6 - Certifying Industrial Cash Crops for Sustainability

Summary

Sustainable branding and certification of agricultural and forestry products, especially those produced on an industrial scale, is thought to be a key solution in addressing sustainability concerns in developing a bio-economy. Certification has increasingly become a prominent component not only for commercial branding purposes but also in non-state market-based sustainability governance. It involves sets of standards and instruments to regulate and monitor the sustainability of commodities from cradle to gate. A certification of approval which may also come in the form of a seal or label is given to a product that meets the standards, adding visible extrinsic information that underpins the “sustainability” attributes of the products.

Such endowment may enhance market access or even provide a price premium to the producers. For producers in Borneo, one potential strategy might be to increase economic output by gaining access to high-value markets in wealthier regions. This is built upon the premise that consumers in these regions are more likely to pay a price premium if the materials came from sustainable sources. For most cases of industrial cash crops, this is a “carrot” with a “stick”, as producers do face enormous pressure from environmental NGOs to adopt more sustainable land-use practices (Gnych, Limberg, and Paoli 2015; Purwanto 2019). Actors along the value chain, especially large buyers of primary agricultural commodities such as food manufacturers, middlemen, retailers, as well as NGOs may also actively work with the producers in developing voluntary standards and certification schemes (Pye 2016).

However, such market-based tools may overlap with various legal frameworks in either producing or importing countries, causing unwanted competition between the public and private sectors in sustainability governance. Also, commodity-centred systems may significantly intersect with other regimes that focus on different lines of inquiry like climate change, biodiversity, haze, and economic development, forming a polycentric regime complex that involves a wide range of actors. The emergence of different standards, schemes, and legal requirements may stir confusion among the stakeholders and substantially increase transaction costs.

In Borneo, two important commodities, palm oil, and timber have been in the limelight. Many companies as well as smallholdings are in pursuit of various certification schemes to tap into price premiums, and more particularly, to gain access to the EU market.