Private Sector Contributions to Sustainability in Global Food Networks

A case study on the sustainable rice sourcing strategy and practices of Mars Food

Laura van Hamburg

‘Private Sector Contributions to Sustainability in Global Food Networks

A case study on the sustainable rice sourcing strategy and practices of Mars Food’

Amsterdam, March 2016

Student L. van Hamburg (920116-302-040)

Supervisor Wageningen University: dr.ir. P.J.M (Peter) Oosterveer

Supervisors Mars Food: Luc Beerens - Global Sourcing Director Rice

Louke van Beek - Koopmans - Global Sustainable Sourcing Insight Manager

Wageningen University Mars Food Europe Hollandseweg 1 Benjamin Franklinstraat 19 6706 KN Wageningen 3261 LW Oud-Beijerland The Netherlands The Netherlands

Copyright © 2016 All rights reserved. No part of this publication may be reproduced or distributed in any form of by any means, without the prior consent of the author.

iii Abstract

We live in a world that is continuously globalizing, and so are our food chains. Due to globalization one is no longer able to sufficiently regulate the (negative) side effects of global food production and consumption due to a mismatch between globally organized food chains and the national regulatory arrangements. Alternative governing networks including NGOs, public and private sector emerge and seem to offer a more suitable approach. This research identifies and explains the contributions that private food companies deliver to positively affect sustainability of global food production and consumption networks, and their role in making sustainability achievements that go beyond their own supply chains.

Three different approaches towards governing sustainability via supply chains – governing sustainability in, of and trough chains – are used to analyse the sustainable rice sourcing strategy and practices of Mars Food. An extensive empirical research at the sustainable sourcing department of Mars Food tackled their opportunities for delivering a contribution to sustaining the rice sector beyond their own supply chain. The results from this study show that, although Mars Food developed an external oriented strategy and aims to positively affect the total rice sector, for a successful execution of this strategy they still highly depend on others. The amount of power that Mars Food possess as a lead firm, stays limited to their own (vertical) supply chain actors. In order to deliver sector-wide contributions, multi-stakeholder collaboration among vertical and horizontal supply chain relations is vital in the both the developing and the executing phase of a strategy.

Key words: Sustainability Governance, Global Value Chains, Global Networks, CSR, Sustainable Sourcing

iv Preface and Acknowledgements

Sustainable food provisioning is one of the key themes that guide me during my masters at Wageningen University. The Environmental Policy group (Wageningen University) approach that makes ideals and pragmatism meet, really inspired my and made me decide to go for this specialization and write my thesis at this chair group of the Wageningen University. Via an internship at the sustainable sourcing team of Mars Food, I got the opportunity to study this subject as a part of a lead firm in many supply chains. A bit different than the usual procedure I decided to combine this internship with writing my thesis and hereby add an extra, scientific, dimension to my internship. Studying sustainable food provisioning from a company point of view was new and very insightful. Combining thesis research and an internship was both interesting and challenging

Succeeding both activities would not have been possible without the guidance and support of my supervisor Peter Oosterveer (Wageningen University). During the entire process from writing my proposal, doing the research at Mars Food to writing the actual report, I always felt that I was welcome to ask for advice or support. I would like to thank him very much for his efforts and sharing his scientific expertise with me.

I would like to thank Mars Food Europe for the opportunity of being involved at one of the first stages of implementing the global sustainable sourcing strategy. Special thanks go to Luc Beerens and Louke Koopmans (Mars Food). I would like to thank both of them for their confidence, time, efforts and supportive words. I enjoyed being part of their team a lot and whish them al the best in the continuation of their sustainability journey.

Off course I would like to thank everyone that was able to participate in my interviews. Despite busy schedules and (sometimes) large time differences, all participants were willing to share their story and perspective. I have experiences these conversations as insightful and honest, which means a lot to be.

I really enjoyed encountering so many people that are passionately working about sustainability and ethically motivated to be involved in this theme. This is something that motivates me for the future.

Laura van Hamburg

v Table of Contents

Abstract ...... iv Preface and Acknowledgements ...... v List of Figures ...... ix Table of Abbreviations ...... x 1. Introduction ...... 1 1.1 Background ...... 1 1.1.1 Globalized food networks ...... 1 1.1.2 Food Industry Challenges - The effects of globalized food networks ...... 2 1.1.3 Insufficient regulation ...... 3 1.2 The research ...... 3 1.2.1 Problem statement ...... 3 1.2.2 Research Objective ...... 4 1.2.3 Research Questions ...... 4 1.2.4 Relevance ...... 5 2. Global Sustainability Governance ...... 6 2.1 Governance approach ...... 6 2.1.1 Governance Defined ...... 6 2.2 Chain and Network Perspectives ...... 7 2.3 The Company Role in Governance Arrangements ...... 8 3. Addressing sustainability in, of, and trough chains ...... 10 3.1 Internal Perspectives ...... 10 3.1.1 Governance in chains ...... 11 3.1.2 Governance of chains ...... 11 3.2 External Perspective ...... 12 3.2.1 Governance through chains ...... 12 3.3 Illustrative practices ...... 13 3.3.1 Corporate Code of Conduct - Unilever ...... 13 3.3.2 Third Party Certification – UTZ Certified ...... 14 3.3.3 Multi Stakeholder Arrangement – International Cocoa Initiative ...... 15 4. Methodology ...... 16 4.1 Research Design ...... 16 4.1.1 Literature Research ...... 16 4.1.2 Empirical Research ...... 17 4.2 Research Units ...... 17 4.2.1 The Company ...... 17 4.2.2 The Sector ...... 17 4.2.3 The Practices ...... 18 4.2.4 The Respondents ...... 18 4.3 Data Gathering ...... 19 4.3.1 Internship ...... 19

