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Can commodity traders make a real impact in achieving sustainability goals?

In March 2020 when the COVID-19 outbreak sent shock waves across the globe, almost every other country declared a lockdown, freezing economic and trade activities. This led to huge chaos and panic among people all over the world, especially for food supplies, resulting in hoarding cupboards with the essentials piling up to meet the needs for months to come. While people were in panic, commodity traders were busy to get the trades back to normal and ensure that this chaos would not last for long by meeting the sudden demand shocks. This was the situation when the supplies were available but stuck in some other part of the world and almost everyone was sure that this situation would be temporary.

World population is expected to grow by 25% to 9.8 billion by 2050 which would mean an increase in food demand thereby putting pressure on existing resources which are already under threat of deforestation and urbanisation. Climate change and impact of human activities on the environment and society is already affecting the ability to meet current food demand (one in five children around the world are stunted in their growth by the age of five due to lack of proper nutrition and access to food). In order to be able to use the same resources to meet the future global food demand it is very important that we not only use it efficiently but also ensure a sustainable approach in using it. This is equally important for energy resources too.

Responsibility towards sustainable products starts from consumers being aware of it and consciously asking for them. This pressurises the manufacturers and retailers to ensure that the products are made from sustainable sources, especially when there is a demand. However, there is very little direct contact between these manufacturers/ retailers and the producers. Hence, commodity traders play a very important role and are the critical link between producers and consumers.

Commodity traders can help achieve sustainability in the complete supply chain and ensure that there are no negative impacts on the environment and society through supply chain activities in the following ways:

  • Encourage producers to use precision farming techniques: These techniques help farmers use resources in an optimal way. For example, the amount of water and fertilizer used for growing crops are based on a very scientific approach to avoid excessive use. The excessive use of fertilisers leads to contamination of water bodies, depleting soil fertility, carbon emissions (from manufacturing of fertilisers) and are a major source of nitrous oxide in the environment. Such techniques help preserve soil fertility for a long time and thereby avoid farmers venturing for more land through deforestation to increase their farm output. Creating awareness on precision farming/ sustainable practices is possible only through commodity traders who are in direct and regular contact with producers.

  • Encourage education among thriving communities and discourage child labor<