Where the sustainability demand actually lands:
C.S. Liew on farms, traders and who pays

Agronomist C.S. Liew has spent four decades supplying Asia's farms and watching sustainability requirements meet the realities of farms, traders and food prices. His account keeps returning to three questions: can it be done, how fast, and who pays.

Most conversations about sustainable supply chains begin at the buyer's desk: a supermarket chain or a large food company sets a requirement, and suppliers are asked for traceability, farming records and chemical-use data. On paper the request travels neatly down the chain to the farm. Agriculture is rarely that neat, and the person best placed to explain why is someone who has spent a career supplying the farms.

C.S. Liew has worked in the global agricultural inputs business, mostly fertilisers and pesticides, since graduating as an agronomist from Iowa State University in 1979. Today he is with Pacific Agriscience, a Singapore firm established in 1998 that facilitates mergers and acquisitions and sources crop protection and crop nutrition products. We sent him eleven written questions about what happens when a buyer's requirement reaches the businesses expected to deliver it. His answers are quoted below in his own words.

What large buyers are asking for

Supermarket chains and other large buyers, C.S. says, are increasingly demanding that food producers at the farm level “produce more sustainably with traceability protocols”: use fewer chemical inputs, keep detailed documentation of what was used and when it was applied, and in some cases show that livestock feeds are conventionally produced without genetically modified ingredients. Those demands are either imposed directly on the bigger farms, or passed down through the traders and consolidators of farm harvests, or the packing houses.

The buyer wants to know what happened on the farm, but the company in the middle is the one that has to provide the assurance. Large buyers, he says, expect the traders, packing houses and processors to comply with all of their sustainability demands and to ensure there are no illegal levels of chemical residues in the produce. In Singapore the arrangement is unusually stark. “All responsibilities lie with the importer and consolidator of harvests.” Imported produce is sampled and lab-tested overnight; if illegal residues are found, the consignment is incinerated or destroyed, and “the importer bears consequences beyond the loss at hand. They need to go back to the farm level to ensure this sin is not repeated.”

The records usually exist. The time and money often do not.

A new requirement rarely means building records from nothing. Packing houses and traders, C.S. says, “typically already have some records of farms and farming practices and what chemical inputs the farmers used and why they used what they used.” Whether those records satisfy a large or a new buyer is a different question, and when they do not, two constraints appear at once: the supply timetable, and a cost of compliance “that cannot be passed on to the large buyers.”

This is where a sustainability requirement stops being a reporting exercise and becomes an operating decision. Traders generally know exactly what is being asked. “Whether the demands can be met and at what costs and in what reasonable time frame are critical. When there is pressure put on and certain protocols can't be met but food or harvests still need to be delivered and an income is needed at the farm and trader levels, cheating typically sets in.”

What a farm can prove, and what it cannot

“What pesticides are used and when they are applied can easily be documented at the farm level,” C.S. says. Documentation is not the same as behaviour, though: he raises the possibility of a farmer applying a more toxic product early in the season so that residues are no longer detectable at harvest. A requirement that reads well in a procurement document can create very different incentives on a farm working on thin margins.

Two requirements are harder to meet than to write. Buyers now ask for “low carbon rice”, grown without constantly flooding the paddy fields, because flooded paddies release methane, a far more powerful global warming gas than carbon dioxide. “This new practice demanded is easier said than done, and hence little has been done.” And under the EU's deforestation regulation, EUDR, small oil palm farmers lose access to the European market because they cannot prove that their land was not forest at the cut-off date. The problem is not what the farmer does today but proving what happened years earlier.

Consequences, he adds, mostly stay inside the supply chain and only become public when illegal residues are involved. He points to Thai and Vietnamese exports of fresh durian to China, and Indian exports of spices to Singapore and Hong Kong, both stalled because of residues.

Who pays

For C.S. this is the central problem: “Sustainability comes with a cost, except for no-till farming and the growing of leguminous cover crops. Are consumers willing to pay, or are governments ready to subsidise the higher costs of producing more sustainably? The answer is unfortunately not.” Food is politically sensitive, he says, because governments want the poorest segment of the population to be able to buy it, “and hence food prices are kept low, most of the time to the detriment of the poor farmers.”

Asked whether Singapore buyers ask for something different from the multinationals, his answer is short: the Singapore Food Agency “is mostly concerned with illegal chemical residues and traceability,” and, in his view, Singapore has little domestic food production to protect.

What to do on the day the pack arrives

His advice to a trader or consolidator is plain. First, assess whether each demand can be met, based on experience. Second, for the items that may not be met, “discuss with their farmers and see if solutions can be found.” Third, and “most critical”, the cost of compliance: “what it costs and who will pay.” And the one thing not to do: “cheat right from the get-go.”

Assessing a requirement properly at the start is not about a better report. It is about knowing what the business can substantiate, what it cannot, and what must change before anyone is tempted to claim that everything is already fine.

One contradiction still bothers him after 45 years. “Farmers may lose money despite having to toil in the hot sun growing food, and consumers may end up paying high prices whenever there are short-term shortages arising from sudden calamities such as floods, droughts and typhoons, but the traders and supermarkets always make money. A matter of more or less, but never losses.”