vi 4.3.2 Semi-structured interviews ...... 19 4.3.1 The Bias as a Mars-Food intern ...... 19 5. Introduction to the Case ...... 21 5.1 Mars Inc. – Introduction to the company ...... 21 5.2 Changing to sustainability policies: external and internal drivers ...... 22 5.2.1 External influences ...... 22 5.3 Sustainability Policy ...... 24 5.3.1 Responsible Sourcing ...... 24 5.3.2 Sustainable sourcing strategy ...... 25 5.4 Risk Management Approach ...... 27 6. Rice Provisioning ...... 28 6.1 The Rice Sector ...... 28 6.2 Sustainability Challenges in the Rice Industry ...... 28 6.2.1 Rice and the Environment ...... 28 6.2.2 The Socio-Economic aspects of rice trade ...... 29 6.2.3 Un-transparent supply chains ...... 30 6.3 Mars Food Sources Rice from 9 Counties ...... 30 6.4 Chains and Networks in Rice Provisioning ...... 31 6.4.1 Vertical Relations – Value Chain ...... 31 6.4.2 Horizontal Relations – Network ...... 32 7. Sustainable Rice Sourcing ...... 34 7.1 Mars Food Sustainability Practices ...... 34 7.1.1 Mapping – Sustainable sourcing ...... 35 7.1.2 Sustainable Rice Platform ...... 37 7.1.3 The Direct Sourcing Program in Pakistan ...... 46 7.1.4 Code of Conduct – Responsible Sourcing ...... 54 7.2 Sustainability Achievements in, of or through the Mars Food Rice Supply Chain ...... 58 7.2.1 The Sustainable Sourcing Strategy for Rice - through approach, of practices ...... 58 7.2.2 SRP – through platform, of standard ...... 59 7.2.3 Direct Sourcing – through approach and practices ...... 62 7.2.4 Code of Conduct – in approach and practices ...... 63 8. Discussion and Conclusion ...... 65 8.1 Answering the Research Questions ...... 65 8.1.1 Partner Engagement ...... 65 8.1.2 Possibilities for achievements beyond the own supply chains ...... 66 8.1.3 Lessons learned ...... 67 8.1.4 Private Sector Contributions to sustainability in and beyond their chains ...... 68 8.2 Reflections ...... 69 8.2.1 Reflections on the results ...... 69 8.2.2 Reflection on the theoretical framework ...... 69 8.2.3 Reflection on the methods ...... 70 Appendix A ...... 77 Interview Respondents ...... 77

vii Appendix B ...... 79 Topic list used for the semi-structured interviews ...... 79 Appendix C ...... 81 Supportive Tables and Figures ...... 81

viii List of Figures

Figure 3.1. A visualization of the three distinct types of governance. (Bush et al., 2014 p11) ...... 13

Table 4.1 Overview of the respondents’ characteristics ...... 18

Figure 5.1 Sustainable sourcing vs. responsible sourcing. (Mars Inc., 2015 p16) ...... 27

Figure 6.1 Map of the 9 rice-sourcing countries of Mars Food, including the main areas of concern . 31

Figure 6.2 A regular rice supply chain of Mars Food ...... 32

Figure 6.3 The direct sourcing supply chain Mars Food ...... 32

Table 7.1 The complete list of SRP stakeholder participants in 2015 (SRP PI, 2015)...... 39

Table 7.2 Stakeholder participants in the direct sourcing progam ...... 48

Table 7.3 Stakeholder participants in the responsible sourcing program ...... 55

Figure 7.4 Summary of the practices’ characteristics, category and effect beyond the chains of Mars Food...... 64

Figure A. The multi-nationals behind our food brands (Oxfam, 2013) ...... 81

Figure B. Results of the AIM-Progress benchmark study on the responsible practices of the largest fast moving consumer goods companies (AIM-Progress, 2015) ...... 81

Table A. 23 Raw materials prioritized by Mars Inc. in the sustainable sourcing strategy. 16 of these raw materials are relevant for Mars Food (in bold)...... 82

Figure C. Mars Inc.’s visualization of the sustainable sourcing strategy (Mars Inc., 2015)...... 82

ix Table of Abbreviations

CEO Chief Executive Officer

CSR Corporate Social Responsibility

ICI International Cocoa Initiative

ILO International Labours Organization

Inc. Incorporated

ISO International Organization for Standardization

IRRI International Rice Resources Institute

GHG Green House Gas

Ltd Limited

MSSM Mars Strategic Sourcing Method

NGO Non-Governmental Organization

P&G Procter and Gamble

RPL Rice Partners Limited

RSPO Roundtable on Sustainable Palm Oil

RTRS Round Table on Responsible Soy

SRP Sustainable Rice Platform

SAI Sustainable Agriculture Initiative

UNEP United Nations Environmental Program

WRI World Resources Institute

WTO World Trade Organization

WUR Wageningen University and Research Centre

WWF World Wildlife Fund

x 1. Introduction

The background sector (1.1) of this introductory chapter section aims to explain the food industry as a global network and introduces the presence of sustainability issues within these networks; issues that are difficult to address due to different levels of operating. In relation to this, the insufficiency of approaching food problems on a national government level will be expressed. Within section 1.2 the research and theories that will be exanimated in the further chapters will be introduced.

