Sustainable Production Hits Its Stride

An annual growth rate of 41% is highly impressive for any business or industry. Would you believe that fair trade and eco-friendly products are currently seeing just such an explosion? The good news comes in a report called The State of Sustainability Initiatives Review 2014, compiled by a coalition of fair trade and sustainable development groups. It presents an optimistic outlook for sustainability standards and certifications and the companies that choose to pursue them. Some areas that need improving were also identified.

The review examined 16 key sustainability standards that cover 10 major commodities, such as cocoa, sugar and palm oil. The sustainability standards in the report, taken together, represent $31.6 billion in trade value. The 41% figure was the average annual growth seen in the production of sustainable commodities, like fair trade cocoa, in 2012. The study’s authors contrast this growth with the 2% rate at which conventional commodity markets grew. Sustainable palm oil was the strongest individual sector with growth of 90%, followed by sugar at 74%.

But perhaps the most important positive trend highlighted in the report is the increased market penetration seen by these standard-compliant commodities. Sustainable coffee, for instance, reached a 38% share of the global market in 2012, up from only 9% in 2008. The participation of developing countries in supply chain decision making was found to be improving along with the growth in production. Developed countries are still the dominant force in theses economic exchanges, but developing countries are gaining more of a voice as stakeholders.

Not everything is so rosy in the world of the eco-certifications, like Rainforest Alliance and Fairtrade International, profiled in the report. Oversupply is a problem in some cases, as the production of commodities has outpaced demand. While this means that companies have plenty of choice in the sustainable commodity market, downward pressure on prices will continue until demand meets supply.

The report also details the investments that will be needed in developing economies if they are to compete effectively in the sustainable commodities market. When developed, export-oriented economies are able to supply sustainable markets, they tend to dominate. Therefore, if eco-friendly and fair trade programs are to help reduce poverty, the playing field will have to be leveled.

Published in WholeFoods Magazine, March 2014