Commodity Traders and Sustainable (Soy) Supply Chains

Global commodity traders play a key role in the purchase-sale, handling and distribution of many of the world’s commodities, thus facilitating trade and consumer demand. Yet they are often criticized for adversely affecting local producers and local communities/cultures and for engaging in (or effectively encouraging) un-sustainable practices and outcomes.

This paper takes a small, initial step in trying to answer these debates. As part of the Governance of Labour and Logistics for Sustainability (GOLLS) program (via an ISS RIF award), it first seeks to describe what these key firms do and how. Using the case of soya and Brazil (in particular), it describes the commodities, the “typical” organizational and financial mechanisms used by traders (for retaining margins) and the case of the key ABCD group of firms.

The specific impacts of soya chain governance (plus acts of resistance and strategies/forms of regulation) are noted more clearly in other publications and events (Pegler et al. forthcoming, Pegler and Widmarck 2020, Vecchione 2018), including quite startling reviews of the role of various nations financial sectors and governments in promoting trader activity (FIAN International et al. 2018).

This article’s second contribution is more general, making the link between trader activity and the broader question of sustainability through comparing and contrasting how profit/volumes and risk assessments surrounding local supply considerations can at times encourage them to either vertically or horizontally integrate (or not) in the local chain/economy. These choices help provide the context to the “spaces” where global chains touch down, these in turn having important consequences for local development, incomes, jobs and welfare and the (above mentioned) social impacts, forms of resistance and regulation which often emerge.