¹Raffaele D’Annolfo, ¹Federica Demaria, ¹Federica Morandi, ²Sara Romano, ¹Maria Rosaria Pupo D’Andrea, ¹Roberto Henke and ¹Riccardo Passero

¹Consiglio per la ricerca in agricoltura e l’analisi dell’economia agraria (CREA)

²Università degli Studi della Tuscia

Background

Trade4Sustainable Development is a project funded by the European Union’s Horizon 2020 program with the primary objective of contributing to the creation of new opportunities that foster positive sustainability impacts of trade. Within this project, Work Package 4 (WP4) aims to conduct a “Qualitative in-depth analysis of linkages and case studies”, specifically focusing on fruit and vegetables, coffee in Vietnam, cocoa and cashew in Ghana, rice in Thailand, and olive oil in Tunisia. Following a careful selection of value-chain products, CREA has undertaken an in-depth analysis of the cocoa and cashew value chains in Ghana and the tea, dragon fruit, and rice value chains in Vietnam (Deliverable 4.2). These value-chain case studies will also serve as the basis for the preparation of Deliverable 4.3, titled “Policy brief: Assessment of sustainability effects of voluntary and ethical trade standards”, which will be developed in collaboration between CREA and the Institut National de la Recherche Agronomique (INRAE).

Objective

The purpose of this article is to provide a preliminary overview of the common evidence on the main issues identified by the CREA team, focusing specifically on different value chains in Ghana and Vietnam (D.4.2). It also emphasizes the need for further study on Voluntary Sustainability Standards (VSSs), which the literature has shown deserve consideration when designing policies and programs aimed at improving various aspects of the livelihoods of smallholder farmers, including labor rights, gender equality, adoption of sustainable practices, and biodiversity promotion (D.4.3). These considerations are particularly relevant in the light of the Agenda for Sustainable Development (UN, 2015).

Value-chain analysis in Ghana and Vietnam: common challenges and opportunities

International agricultural trade plays a crucial role as a primary source of foreign exchange in many developing countries, providing a vital economic lifeline by facilitating the exchange of agricultural products across borders. This exchange not only contributes to the financial stability of these nations but also fosters global economic integration. Additionally, it provides valuable resources to governments that can be reinvested into diverse public initiatives aimed at fostering wealth creation and, consequently, alleviating poverty. Moreover, agricultural trade is key in generating income for many smallholders, especially when they are well integrated into the value chain and produce high-value agri-food products (Maertens & Swinnen, 2014).

The most relevant value chains, along with their key export products, have been selected based on the Project Grant Agreement and further exchanges between the CREA team and project partners in Vietnam and Ghana. While the value chains in Vietnam (tea, dragon fruit and rice) and Ghana (cocoa and cashew) exhibit distinct characteristics, many of the identified challenges cut across both contexts. The most significant challenges are briefly presented below by providing data information mainly at country level.

 

• Farm size: smallholder farmers are the main actors involved in the production of the crops considered in the mentioned value chains in Ghana and Vietnam. The High-Level Panel of Experts on Food Security and Nutrition (HLPE, 2013) identified, among several definitions, smallholder agriculture as: “practised by families (including one or more households) using only or mostly family labour and deriving from that work a large but variable share of their income, in kind or in cash. Agriculture includes crop raising, animal husbandry, forestry and artisanal fisheries. The holdings are run by family groups, a large proportion of which are headed by women, and women play important roles in production, processing and marketing activities”. However, a commonly used criterion for identifying smallholder farmers is landholding size, with less than 2 hectares being the most frequently used classification (Garner & de la O Campos, 2014; Graeub et al., 2016). In Ghana, over 70% of individuals employed in the agricultural sector are smallholder farmers living in less developed communities, engaging in rudimentary agriculture (Alidu et al., 2022). In Vietnam, this percentage increases to 89%, with farmers cultivating an average plot size of 0.4 hectares (FAO, 2018).

