Case Study 2: Intra-EU trade, resilience and social sustainability - the case of the oats value chain in the Nordics

  • To what extent are social and environmental sustainability measures, practices and standards addressed by businesses in the Nordic oats value chains?
  • Are there certain social sustainability measures that are less prominently addressed in the Nordic oats value chains, also compared to environmental sustainability measures, and if so, why?
  • What are the implications of the above findings for achieving resilience objectives and more sustainable intra-EU trade in oats and oats products?

The case study identified a need for increased transparency regarding oats pricing, product flows, as well as the collection, validity and use of sustainability data such as footprint assessments. The evidence from a circular sustainability assessment in Finland and Sweden suggests that the social sustainability performance of Nordic oats value chains is high and contributes to resilient intra-EU trade in oats and oats products, yet issues of pricing transparency and market power asymmetry are pervasive. Furthermore, there is a need for intra-organizational changes in the value chain (among processors, retailers) since social sustainability matters related to labor issues have been found to be treated in HR units, rather than in dedicated sustainability-related teams that are typically in charge of sustainability reporting. Such organizational changes could help to achieve further improvements in social sustainability standards and value chain governance, thereby impacting farmers, consumers and trade.

The case study analysis suggests that in both Finland and Sweden, the oats value chain actors demonstrate a strong commitment to upholding international labor standards, including those set by the ILO, ICESCR, and ICCPR. Despite this, a trend of reduced attention to social sustainability can be observed, particularly among large processors and retailers who appear to leverage their market dominance to influence prices, disadvantaging farmers and contributing to a lack of transparency. While most of the case study respondents seem to comply with government or EU production standards, social sustainability measures are less emphasized compared to environmental ones. Freedom of association and collective bargaining are well-supported, with effective reporting systems and social dialogue involving unions and employee representatives. Employment contracts are often negotiated under collective bargaining agreements, but the minority of farmers have systems in place to assess social impact, indicating room for improvement.

Regarding transparency, the level of prior disclosure of project-related information (e.g. on changes in production and processing capacity) to local stakeholders is low. In contrast, the accessibility of information on intervention policies, laws, procedures, and decisions to all value chain actors is facilitated by industry associations, contributing to the sector’s resilience against various shocks.

The participation of women in production-related decisions within the Finnish and Swedish oats value chain appears to be less of an issue compared to other sectors like coffee and cocoa. This is largely due to the societal conditions and mechanisms in the Nordic countries that already promote gender equality and balance. Consequently, social aspects such as human rights and gender balance are perceived as fewer pressing concerns. Respondents from the survey support this view, indicating that contracts with retailers do not typically include specific social clauses, as these values are already embedded in the firm’s core principles.

The participation of women in trade unions, farmers’ organizations, and other groups within the oats value chain shows a mixed but evolving focus on social dimensions. Some interview respondents identified gaps in addressing social aspects, such as the role and responsibilities of women, but noted that certain organizations are beginning to integrate these considerations into their strategies. Certificates used by these organizations emphasize climate change, yet increasingly recognize the need to incorporate social dimensions, including gender equality.

Although the question of local food production increase has been less relevant for Finland and Sweden before the Russian invasion of Ukraine, both countries show a strong commitment to sourcing oats from domestic farmers. Organizations in these countries prefer locally produced oats, emphasizing geographical proximity and consumer preferences for sustainable, domestically sourced products. One organization uses the Ecovadis tool to engage with suppliers on sustainability efforts, prioritizing cereals free from growth regulators or glyphosate and sourced from the domestic market. Respondents from the farmer survey also stated that they source most oats from domestic producers.

The participation of formal and informal farmer organizations in the oats value chain in Finland and Sweden is mostly evident through formal entities such as MTK (the national farmers’ union). The inclusivity of cooperative membership in Finland is challenging to assess due to the dominance of two main retailers controlling about 85% of the market. Additionally, there are limited cooperatives specifically for oats farmers, with private companies like OATLY creating exclusive membership clubs. The leadership within farmer associations is accountable, representing farmers of all sizes. However, these associations do not engage in collective negotiation for input or output prices, unlike models seen in other countries. Oats actors have raised concerns about the lack of transparency in pricing and unfair revenue sharing within the value chain. Farmers’ access to information on agricultural practices used on other farms, on oats company policies across regions, and on market prices paid at farm gate is unclear. Accountability on achieving environmental sustainability goals are difficult to assess, yet only 33% of survey respondents reported using written contracts with buyers that include environmental sustainability specifications.

The key frameworks relevant include domestic legislation (Finnish Agricultural & Labor Law, Swedish Agricultural & Labor Law, Finnish Employment Contracts Act, Swedish Employment Protection Act), European Union Framework (Common Agricultural Policy, General Food Law Regulation (EC 178/2002), Regulation on Organic Production and Labelling of Organic Products (EU 2018/848), EU Climate Action Policies) and international agreements (Paris Agreement, International Labour Organization (ILO) Conventions).