1.1 Background

Times are changing. We live in an era in which the world is continuously globalizing. In particular the rapid evolving innovations in transportation- and communication technology made that different localities, regardless of their distance, get connected. Due to the Internet and other electronic based technologies we can now, for instance, communicate and trade with each other where and whenever we want. This status of interconnectedness and global modernity (Bauman, 2004) is extensively explored by Castells (2000; 2011) and he termed this phenomenon as the ‘global networks society’. Within a global network society, (economic) activities are no longer primarily organized by sovereign nation states and national companies or institutions, but through global networks in which time and national boundaries get less relevant (Castells, 2011). This however, does not imply a replacement of the local and the regional by the global, but more an intensification of the relations between different localities (Oosterveer, 2015).

Society and environment, the national, the local and the global, technology and nature, all became interconnected in one global network. Within this global network, natural resources, products, waste and energy are rapidly moving from one place to another. These movements are called flows (Castells & Cardoso, 2006).

1.1.1 Globalized food networks

This illustration of a global network can also be applied to food and the food industry. With the shift to the network society (Castells, 2000), the production and consumption of food also turned into a global phenomenon (Oosterveer, 2006). Food trade is increasingly organized on the global level (the global network) and connects production and consumption at the local levels.

Within these global food networks, place and time get less relevant. As in the past, location and climate were determining factors for your diet; nowadays an increasing amount of food is sourced globally. Resulting in the fact that you can buy many different (inter) national products throughout the entire year in Dutch supermarkets. The production and consumption of food is no longer limited to the boundaries of a nation state or region; the processes are ‘increasingly transboundary in nature’ (Bush et al, 2014 p1). So with the transition to a state of global modernity (Bauman, 2004), also the geographically bounded food supply chains got increasingly replaced by the global network of food production and consumption. The food or agricultural commodities can be seen as flows that are criss-crossing national borders and connect different localities (Urry, 2003) (the place of production and consumption) within transnational infrastructures and networks (Oosterveer, 2009)

1 1.1.2 Food Industry Challenges - The effects of globalized food networks

Due to population growth and an increase in demand for food, the earth’s resources are under an increasing amount of pressure. In 2015, 9.1 billion people are expected to be living of earth (Godfray et al., 2010) this is an increase of 22% against the level of today. As the demand for food will grow this much, the immense demand for agricultural products will rise even further due to the use of biofuels.

Agricultural practices, monocultures in particular, are already associated with environmental problems like to soil degradation, green house gas emissions and biodiversity loss. Agriculture is, for instance, responsible for 18% of the global GHG-emissions and uses 70% of the useable water on earth (Mars Inc, 2015 p33). Agro-food commodity cultivation, processing, trade and consumption contribute to climate change and global warming since it are emitters of GHGs. But, at the same time has climate change a severe influence of the earth’s ability to produce food (Oosterveer and Sonnenfeld, 2012)

Food production and consumption is considered as a substantial contributor to the climate change problem but is also suffering from its impacts. Globalization, and the increase in global food trade enhances the side effects of agricultural production and brings in different problems, which make global supply chains more unsustainable and problems complex to address:

- Globalization causes a change in land-use, mainly an extension of farm land over forests - Due to globalization production areas are shifting to more fragile regions - Especially in global supply chains the benefits are not always mutual divided

(Hall, 2006; Appadurai, 1995; Oosterveer 2015)

Furthermore, the global dynamics (global trade) have an impact that goes much beyond the food that is traded; it influences policies and, production and consumption practices in many countries. Production localities, for instance, are subjected to the complex dynamics of global flows as climate change, the global financial system and global price fluctuations. Wheat for example is a commodity that is very much subjected to the global market prices and to price speculations. The global dynamics in this case dominate the local.

Also the decision-making (by key actors in the chain) related to food might have a widespread impact that goes beyond the borders of a nation state or a food company’s organizational boundaries. When Europeans consumers demand for cheap fish products, it will affect the global fish market and international trade and eventually put Vietnamese fisheries under pressure. This illustrates that decisions made by consumers here in Europe can influence the livelihoods of people on different localities.

Food production and consumption operate on a global level at which the globalized supply chains connect different localities with each other and make time and national boundaries less relevant. These globalized supply chains have an impact on each localities where it is connected to and shapes ‘the contemporary circumstances of production and consumption’ (Bostöm et.al, 2014 p1).

2 While sustainability, and the effects of globalized supply chains are recognized as being one of the key challenges in the food industry (Dentoni and Peterson, 2011) one is not able to sufficiently regulate these side effects of global food production and consumption.

1.1.3 Insufficient regulation

The problem within these global food networks and the regulation of the side effects is, that there appeared to be a mismatch between the globally organized ecosystem in which the environmental side effects appear, and the national regulatory arrangements that try to address these problems. Due to the global character of current food flows, challenges that are rooted in globalization are present: ‘due to globalization of both production and consumption, the regulation of food related risks and, more generally speaking, the environmental dimension of food production and consumption is much more difficult to establish’ (Spaargaren et al, 2006 p.28). This mismatch is not only applicable to the environmental side effects of global productions and consumption systems, neither is one able to sufficiently regulate the socio-economic conditions within these systems.