• Commodities production: smallholder farmers are primarily engaged in producing commodities for sale in both national and international markets. According to FAO (1997), the term “commodity” commonly describes agricultural products in their original state or after undergoing basic processing. Examples include cereals, coffee beans, sugar, palm oil, fruits, cattle, cotton, and rubber. A defining feature is that their production methods, post-harvest treatments, and/or primary processing do not add distinctive characteristics or attributes. Agricultural commodities are generic, undifferentiated products that compete primarily based on price, lacking other distinguishing and marketable characteristics. This is evident in the case of cocoa beans in Ghana and lower-quality rice in Vietnam, which experience low added value in the international commodities market, just to cite a few examples.

• Deforestation: According to FAO (2021), from 2000 to 2018, nearly 90% of global deforestation was a result of agricultural expansion, including 52% from cropland expansion and 38% from livestock grazing. Deforestation linked to agriculture has often been associated with a select group of commodities. Some commodities have come under heightened scrutiny due to their connection with the use of recently deforested areas. Among these are beef, soybeans, palm oil, cocoa, coffee, wood and rubber (OECD & FAO, 2023). Based on the most recent data from the Global Forest Watch (GFW) platform spanning from 2002 to 2022, Ghana experienced a 12% loss in primary forests, while Vietnam faced an 11% loss during the same period (GFW, 2023).

 

• Water pollution and biodiversity loss: In Vietnam and Ghana the extensive use of agrochemicals has led to pervasive pollution in natural systems. It is common practice among farmers to uniformly apply pesticides, including highly hazardous toxins, when pests are detected in the field. Furthermore, the combination of agrochemical use and high fertilizer application rates is associated with nutrient leaching, resulting in damage to water quality (Nguyen, 2017). The accumulation of pesticides in water, along with proven adverse effects on human health, led to the widespread prohibition of certain pesticides like DDT[1]. Unfortunately, these pesticides persist in use in developing countries, leading to both immediate and potential long-term health consequences. Additionally, agricultural pollution affects aquatic ecosystems, as evidenced by eutrophication in lakes and coastal waters, causing negative effects on biodiversity (IWMI and FAO 2017). Moreover, water scarcity exacerbates the harmful effects of pollution, leading to increased competition not only between agricultural and other uses, such as domestic use, but also within the agricultural sector, particularly between exports and national food production.

 

• Informal employment and poverty rate: Agricultural sector is largely characterized by informal employment both in Ghana and Vietnam. According to the ILO database, the rate in the agricultural sector in Ghana is approximately 97% for males and even higher at 98.3% for females in 2015 (ILOSTAT, 2023). In 2021, 42 out of 63 provinces in Vietnam recorded an informal employment rate exceeding 70%, with 26 provinces going above the 80% mark. A direct correlation exists between the prevalence of informality, the proportion of workers involved in agriculture, forestry, and fisheries (AFF), and the household poverty rate in provinces. Provinces characterized by high household poverty rates, coupled with a substantial proportion of workers engaged in AFF activities, tend to exhibit a high prevalence of informality (GSO, 2022).

In addition, there are several other constraints that hinder smallholder farmers from participating in international markets. These include an underdeveloped agricultural sector, inadequate market information, poor bargaining power, lake of financial and extension services, and low institutional capacity.

Can voluntary sustainability standards be a possible solution to enable smallholders to fully benefit from international markets?

Voluntary sustainability standards (VSSs) hold the potential to deliver positive economic, environmental, and social benefits to smallholder farmers, aligning with several Sustainable Development Goals (UNCTAD, 2023). By promoting the adoption of sustainable farming practices, labor standards and ensuring product quality, VSSs empower farmers to participate in high-value chains and markets, fostering stability in prices and enhancing profitability, particularly for products marketed in the developed countries such as EU market. However, the associated certification costs, influenced by stringent environmental regulations (e.g. European Union Deforestation-free Regulation), sanitary and phytosanitary (SPS) measures, and increased labor standards, particularly those related to ILO Conventions, may pose challenges for smallholder farmers[2]. Moreover, the lack of institutional and technical capacities for accessible certification in developing countries is a significant barrier for smallholders in demonstrating compliance with VSSs (FAO, 2014). Hence, further investigation and assessment are necessary to understand the extent to which VSSs can effectively contribute to improving smallholder livelihoods in Ghana and Vietnam.

