D3.6 Discussion paper on sustainability standards and competitiveness

The deliverable 3.6 aims at developing a discussion on the assessment of collected data and their implications with regard to competitiveness and sustainability standards relevant in the agricultural trade context. The information and data, collected and presented in the deliverable D3.4[1], has undergone an initial standardisation phase, for making it useful as input in several WP’s within the MATS consortium (see Figure 2: MATS analytical framework, D2.4, p. 21).

The aim of this discussion paper is to further define and clarify the perimeters of the concept of sustainability within international trade, with a focus on the issue of labour (as an indicator of social sustainability) and environmental impacts (CO₂ eq.). This discussion paper focuses on the dynamics created within two case studies: CS#10 and CS#13.

Throughout D3.4, detailed work was carried out on the collection of relevant data on environmental, economic and social sustainability.

Since these sustainability dimensions and corresponding data and measures are deeply interlinked, it is essential to process the three related sustainability dimensions and related governance issues here: labor laws at the same time in a synergetic approach: the coexistence of these makes it possible to better understand conditions for a more sustainable international trade system.

In order to process the data in a comprehensive manner and in line with the MATS analytical framework (D2.4), the construction of causal loop diagrams (CLDs) was chosen as methodological approach. CLDs can be described as graphs that schematically represent the different variables and existing links, highlighting the likely consequences that the variation of one value has on the entire system.

The cause-effect system is emphasised graphically, yet it is also possible to extend this graphical reading by integrating a mathematical algorithm to this system of connections, which allows the values and variables collected from the previous D3.4 to be interconnected.

By introducing a sequence of mathematical relationships, it is possible to modify the values of specific items and visualise the variations. In this way, it is possible to build a sector-specific model, as was done within MATS for the dairy and beef sectors. The next step allows this dynamic representation to be adapted and customised for each individual partner country.

Data collected in the context of research in the economic, environmental and social areas were subjected to the standardisation process.

For economic sustainability, the data of interest are:

•       farm size (no. of cattle per farm, no. of land used (ha), no. of labour units per farm);

•       production and labour costs, expressed in €/100 kg CW -for beef- and €/100 kg of milk produced -for dairy;

•       personnel costs (€/hour)

•       prices (€/100 kg cw sold -for beef- and €/100 kg milk for dairy)

•       subsidies (decoupled payments in €/100 kg of cw sold for beef or subsidies in €/100 kg milk produced)

•       data on import and export (tons) and related tariffs (%);

With regard to the social context, information was collected on;

•       working conditions (working time, education, paid leaves, occupational health and safety, social welfare, payments, trade right, child work)

•       living wages.

And lastly, for the environmental impact, data were collected on the production of CO2 eq., more specifically:

•       kg CO₂eq./100 kg milk for dairy sector;

•       kg CO₂-eq./kg of meat, or kg CO₂-eq./kg of carcass weight, or kg CO₂-eq./kg of free bone meat, or kg CO₂-eq./kg of protein.

The standardisation process is crucial since it allows the results of the different CLDs to be comparable. This is a fundamental step considering that international trade requires an overall view of different countries and commodities (here dairy and beef) at the same time.

The application of the mathematical model also makes it possible to develop a series of scenarios, allowing different adaptation and mitigation strategies to be developed for the commodities (beef, dairy) and countries (Algeria, Germany, U.S.) considered. In addition, the scenarios allow the assessment of trade relations between the different countries.

This discussion paper helps to elucidate cross-effects among the different sustainability dimensions and implications (e.g. lower prices, but at what cost?), thereby also clarifying what it means to be more “competitive” (highlighting the importance of product and process quality, and the role of qualified personnel). Focusing on social and environmental sustainability in relation to international trade of beef and dairy products, this discussion paper provides a discussion base for policymakers and other transition path stakeholders, which is deeply grounded in the SDGs and country-level labor conditions. The discussion paper assesses the weight of labour costs in production across countries and aims to help improve understanding of the role of local legislation in strengthening product competitiveness. In addition, it assesses how governance (labor laws) may impact the farm competitiveness and trade of beef and dairy commodities. With the help of CLDs, different trade dynamics scenarios are explored for beef and dairy, especially with regard to expected impacts in Algeria, Germany and the U.S. The scenarios for these countries were to reach self-sufficiency. This implies that production in Algeria increased, and in Germany and the US declined. In the case of Algeria, we also increased salaries to improve social sustainability. These scenarios not only identify expected changes in the trade dynamics between countries, yet also highlight the potential for higher national sectoral profitability in Algeria, as well as the potential of a national CO₂eq. reduction in the case of Germany and the US. Overall, the discussion paper suggests that when competitiveness is considered as a key criterion for economic sustainability, important trade-offs arise among economic, social and environmental sustainability implications once the national diversity of governance and social conditions (labor laws and labor conditions) is taken into account.