In the Perspectives guest blog series, Farm Foundation invites participants from among the varied Farm Foundation programs to share their unique viewpoint on a topic relevant to a Farm Foundation focus area. Dr. Sandro Steinbach, the 2024 Farm Foundation Agricultural Economics Fellow, and Claire Citeau, a distinguished fellow at the Canadian Agri-Food Policy Institute, contributed this guest blog. In July 2024, they attended the Global Forum on Farm Policy & Innovation‘s second workshop, held in Washington D.C. on the topic of measuring sustainability outcomes to facilitate agricultural trade. An in-depth paper summarizing the event’s key takeaways and next steps is also now available.

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As climate pressures increase and sustainable practices become a priority, the agricultural sector faces a unique challenge: balancing trade policies with the need for sustainable farming. In July 2024, global experts gathered at the Global Forum for Farm Policy & Innovation (GFFPI) workshop in Washington, D.C., to tackle these pressing questions. Here, we highlight key takeaways from the workshop on aligning global trade with sustainable agriculture.

Why Integrating Sustainability into Trade Matters

Global agriculture is at a crossroads as countries strive to boost productivity and meet sustainability goals without causing unintended trade disruptions. Trade plays a vital role in food security, yet poorly coordinated policies can lead to barriers, especially as more nations adopt individual sustainability measures. To keep the agricultural sector competitive and resilient, there’s a growing need for a unified framework to guide trade and sustainability.

The Challenges of Harmonizing Trade with Sustainable Agriculture

Sustainable agriculture protects natural resources, maintains profitability, and supports community well-being. While the concept is widely understood, applying it consistently across countries and trade agreements takes time and effort. The workshop underscored that each country faces unique hurdles in integrating sustainable practices. For example, while some regions prioritize carbon reduction, others focus on reducing food insecurity or supporting local farmers. As a result, a “one-size-fits-all” approach to sustainable trade isn’t feasible.

What Role Can Trade Agreements Play?

Trade agreements hold the potential to foster sustainability, but they must be crafted carefully. Adding sustainability chapters focused on environmental and labor standards can help, as can voluntary incentive-based programs that encourage best practices without restricting farmers’ flexibility. Workshop participants agreed that trade policy can be a powerful tool, but only if it promotes shared goals while respecting local contexts.

Adopting an Outcome-Based Approach to Measure Sustainability

One key takeaway from the workshop was shifting from traditional, input-based sustainability measures (such as mandating specific farming practices) to outcome-based approaches. This shift allows farmers to adapt and innovate while focusing on measurable results like soil health, carbon sequestration, and biodiversity. Though more complex, outcome-based metrics can yield more meaningful insights and foster an environment where sustainable practices are both encouraged and achievable.

The Importance of Global Standards and Local Flexibility

Global standards are essential for assessing sustainability fairly across different countries. However, rigid frameworks may overlook local realities, particularly for smallholder farmers who face unique challenges. Workshop discussions emphasized the importance of balancing global standards and local flexibility to ensure sustainability goals are relevant and achievable worldwide. This balance is critical for creating trade policies that don’t stifle innovation or penalize farmers in resource-limited regions.

Supporting Sustainable Innovation in Agriculture

International trade enables innovation by allowing the transfer of knowledge, technology, and best practices. Golden Rice, an innovation born of global collaboration to address vitamin A deficiency, was one example discussed at the workshop. Cross-border cooperation accelerates such breakthroughs, underscoring the need for open markets that allow agricultural innovations to reach areas most needed.

Recommendations for Sustainable Trade

The workshop concluded with actionable steps for aligning trade and sustainability:

1. Adopt Flexible, Science-Based Policies: Avoid rigid policies and instead focus on outcome-oriented, science-based standards that allow flexibility for farmers to adopt practices locally.
2. Invest in Consistent Metrics and Data Management: Developing universally accepted metrics will make sustainability more transparent and achievable, especially with emerging technologies like remote sensing and real-time data tracking.
3. Strengthen Global Cooperation: Collaborating with institutions like the WTO and FAO can help establish frameworks integrating trade with sustainability. Global collaboration is essential to create cohesive, effective standards.
4. Position Sustainability as a Trade Opportunity: Rather than viewing sustainability as a trade barrier, policymakers should consider it a pathway to new markets and greater competitiveness.
5. Involve Farmers in Policy Development: Policies should reflect the realities on the ground, including the needs and challenges of farmers. Ensuring farmers’ participation in policy discussions helps craft practical and impactful solutions.