For the global food flows this means that there is no sufficient regulatory system that addresses the global negative side effects of food production and consumption. National and local government arrangements are no longer able to tackle food issues since we are speaking for globalized food networks/supply chains that travel through and connect different localities and therefore move beyond the borders of the nation state. However, neither are ‘global WTO-based types of policies’ sufficient enough to effectively govern the environmental and social consequences of the global food trade (Oosterveer, 2006).

Therefore we should step away from the linear approach of scaling up government from micro to macro/local to global level and replace it by an approach of governance connections (Bierman and Pattberg, 2008). To understand the global dynamics of food and the distribution of power around it, we have to look at networks instead of a collection of individual countries, and who has the power within these networks. The state, private sector and the civil society shape sustainability in the agri- food chains. New types of regulatory arrangements involving state, private sector and civil society actors emerge within the food sector in addition to national governments. This research focuses on the role of private sector food and beverage companies within these new regulatory arrangements.

1.2 The research

1.2.1 Problem statement

The current regulatory systems of nation states and multilateral organizations are not sufficient enough to regulate and address the socio-economic and environmental side effects of global food production and consumption. There is a need for an alternative approach towards governing these side effects: a governance oriented approach in which public-, private- and civil society actors are included. Due money and resources commercial companies are powerful actors in the global food chains. It is interesting, and valuable for policy makers, to identify how these commercial companies can contribute sustainability governance and how they can put their resources to use to positively affect the practices in their own supply chain and beyond.

3 1.2.2 Research Objective

The major aim of this research is to get insights and understanding about the way in which commercial companies contribute to the sustainability (governance) in and around their commercial activities. By means of a case study at Mars Food, there will be aimed to investigate how this company tries to address and minimize the environmental and socio-economic side effects in and beyond their rice supply chains.

1.2.3 Research Questions

Main Research Question

How do private companies contribute to the sustainability of global food production and consumption and what is their role in sustainability achievements beyond their supply chains

Sub Questions

Three sub-questions have been formulated to be able to answer the main research question.

1. Does Mars Food engage with (non) supply chain partners in developing its sustainability approaches and practices?

- What kind of tools and schemes are used? - What are the motivations and goals of these schemes? - Are both public-, private- and/or civil-society actors pro-actively involved in policy making and executing? - Are compromises made and how? - What is the impact of this engagement on the rice supply chains?

2. What are the possibilities for Mars Food to make sustainability achievements beyond their chain?

- Where in the three classifications (in, of, through) of sustainable chain and network governance can Mars Food’s sustainability practices be placed? - What are the opportunities and threats Mars Food is confronted with when considering sustainability through chains?

3. What valuable lessons that can be learned from the Mars Food case study for other companies in the food sector, but also policy makers and NGOs to realize sustainability governance on global food flows?

- Considering the opportunities and threats faced by Mars Food what are possibilities for companies in the food industry to contribute to sustainability governance? - Considering the opportunities and threats faced by Mars Food what are possibilities for policy makers and NGOs to contribute to sustainability governance in the food industry

4 1.2.4 Relevance

To speak with the Brundtland et al. (1987) definition on sustainable development: ‘Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ (Quental et al, 2011, p.20). Due to the expected increase of the world’s population and the associated increase demand for food, sustainable food provisioning is key. Not changing our current food provisioning system and insufficiently addressing the side effects for global food trade would undermine the opportunity for future generations to be able to fulfil their needs. In order to be able to achieve a sustainable food provisioning system, now and in the future, each actor’s responsibility and agency should be recognized and used.

5 2. Global Sustainability Governance

Global Food systems are very complex and consist of many different actors operating in these systems. To be able to identify the role of the private sector in governance arrangements around the side effects of global food production, it is of importance to know the relevant actors in a certain food system. This chapter will therefore introduce the Global Value Chain theory of Gereffi (2005) and the Global Network Theory of Castells (2000). These two theories can, complementary to each other, help identify the relevant actors related to a problem and thereby the relevant actors for governance arrangements. The theories will later in the research (chapter 6) be used to identify the relevant actors for Mars Food in relation to their sustainable rice sourcing strategy. At first this chapter introduces the concept of governance and explains why a governance-approach is more sufficient in the context of addressing sustainability issues.

2.1 Governance approach

The ability of public actors to govern the food system has decreased in the course of globalization; food systems transcend the reach of (national) public regulations. Private actors, on the other hand, are taking an increasingly powerful position (Fuchs and Glaab, 2011) and operate on a worldwide scale in which they affect the livelihood of many people. The power of public actors has, however, not completely diminished, (Fuchs and Glaab, 2011) and therefore both public and private actors play a key role in addressing the side effects of global operating food systems. Within this, governments have the capacity to determine trade rules, agricultural subsidies or market access. Private actors influence this public regulation in their interest or create self-set rules and standards (Clapp and Fuchs 2009; Fulponi 2006). Also new social movements concerned about the environmental and social side effects of the food system have emerged and try to influence decision making towards a more sustainable food system (Fuchs and Glaab, 2011).

