Multiplicity of sustainability standards and potential trade costs in the palm oil industry

Abstract

The growing impact of the global production of agricultural commodities has created new regulations that aim at a more sustainable trade. Sustainability standards (SS) are essential tools for transnational trade governance because they increase the possibility of recognizing products from sustainable sources. However, there is currently a proliferation of SS in almost every industry. This paper proposes a conceptual framework to establish how standard interactions such as competition, cooperation, and overlap shape the impact of multiplicity on trade costs. We apply the framework to the palm oil industry by using the information on three aspects of SS schemes: the requirements, the institutional design, and the cooperation strategies. Our results indicate that the North–South multiplicity in the palm oil market is characterized by high overlap, but there exists a balanced co‐opetition in the standard market. As the cooperation strategies between the SS schemes are very shallow, there might be potential trade costs associated with the SS multiplicity in the palm oil industry. [EconLit Citations: Q01 Sustainable Development, Q17 Agriculture in International Trade, Q18 Agricultural PolicyFood Policy].

SDGs trade‐offs associated with voluntary sustainability standards: A case study from the coffee sector in Costa Rica

“…Various authors (Brandi, 2021; Hidalgo et al, 2023; Woubie et al, 2015) agree on the fact that overlapping VSSs' requirements and multiple certifications leads to inefficiencies in the system, as each standard requires unique instruments to measure compliance. They concur that standardization is necessary for producers and producer organizations to reduce transaction costs.…”

A Collaborative, Systems Approach for the Development of Biomass-Based Value Webs: The Case of the Acrocomia Palm

“…Creating ecological, social, and economic value, necessitates the development of governance strategies towards social inclusion, fair trade, the reduction of structural barriers, the higher participation of farmers in value-adding activities, and the avoidance of negative impacts on the environment. The certification of sustainability standards and the regional designation of origin are two possible mechanisms to differentiate acrocomia-based products on the (international) market [124].…”

“…Here, private-public partnerships in the form of national or international roundtables or multi-stakeholder initiatives are needed, with a strong contribution from acrocomia value-web stakeholders. Out of these, regulatory trade frameworks at international level for cross-border value chains may be developed [124]. Additionally, institutional arrangements should be implemented to foster the inclusion of smallholders in value chains and webs and promote their economic viability.…”