong Institutions).
2. Promotion of Best Practices: The analysis includes highlighting emerging soft-law instruments and regulatory frameworks adopted in various jurisdictions. Sharing these models promotes the development of fair and transparent institutional frameworks globally, reinforcing SDG 16.
3. Fostering Sustainable Value Chains: By addressing UTPs, FAO’s ultimate goal is to create more inclusive, efficient, resilient, and sustainable agri-food value chains. This comprehensive vision directly supports the interconnected goals of Zero Hunger (SDG 2), Responsible Production (SDG 12), and requires international cooperation as envisioned in SDG 17 (Partnerships for the Goals).

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 1: No Poverty

• The article directly connects Unfair Trading Practices (UTPs) to the financial instability of farmers and “rural poverty,” which are central concerns of SDG 1.

SDG 2: Zero Hunger

• The article focuses on agricultural supply chains and the stability of farmers. UTPs undermine the efficiency and sustainability of these chains, which are crucial for ensuring food security and achieving the goals of SDG 2.

SDG 5: Gender Equality

• The text explicitly mentions “gender inequality” as a social issue that is compounded by the economic vulnerability caused by UTPs, linking the issue directly to SDG 5.

SDG 8: Decent Work and Economic Growth

• The article highlights “labor informality” and the “significant economic burdens” placed on suppliers. It discusses the need for farmers to “compete on equitable terms,” which aligns with the goal of promoting decent work and inclusive economic growth.

SDG 10: Reduced Inequalities

• The core theme of the article is the “bargaining power imbalances” and “concentration of market power” that lead to UTPs. This directly addresses the goal of reducing inequality within and among countries.

SDG 12: Responsible Consumption and Production

• The article mentions that UTPs lead to “resource exploitation” and discusses FAO’s commitment to “sustainable agri-food value chains,” connecting the issue to the principles of sustainable production patterns.

SDG 13: Climate Action

• An environmental consequence noted in the article is that “resilience to climate change declines” due to UTPs, linking the practices to the challenges addressed by SDG 13.

SDG 17: Partnerships for the Goals

• The article discusses UTPs in the context of “trade liberalization” and “global value chains.” It also mentions FAO’s role in supporting “evidence-based policymaking” and the adoption of “soft-law instruments,” which relates to strengthening global partnerships and policy coherence for sustainable development.

2. What specific targets under those SDGs can be identified based on the article’s content?

SDG 1: No Poverty

• Target 1.2: By 2030, reduce at least by half the proportion of men, women and children of all ages living in poverty in all its dimensions. The article’s mention of “rural poverty” directly relates to this target.
• Target 1.4: By 2030, ensure that all men and women, in particular the poor and the vulnerable, have equal rights to economic resources. UTPs directly undermine these rights for farmers.

SDG 2: Zero Hunger

• Target 2.3: By 2030, double the agricultural productivity and incomes of small-scale food producers. The article states that UTPs “compromise farmers’ financial stability” and limit their ability to “effectively capture value,” which runs counter to this target.
• Target 2.4: By 2030, ensure sustainable food production systems and implement resilient agricultural practices. The article notes that UTPs lead to a decline in “resilience to climate change” and undermine the sustainability of agri-food chains.

SDG 5: Gender Equality

• Target 5.a: Undertake reforms to give women equal rights to economic resources. The article’s identification of “gender inequality” as a social issue compounded by economic vulnerability points to the need to address this target within agricultural value chains.

SDG 8: Decent Work and Economic Growth

• Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men. The mention of “labor informality” indicates a lack of decent work, which this target aims to rectify.
• Target 8.8: Protect labour rights and promote safe and secure working environments for all workers. UTPs like “unilateral contract modifications” and “shifting costs to suppliers” create insecure working environments.

SDG 10: Reduced Inequalities

• Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average. Farmers in developing countries, who are disproportionately affected by UTPs, often fall into this demographic.

SDG 12: Responsible Consumption and Production

• Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources. The article’s reference to “resource exploitation” as a consequence of UTPs directly relates to this target.

SDG 17: Partnerships for the Goals

• Target 17.14: Enhance policy coherence for sustainable development. FAO’s effort to “support evidence-based policymaking and the formulation of best practices” is a direct action towards achieving this target.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Farmer Financial Stability: Implied as a key indicator. Progress could be measured by tracking changes in farmer income, debt levels, and profit margins, which are affected by practices like “delayed payments” and “shifting costs.”
• Prevalence of Unfair Trading Practices: The article focuses on UTPs like “delayed payments, unilateral contract modifications, and shifting costs.” An indicator would be the reported incidence of these practices in supply chains.
• Rates of Rural Poverty: The article explicitly mentions “rural poverty.” Measuring the percentage of the rural population living below the poverty line would be a direct indicator.
• Levels of Gender Inequality: The article mentions “gender inequality.” This could be measured through indicators like the gender pay gap in the agricultural sector or women’s access to and control over economic resources.
• Rates of Labor Informality: The mention of “labor informality” implies that measuring the percentage of workers in the agricultural sector without formal contracts or social protection is a relevant indicator.
• Resource Exploitation Levels: The article mentions “resource exploitation.” This could be measured by tracking rates of soil degradation, water use efficiency, or deforestation linked to agricultural production.
• Adoption of Policies/Soft-Law Instruments: The article highlights “emerging soft-law instruments adopted in various jurisdictions.” A clear indicator of progress is the number of countries or jurisdictions that have enacted legislation or regulations to curb UTPs.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators’ to present the findings from analyzing the article.

SDGs	Targets	Indicators (Mentioned or Implied in Article)
SDG 1: No Poverty	1.2: Reduce poverty in all its dimensions. 1.4: Equal rights to economic resources.	Prevalence of rural poverty; Farmer financial stability (income, debt).
SDG 2: Zero Hunger	2.3: Double incomes of small-scale food producers. 2.4: Ensure sustainable and resilient food production.	Farmer income levels; Measures of resilience to climate change.
SDG 5: Gender Equality	5.a: Equal rights to economic resources for women.	Indicators of gender inequality in agricultural value chains.
SDG 8: Decent Work and Economic Growth	8.5: Full and productive employment and decent work. 8.8: Protect labour rights.	Rates of labor informality; Incidence of unilateral contract modifications.
SDG 10: Reduced Inequalities	10.1: Sustain income growth of the bottom 40%.	Income levels of small-scale farmers; Measures of bargaining power imbalances.
SDG 12: Responsible Consumption and Production	12.2: Sustainable management and efficient use of natural resources.	Rates of resource exploitation.
SDG 13: Climate Action	(Implied) Targets related to enhancing adaptive capacity and resilience.	Measures of agricultural resilience to climate change.
SDG 17: Partnerships for the Goals	17.14: Enhance policy coherence for sustainable development.	Number of jurisdictions adopting policies or soft-law instruments against UTPs.

Source: fao.org