The Path to a Sustainable Agricultural Future

As agriculture faces mounting challenges, aligning trade with sustainable practices is essential. With thoughtful policies and collaborative efforts, global trade can support a more sustainable and food-secure world. The insights from the GFFPI workshop provide a strong foundation for future discussions, reminding us that trade policies should empower, not hinder, the transition to sustainable agriculture. With aligned policies and a shared commitment, the agricultural sector can advance toward a more resilient, sustainable future.

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Claire Citeau is a distinguished fellow at the Canadian Agri-Food Policy Institute. She is also a senior fellow at the Graduate School of Public and International Affairs at the University of Ottawa. Sandro Steinbach is an associate professor in the Department of Agribusiness and Applied Economics and the director of the Center for Agricultural Policy and Trade Studies at North Dakota State University. They can be reached at cciteau@uottawa.ca and sandro.steinbach@ndsu.edu, respectively.

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On Thursday, July 18, 2024, Farm Foundation participated in the second Global Forum for Farm and Policy Innovation (GFFPI) workshop, held in Washington D.C. The focus of the workshop was “measuring sustainability outcomes to facilitate agricultural trade.” This was a priority identified in the previous workshop.

The nearly 70 participants representing 18 countries discussed the topics of an outcomes-based approach to trade and sustainability, and measuring challenges and opportunities in trade and sustainability. Farm Foundation President and CEO Shari Rogge-Fidler provided opening remarks and also facilitated small group discussions, along with Farm Foundation Vice President of Programs and Projects Martha King. U.S. Department of Agriculture Under Secretary for Trade and Foreign Agricultural Affairs Alexis Taylor spoke on the importance of trade and sustainability for global food and agriculture.

The first workshop, held in late 2023, brought together representatives from OECD countries and OECD Secretariat as well as industry experts from across Europe, North America, Japan, and Australia to discuss the role of trade and agriculture sustainability in an interactive and thought-provoking format. That workshop, held at the OECD in Paris, enabled stakeholders from around the world to identify common goals and priorities. 

The findings from the first workshop were published in a report entitled Advancing the Role of Trade and Agricultural Sustainability. A second paper reflecting the findings of the second workshop is anticipated this fall.  

The Washington D.C. workshop was held in partnership with the Australian Farm Institute, Farm Foundation, the Canadian Agri-Food Policy Institute, and the Forum for the Future of Agriculture.

GFFPI events, including this one, support Farm Foundation’s mission of building trust and understanding about U.S. agriculture with global food and agricultural stakeholders. In addition, Farm Foundation offers a uniquely independent platform for these dialogues to advance and elevate trade and sustainability issues. 

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In the Perspectives guest blog series, Farm Foundation invites participants from among the varied Farm Foundation programs to share their unique viewpoint on a topic relevant to a Farm Foundation focus area. Michelle Klieger is a 2024 Farm Foundation Young Agri-Food Leader and president of Stratagerm Consulting. In this blog she discusses the European Union’s new deforestation regulations.

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The European Union aims to raise the global bar with new Deforestation Regulations. Effective since June of 2023, the regulations ban imported goods that stand to profit off of deforestation practices. By devaluing and even penalizing these practices, the EU hopes to create a  commodity trade standard that will reverse the effects of deforestation. They predict 177,920 acres of forests, or one quarter of Rhode Island, will be saved in 2025, and are optimistic that these steps will reduce air pollution.

Soy, palm oil, beef, coffee, and cocoa trades are expected to experience a significant impact due to these new requirements. Brazil, Argentina, Malaysia, Indonesia, Canada and parts of Africa are on edge as they consider trading options. Some argue this is the beginning of a new era, while others see it as a reorganization of supply chains.