The governing of global food systems should shift away from the regulatory framework in which the nation state is dominant and conventional distinctions between society, state and the private sector were strong. There is a need to find a way to unite these different actors and make use of their ability to influence the food system. One manner to incorporate both the potential and the responsibility of actors in a food network is by taking a governance approach and stepping away from the formerly distinct divisions in tasks among state, market and civil society. A governance approach entails that the state is no longer dominant in policy making and that new alliances are created between the state and other actors (Spaargaren, 2006). All actors present in, or related to, an issue have to be addressed or involved in governance arrangements surrounding that particular issue.

2.1.1 Governance Defined

Governance is a notion often referred to in different contexts, and is defined in different ways. In general governance is always about: regulatory and organisational processes. These processes can operate at different levels. To give a definition of governance that fits best in the context of this research I would like to refer to Biermann and Pattberg (2008). Biermann and Pattberg (2008) defined global environmental governance as:

6 “World politics that are no longer confined to national states, but are characterized by increasing participation of actors that have so far been largely active at the subnational level. This multi-stakeholder governance includes private actors, such as networks of experts, environmentalists, multinational corporations, but also new agencies set up by governments, including international courts” (Biermann and Pattberg, 2008 p.280; Biermann, 2007)

This definition is fairly relevant for this research, because it takes governance at the highest level, the global level, since it concerns environmental issues and these go beyond boarders. Because this research focuses on the governance of sustainability issues related to global food production and consumption, it is also relevant to take a global approach on governance. It is important to see the global urgency of these problems and there is a need to go beyond local, regional and the national. In this thesis, however, the focus is not only on environmental sustainability but also on the social aspects of it, like human rights, income and gender.

2.2 Chain and Network Perspectives

Governance implies a new balance between state, market and society (Loorbach, 2010). But, policy making on such a level is extremely difficult since you cope with complex problems and different actors and perspective that need to be dealt with (Loorbach, 2010). The Global Value Chain theory of Gereffi (2005) and the Global Network Theory of Castells (2000) can be used to identify the actors that should be involved in governance arrangement with respect to the negative side effects of global operating food systems.

To grasp the complexity of the production, trade and processing of commodity goods (the supply chain) and to understand the role of the actors involved, scholars used the concept of Global Value Chains (Gereffi, 2005). This perspective is developed by Gereffi (2005) and indicates the different levels and phases in which a commodity gets generated and value gets added. It identifies the key actors within this process and focuses on the distributions of power in this supply chain. When studying the supply chain from beginning to an end, from farm to fork, you get a better insight in how the dynamics within the chain are steered by dominant economic actors (Oosterveer, 2014). The vertically related actors within these supply chains are connected via the flow of the products from beginning to the end, the flow of money that goes back in return and the flow of information that is going both ways (Oosterveer, 2015).

The global value chain theory focuses mainly on the economic (supply chain) actors and how they steer the dynamics of the vertically organized supply chains. This theory ignores, however, the influential roles of governments, NGOs, and research institutes. These are operating on the horizontal level and need to be taken into account as well. When aiming to understand the complete chain dynamics, we need to go beyond the vertical chain relations and include the horizontal relations towards the chain as well.

The Global Value Chain perspective therefore needs to be extended with the Global Network perspective of Castells (2000). This theory is originally used to analyse global flows as communication and trade, but can also be applied to food trade when considering global food value chains as global networks. The network perspective allows a more detailed analysis because it includes the horizontal

7 relations around value chains and recognized the social and non-material dimensions of food chains. These horizontal relations are connected via flows of knowledge, culture and awareness (Castells & Cardoso, 2006). The network theory shows that global food chains are embedded ‘social and social- material’ actors and networks (Oosterveer, 2014). The theories together can identify the involving local and global, public and private actors and influences, and thereby provide a basis for new governance arrangements.

2.3 The Company Role in Governance Arrangements

This research focuses on the role of commercial food companies and the way they interact with the public, the private and the civil society (the vertical and horizontal chain relations), in order to deliver contributions to sustainability in and beyond their supply chains. Within governance arrangements commercial companies potentially have a lot to offer since they are one of the powerful actors within a certain commodity network because of the amount of resources and money. Besides, companies are nowadays faced with sustainability challenges; there is a need to secure future supply and this cannot be achieved by operating in an extreme unsustainable manner. Furthermore, external pressure is raised to make companies change their practices and to take responsibility for the actions that impact the entire chain and beyond. As a result companies seem to be more ‘willing’ to participate in practices that might not only apply to the economic benefits of the company itself.

One example of external exposed pressure on the business/policies of large commercial companies in the food industry is Oxfam’s (2013) Behind the Brands campaign. In the corresponding report, the (publically available) policies and promises of the ten largest ten food businesses in the world are reviewed and assessed. Within this assessment Oxfam looked the policies regarding social and environmental sustainability. Land-, water- and climate change- policies and supplier requirements are assessed. In addition, the rights and positions of farmers, workers and women, and the companies’ practices to improve their position, are covered. Scoring high or low in this ranking will have an impact on the company’s reputation and brand image, either positive of negative. Campaigns like these raise awareness among companies and society.

As a response to sustainability challenges and the growing pressures from NGOs and civil society, commercial companies are more and more trying to find appropriate policies and practices to make the needs of both the industry and the natural- and social environment meet. Within the contextual landscape of globalization and increasing interconnectedness, they search for a suitable approach to address sustainability issues within and beyond their chains. Firms in the food industry are starting to interact with a broader set of stakeholders to be able to address the challenges they are faced with. These stakeholders do not only include supply chain actors as producers, traders and retailers, but also governments, knowledge institutions, NGOs and other civil society organizations (Dentoni and Peterson, 2011 p.84; Bush et al., 2014). The interaction between these actors and the sharing of information leads to the fact that many agricultural companies cooperate, form and/or participate in different kind of (governance) arrangements. These arrangements aim to target sustainability around both production and consumption processes. Within these kind of activities resources can be shared and joint sustainability objectives can be agreed upon (Dentoni and Peterson, 2011). Examples are: labels and certification schemes, code of conducts and industry platforms.