Processors and retailers appear to wield significant influence due to their dominant market position relative to oats farmers and their production capacity, impacting market prices during contract negotiations. This implies a need to strengthen producer cooperatives and similar organizational forms, to negotiate collectively with processors and retailers. This could enhance farmers’ bargaining power, ensuring fairer contract terms, and thus improving the competitive position of oats farmers.

As part of a case-study approach, a circular forward- and backward-translation process of high-level sustainability metrics (UN’s Sustainability Development Goals) was performed into business-level and stakeholder-relevant sustainability dimensions (based on the Global Reporting Initiative, GRI). This was done to benchmark stated sustainability performance (by value chain actors, as part of semi-structured interviews and surveys) with revealed sustainability performance information (based on publicly available data, including sustainability reports). Four GRI categories relevant to the research questions and sector in question were identified from semi-structured interviews, which were then addressed further in varying depth in subsequent value chain actor online survey and analysis steps: (1) Labor Practices and Decent Work (access to and inclusion in networks – of individuals/ managers, and organizations; this includes access to resources/ knowledge), (2) Human Rights (focusing on workers and suppliers/contractors; employment security), (3) Society (focusing on communities, community development; dimensions of social capital also potentially relevant for urban resilience), and (4) Product Responsibility (focusing on customers; how is that responsibility enacted – what governance mechanisms are relevant here; role of data privacy/ sharing/ transparency). Information analysis from publicly sustainability reports regarding governance mechanisms and the identification of sustainability disclosure gaps was performed based on the following steps:

Source: Langeneck & Steiner (2022)

This sustainability-reports assessment was part of a circular forward- and backward-translation process specifically invented for this case study, and based on the following analysis steps:  

Source: own

As the above Figure shows, a literature review that included gray literature and a focus on social sustainability dimensions and governance mechanisms preceded the circular sustainability assessment. Based on the outcome of this literature review, gaps were identified in terms of SDG dimensions that were deemed not to have been sufficiently addressed in oats sectors as identified by previous academic works. Considering these identified SDG dimensions, they were matched (‘translated’) with corresponding GRI indicators to understand them from an organizational perspective. This GRI indicators matrix was then used as part of a text-based analysis to screen publicly available sustainability reports (Finland, Sweden) of key businesses active in the oats value chains. The objective of this text-based analysis was to check to what extent SDG targets and their corresponding GRI indicators that were deemed under-addressed by previous literature would find confirmation in the sustainability reports (are they also under-addressed in the case of the Finnish and Swedish oats value chains?). This screening of the sustainability reports was also used to substantiate the gap between what could be regarded as best practice in terms of a comprehensive addressing of sustainability goals by the business in question (based on GRI dimensions) and the observed level of addressing these goals and sustainability dimensions (from published sustainability reports, and as revealed by value chain actors in the semi-structured interviews and surveys). Finally, the so-identified gap based on GRI dimensions was then back-translated into corresponding SDG’s and sub-SDG’s, to enable an approximate judgment of the extent to which certain SDG’s were addressed in the oats value chains. Finally, the survey data is being analyzed econometrically (limited dependent variable models).

Langeneck, L. & B. Steiner (2022). Addressing the SDG goals through a substantiation with the Global Reporting Initiative (GRI) indicators. MATS – Making Agricultural Trade Sustainable, Report 01/2022, University of Helsinki.

Data collection includes evidence from a literature review, publicly available sustainability reports from oats value chain businesses, a set of semi-structured interviews, and an online questionnaire that was shared with actors in the Finnish and Swedish Oats value chains during Fall 2023. In each of these data collection steps, relevant environmental and social sustainability dimensions were addressed, including governance mechanisms and practices such as production contracts, trade credits, and implicit or explicit sustainability standards employed in the oats value chains.

Positive sustainability impacts with trade-relevance could be expected if oats processors and retailers acknowledge more extensively relevant social sustainability dimensions related to pricing and product transparency, and therefore market power asymmetry. This could include a resetting of social sustainability goals in their business units responsible for collecting and processing sustainability-related data for the purpose of sustainability reporting. Resetting such goals could include both quantitative and qualitative dimensions of social impact, including factors such as workers’ well-being, job satisfaction, and community engagement. Furthermore, it could involve an improved understanding of multi-stakeholders’ perspectives and priorities regarding social impact to ensure the relevance and inclusivity of assessments.

An increased awareness of and attention to social and environmental sustainability (also evidenced through the above stakeholder interviews and surveys) is expected to result in requests for fairer pricing from farmers that could have trade implications.

Case Study Leader

University of Helsinki,
Department of Economics and Management

SDG's Addressed

     

Geographical Focus and Scale

  Finland
  Sweden
  EU

Product and market focus

Oats and processed oats products; intra-EU markets.

Key stakeholders

Farmers, processors, traders and retailers involved in oats value chains in Finland and Sweden.