Complexities of EU Regulations

For companies working to meet regulations, the process is complex. While individual companies must produce data to receive deforestation- free certification, entire supply chains must be vetted. Each industry faces unique obstacles.  Soy, for example, goes from farm production, and is then transported to processing facilities, then moved onto crushers, then to product manufacturers, and finally to retailers. If at any point in the process operations have made use of deforested land, the trading company could be banned from exporting goods to EU countries. Palm oil batches typically mix fruit from many sources at once. Many of these companies can only trace a product after it has been processed and would need to develop brand new traceability methods to meet requirements.

Meeting the new regulations requires an investment in technology and manpower. In order to make products fully traceable many companies are purchasing GPS technology that allows them to accurately map and consistently monitor their farms. Similarly, if products must be tracked and segregated from planting all the way to a grocery store shelf, digital tracking technology will also be needed. Guaranteeing deforestation-free methods must include in person inspections done by real people traveling from farm to farm to see operations up close. 

It’s a time consuming process to build out this framework, but one that many companies deem both valuable to the global environment and financially lucrative in the long run. Decisions involve farmers, transportation companies, processing plants and manufacturers, but they also must include government policy, technology and in some cases legal crossroads. There is no overnight shift, but rather a development of practices.

A Supply Chain Split

Already many companies are rerouting supplies to other buyers and avoiding EU regulations altogether. The trend prompts speculation that the new requirements will not raise the bar, but simply split or change the flow of supply chains. Brazil could turn to China as a new soy buyer and Indonesia could potentially trade palm oil to Africa. We’ve seen substitute shifts like these in the past with the U.S.-China trade war and sanctions on Russian energy. It may prove simpler and more cost effective to change buyers rather than invest in meeting new EU regulations. Many of these companies have little ability to enforce downline or upline adherence to regulation and they fear penalties.

Interestingly, in 2020 Brazil produced ⅓ of the world’s soy, but only 13% of crops account for 95% of the deforestation that occurred that year. The other 87% appear to have been produced on grassland and savannah areas.  The scenario is true elsewhere and begs the question; will this create a new environmental imbalance that puts stress on other ecosystems? Companies looking to meet regulations could potentially exploit approved farming areas by over farming them. 

Demand For a Different Type of Supply

Will it be harder to secure buyers or much used commodities? For the EU, value is placed not just on the product, but how it is sourced. The decision will impact both consumers and European agriculture. 

European countries are braced to experience a decreased supply of things like chocolate and coffee. But, exactly how increased operating costs will be absorbed remains uncertain. Typically consumer prices reflect production cost increases, but in this situation one or more points along a supply chain may need to take ownership of costs to ensure tradability. The result, at least in the initial stages, would be lower profit margins for most of these companies and possibly higher purchase prices for consumers.

Several European countries are seeking reduced regulations and maintain that the current requirements are virtually impossible for small and medium sized farms to accommodate. They also argue that these regulations negatively impact many of the current sustainability processes farmers are working to implement for the sake of biodiversity, crop and grazing rotations. Farmers worry that they will not be able to produce the soy meal needed to feed their own livestock and that the EU will become too reliant on exports which would negatively affect the European ag sector.

Good News For U.S. Producers

The EU is not alone. Other countries have similar environmentally focused goals and policy in the works to support these goals. The United States has seen a growing consumer demand for traceability, prompting many businesses to begin the process of leveraging technology and better communication up and down supply chains to help customers make informed decisions.

The Forest Act of 2023 was birthed out of the same desire to stabilize regions of the world that have suffered from illegal deforestation and offer opportunities for many industries and individual businesses to clean up their processes. If it goes into effect, the Forest Act would be very similar to the EU’s Deforestation Regulation; banning products that have been produced on illegally deforested land and penalizing unmet requirements.

Many American operations are positioned to receive deforestation-free certification. Several top soy producers are predicted to meet regulations and be granted access to the EU markets. A welcome relief to farmers who have faced narrowing markets in recent years. 

Exactly how competitive this “new” market will be, only time will tell.  Traceability efforts take time. Unless trade lines were already working toward deforestation-free goals, it will take years for many of these supply chains to implement methods that meet EU regulations.  In the meantime, it’s highly likely that global trade negotiations will be impacted and supply chains will shift in response to the environmental standard.

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A version of this blog originally appeared on the Stratagerm Consulting website. It is reposted with permission.

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