To understand and analyse these new forms of arrangements and to be able to identify whether these arrangements are able to have a broader effect than on the economic activities of a lead firm

8 only, Bush et al. (2014) developed a framework. This framework categorizes the different methods and ways in which private companies can integrate sustainability into their business practices. The framework observes the perspective that these companies use (internal or external) and the way they cooperate with other actors than their own supply chain partners. Herewith the theory builds on the Global Value Chain – and the Global Network Perspectives.

Because this theory offers a means of organizing different activities, practices, management systems and organizational structures that together constitute sustainability governance (Bush et al., 2014) it will be central within the research. The theory is used to grasp the practices, and their potential effects, that are carried out by Mars Food. Chapter three therefore will, extensively present the theory of Bush et al. (2014).

9 3. Addressing sustainability in, of, and trough chains

Large food and beverage companies (should) play a vital role within addressing the side effects of global food production and consumption. Since the power in the food chains is centred at the retail and industrial companies (Gereffi et al, 2005), these modes of capitalist production can not only be seen as the (in) direct cause of sustainability issues and inequalities related to food flows under the conditions of globalization. They are also a potential site for social and environmental reform, and can therefore be used as a powerful source to improvement (Bush et al, 2014).

A pro-active attitude from companies towards this reform is hereby required. Large food and beverage companies have to take responsibilities that go beyond the boundaries of their own supply chains. This means that they should look beyond their global economic practices only. For example by integrating policies and practices on gender equality or children’s education, which improves livelihood of an entire community. Due to internal motivations and external pressures, companies more and more participate in and develop different methods to address sustainability problems related to their commodities.

Companies within food chains and non-firms actors outside the chain define, codify, and govern sustainability in many different ways (Bush et al, 2014). These are reflected by a wide variety of i.e. labels and certification schemes, sustainable trade initiatives and corporate social responsibility (CSR) policies. To grasp this wide variety of practices and to understand the dynamics within the construction of these practices, Bush et al. (2014) developed a theory that brings the diverse practices down to three different categories: governing sustainability in, of and through chains. This categorization helps to understand how companies govern the social and environmental aspects of sustainability via their supply chains. Furthermore, it can be used to investigate whether it is possible to make a contribution that has further effects than on their own supply chains.

Within this theory a governance approach and the Global Value Chain - and the Global Network understanding of global food trade (chapter 2) come together. It is important to depart from both approaches when considering sustainability in relation to food and the food industry since: Un- sustainable practices are happening in network dynamics and have (different) effects on the different actors in the network. All actors (vertically or horizontally) related to a certain commodity are influenced and should therefore be taken into consideration in sustainability arrangements/policies.

The three categories (in, of and through) can be divided in internal and external perspectives on including towards governing sustainability via supply chains. Figure 3.1 shows a visualization of the categorization made by Bush et al. (2014).

3.1 Internal Perspectives

The internal perspective on including sustainability governance in value chains focuses on the vertical relations within a certain supply chain; the relations that connect a commodity from farm to fork. These are relations with other actors within the same chain, for example with suppliers and costumers. It is important to note that this does not mean that no external influences over the chain exist, they do. The processes and practices that are governed by the new policy are, however, always internal to the chain; it only governs supply chain practices.

10 Governing sustainability in chains and governing sustainability of chains both reflect an internal perspective towards governing sustainability via the chain.

3.1.1 Governance in chains

This approach is often used by corporate chain actors that aim ‘to improve their social and environmental performance from a business management perspective’ only (Bush et al., 2014 p. 4). It is a very inward looking approach that entails companies that aim to achieve sustainability practices as efficient as possible, in order to get a competitive advantage.

The practices within this category are often characterized by outside pressures from actors that hold companies responsible for the social and environmental effects internal and external to the chain. Companies react on this by integrating social-economic and environmental sustainability topics in their policies as efficient as possible. Many corporate social responsibility (CSR) policies can be a good example of this. Although taking sustainability issues into account in your corporate policy is not bad, CSR policies often turn out to be used as a business case or competitive advantage.

Policies and practices that depart from this perspective only involve private actors and have monitoring and measurement systems, so that practices can be efficiently controlled. An example is the ISO 14001 standard on social accountability and the various CSR policies of companies. (Bush et al, 2014). Section 3.3.1 examines the Supplier Code of Conduct of Unilever as an illustration of governing sustainability in a supply chain.

Key Characteristics

- Internal Perspective – Company focus - Pushed by outside pressure - Arrangements only regard the private sector - Main concern: upgrading the company’s position in the supply chain

3.1.2 Governance of chains

Governance of chains deals with control and power asymmetries in the global supply chain. This perspective relates to the Global Value Chain theory (Gereffi, 2005) and central are the lead firms that can express power over the upstream supply chain actors (Bush et al. 2014). Lead firms are often located in wealthy developed countries while their suppliers and/or producers are located in developing countries (Gereffi et al., 2005). These lead firms can require and set certain production conditions to which their upstream suppliers need to live up to. Herewith they aim to change the socio-economical and environmental performances of their supplying actors.