References

Alidu, A.F., Man, N., Ramli, N.N., Haris, N.B.M., & Alhassan, A., (2022). Smallholder farmers access to climate information and climate smart adaptation practices in the northern region of Ghana, Heliyon, 8, doi.org/10.1016/j.heliyon.2022.e09513
FAO (1997). Agricultural and food marketing management. Available at: https://www.fao.org/3/w3240e/W3240E00.htm
FAO (2014). Impact of international voluntary standards on smallholder market participation in developing countries – A review of the literature, FAO, Rome.
FAO (2018). Small Family Farming in Viet Nam – a country specific outlook. Available at: https://www.fao.org/family-farming/detail/en/c/1111081/
FAO (2021). First results of Forest Resources Assessment 2020 remote sensing survey. Available at: https://www.fao.org/3/cb7449en/cb7449en.pdf
FAO & IWMI (2017). Water pollution from agriculture: a global review. Available at: https://www.fao.org/3/i7754e/i7754e.pdf
Garner, E. & de la O Campos, A., (2014). Identifying the ‘‘family farm”: An informal discussion of the concepts and definitions, FAO, Rome.
General Statistics Office (2022). Overall situation of workers in informal workers employment in Viet Nam. GSO, Hanoi.
Global Forest Watch (2023). Dashboard: Ghana and Vietnam. Available at: https://www.globalforestwatch.org/dashboards/global/
Graeub, B., Chappell, M.J., Wittman, H., Ledermann, S., Kerr, R.B. & Gemmill-Herren, B., (2016), The State of Family Farms in the World, World Development, vol. 87, pp. 1-15.
High-Level Panel of Experts on Food Security and Nutrition (2013). Investing in smallholder agriculture for food security. A report by the High Level Panel of Experts on Food Security and Nutrition of the Committee on World Food Security, FAO, Rome.
ILOSTAT (2023).  SDG indicator 8.3.1 – Proportion of informal employment in total employment by sex and sector (%) – Annual. Available at: https://www.ilo.org/shinyapps/bulkexplorer47/?lang=en&id=SDG_0831_SEX_ECO_RT_A
Maertens, M. & Swinnen, J. (2015). Agricultural trade and development: a value chain perspective. WTO Working paper ERSD-2015-04.
Nguyen, T. H. (2017). An Overview of Agricultural Pollution in Vietnam: The Crops Sector. World Bank, Washington, DC.
OECD & FAO (2023). OECD-FAO Business Handbook on Deforestation and Due Diligence in Agricultural Supply Chains, OECD Publishing, Paris.
UN, (2015). Transforming our World: The 2030 Agenda for Sustainable Development. Available at: https://sdgs.un.org/publications/transforming-our-world-2030-agenda-sustainable-development-17981

UNCTAD, (2023). Voluntary Sustainability Standards in International Trade, United Nations Publications, New York.

[1] Developed in the 1940s, DDT (dichloro-diphenyl-trichloroethane) was the first modern synthetic insecticide, initially used effectively against malaria, typhus, and other insect-borne diseases. Its broad application in the United States and globally led to widespread insect resistance.

[2] Under WP2, case studies conducted in Vietnam and Ghana addressing the coffee and cocoa value chains showed that farmers perceive environmental private standards and certifications as more effective than mandatory requirements for accessing the EU market. Conversely, challenges arise in applying labor standards, where the implementation of formal contracts faces notable difficulties.