Just as the in-approach, this perspective also relates to efficiency and minimizing reputational risk. The main aim of this perspective is however, not to upgrade the company’s position only, but to upgrade the entire supply chain. The tools and schemes that are used therefore most often focus on driving change at the upstream, supplying and/or producing, actors mostly located in developing countries. .

Examples of governing sustainability of chains are voluntary certification schemes that involve NGOs as: Fair Trade and Rain Forest Alliance certification. Section 3.3.2 provides an illustrative practice of

11 Utz Certified’s coffee, tea and cocoa certification, which can be considered as a means to governing sustainability of supply chains.

Key Characteristics

- Internal Perspective – Chain focus - Arrangements regard private sector actors only or both public and private sector actors - Setting requirements for upstream suppliers - Main concern: upgrading an entire supply chain

3.2 External Perspective

The external perspective on governing the sustainability side effects via global supply chains departs from the Global Network Theory (Castells, 2000) and takes a similar approach. This perspective does not only focus on the vertical relations of which a certain chain consists but also considers the horizontal relations (Bush et al. 2014). Horizontal chain relations are the actors that are located outside the supply chain (whether or not in the same industry) and are still be able to influence chain practice. These actors can for example complement or hamper your practices. Examples of horizontal relations within a food networks are NGOs and governments, but also industry peers and the media.

By considering both vertical and horizontal supply chain relations, the external oriented perspective goes beyond the internal supply chain focus. It complements the interaction ‘between the chain and its supply chain actors with a wider set of networked actors and activities that collectively steer sustainable production and consumption’ (Bush et al, 2014 p13).

3.2.1 Governance through chains

Sustainability governance that is organized though production chains and networks reflects this more external perspective. Within this perspective the horizontal actors are taken into consideration and part are of governance arrangements. It recognizes the broader environment of which a supply chain is part, and which gets affected by the practices of a certain supply chain. Governance through furthermore captures how the norms and values of external actors (NGOs, customers and governmental organizations) get integrated into a company’s approach and thereby influences the practices within and around a global value chain (Bush et al, 2014 p4).

In arrangements and strategies that depart from this perspective the chain is used a channel to influence production and consumption practices. Arrangements are made to affects change beyond the chain (beyond the direct economic activities) and have the strongest governance character of the three perspectives.

Examples are the round table initiatives around soy and palm oil: the Round Table of Responsible Soy and the Round Table on Sustainable Palm Oil. Besides, multi-stakeholder arrangements like the Sustainable Rice Platform (section 7.3) or the International Cocoa Initiative (section 3.3.3) can be seen as an example of governing sustainability through chains.

12 Key characteristics:

- External focus - Perceive supply chains as a part of a bigger environment - Civil society organisations often play a key-role in arrangements - Affecting change beyond the supply chain

Figure 3.1. A visualization of the three distinct types of governance. (Bush et al., 2014 p11)

These three different sustainability governance approaches however are not exclusive from each other; they can either way support or undermine each other. From governance through chain for example there are many links to governance arrangements that stay internal to the chain like

The classification of the ideal types of governing sustainability in, of and though chains will be used in this research as the main analysing tool to review and understand the different sustainability activities and practices in the food industry by Mars Food in the rice sector in particular. And furthermore to understand how firm and non-firm actors influence decisions over sustainability in globally organized food flows.

3.3 Illustrative practices

To give an insight on what practices in these three categories contain, this section provides three illustrational practices; one for each category. It provides examples of good practices external to Mars or within Mars (external Mars Food). These example practices can later be compared with the practices of Mars Food in the rice supply chain. Furthermore, the information might be useful in order to put later findings in a broader perspective.

3.3.1 Corporate Code of Conduct - Unilever

Unilever, one of the largest food and beverage multi nationals in the word, is almost famous for their CSR-policy. Currently ranked that the first place of the Down Jones Sustainability Index and also in the Behind the Brands (study conducted by Oxfam. So, perceived as a good policy as well. Although, it needs to be recognized that both rankings mainly focus on companies’ external communication

13 about sustainability and focus less on the content of it. An important part of the companies’ corporate social responsibility policy is their Ethical code of conduct of business principles. This code applies to all Unilever employees and the third parties that represent the company (Polman, 2016). It covers topics like: employees, the environment and business integrity.

First sentence of the code refers to their reputation:

Unilever has earned a reputation for conducting its business with integrity and with respect for the interests of those our activities can affect. This reputation is an asset, just as real as our people and brands (Polman, 2016 p1).

Corporate codes of conducts like this one of Unilever fit the in category of governing sustainability in chain. The central focus on the code of conduct lies mainly on improving the position and reputation of the lead firm. The arrangements only involve and regard, private sector actors. In this case only the actors that are directly linked to the company are obliged to sign the code; earlier stages in the supply chain are not.

Codes like these are frequently used among large corporations (Molenaar, 2013) and different codes apply to different stages of their supply chains. Companies even use different codes for different purposes. Unilever has for example also an agricultural code of conduct to which all their suppliers need to comply to. This codes focuses more on the farmer level as well, but still only economic actors are involved. Companies may also have different assurance systems attached to these codes ranging from no system at all, to self-assessments, verification by the company and third party audits (Molenaar, 2013 p. 50).

3.3.2 Third Party Certification – UTZ Certified

Nowadays multiple voluntary third party certification schemes exist (Molenaar, 2013). These schemes mainly aim to implement best practices in a supply chain via a best practices-standard, or focus on the elimination of the bad practices from a supply chain. One of them is UTZ Certified; a programs and certificate for sustainable production practice in the coffee, tea and cocoa sector (UTZ Certified.org). Utz Certified developed a minimum standard on agricultural production practices for the entire production chains, and a certificate to recognize the compliancy with this standard (Pierrot et al, 2010). Additionally, the program aims for increasing the level of transparency in the chain (Pierrot et al, 2010). The focus areas for the standard are: production practices, labor practices, safety, well-being, and environmental concerns (Mars Chocolate representative, 2015)

Voluntary third party certification schemes, like UTZ Certified can be considered as governing sustainability of chains. Opposed to the approach of addressing sustainability in the chain, governing sustainability of chains does not focus on one supply chain actor only, but aims to improve the practices in the complete supply chain. Utz Certified relates closely to commercial companies (in their foundation and practices), it positions itself as a non-profit organization (utzcertified.org). The involvement of a non-private actor makes it more of an of approach. Certifications schemes like Rainforest Alliance and Fair Trade are similar examples of addressing sustainability issues of global coffee, tea and cocoa chains.

14 Although these certification schemes do not function as a means to upgrade the position of a corporation in a certain supply chain, it is often used as increasing the reputation of corporations as well (Keller, 2008). Furthermore, living up to the standard can be a requirement for delivering to a certain company, which can increase the power of a lead firm over their farmers as well.

3.3.3 Multi Stakeholder Arrangement – International Cocoa Initiative

The International Cocoa Initiative (ICI) is a multi-stakeholder collaboration between NGOs, cocoa companies (i.a. Nestlé, Mars and Mondelez) and labor unions (IIED, 2015). The multi-stakeholder initiative also works with national governments of cocoa producing countries (ICI, 2014). Because of strong rules against corruption the ICI does have a government representative on board in the MSI itself (Mars Chocolate Representative, 2015II). The aim of the program is to ‘safeguard child rights and contribute to the elimination of child labour’ (ICI, 2014). Via partnership building and the development, application and promotion of good practices the program tries to achieve this aim (ICI, 2014). The emphasis in these actions lies on the farmer capacity building (Molenaar, 2013).

The program also operates on a national level to ensure that the program is appropriate and effective with respect to the local conditions. Local partners and institutions are involved and furthermore supported in their capacity building (IIED, 2015). A more local and community oriented approach to change practices makes that this program differs from the top-down implementation of for example certification schemes.

Currently, the program is implemented in Cote d’Ivoire and Ghana: the two priority countries, since they are together responsible for 70% of the world cocoa production (ICI, 2014). In 2014 the ICI program assisted 712 cocoa-growing communities. This resulted in several physical improvement actions that got implemented: 82 farmer field schools, 72 new teachers and 80 new or renovated classrooms, together resulting in improved access to school for 4.000 children (ICI, 2014 II; IIED, 2015).

The ICI is a good example of a collaboration in which different commercial organizations participate because they want to achieve changes that go beyond their own (economic) chain interest. By focusing on farmer capacity building and child labor in general, multi stakeholder arrangements like this also go beyond the so-called ‘low-hanging fruits’ of larger and wealthier plantations that are easier to certify (Molenaar, 2013). The practices of the ICI are expected to contribute to securing future supply, but this is not the focus of the initiative.

The International Cocoa Initiative is a typical example of governing sustainability through chains; it places the cocoa supply chains in a broader perspective, recognizes the social and environmental side effects of the global production systems. By the companies that participate in the ICI it is recognized that they should contribute to addressing these issues. Their supply chains are used as a means to do so.

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4. Methodology

4.1 Research Design

This research aims to grasp the role of private companies in addressing the unsustainable side effects of global food production and consumption; it tries to identify how these companies contribute to global sustainability governance and thereby have an effect beyond the economic supply chain activities. The research question and sub questions related to this aim will be answered by means of qualitative research.

A qualitative research is conducted because, the description of specific company contributions and the context around it, is central in the analysis. The practices need to be described in such a way that the reader can understand the motivation of certain people/companies to take certain actions. It offers a detailed understanding of a certain case. This research it is not only about the practices that commercial food companies undertake but also, about their motivations and challenges. Only by means of qualitative research a sufficient answer to the research question and sub- questions can be found.

The research can roughly be divided into two parts: literature research and empirical research.

4.1.1 Literature Research

To develop the theoretical fundament that fits the case, some previous mentioned concepts needed to be deepened out via an extensive literature review. The theoretical framework departs from the ecological modernization perspective in order to justify Mars Food as the centre of analysis and the large amount of agency assigned to commercial food companies (and recognizing their agency as a means to achieve a more sustainable situation).

Central in the theoretical framework are the Global Network Theory of Castells (2000), the Global Value Chain Theory of Gereffi (2005) and theories on (private) governance arrangements towards sustainability. These theories help to set the scene and grasp the underlying mechanisms that make governance arrangements on sustainability in globalized value chain are an urgent matter and identify the relevant actors in this governance approach. Chain and network conceptualizations will be used to better understand the role of private companies in governance arrangements towards sustainability. In particular the classification made by Bush et al. (2014) (governing sustainability in, of and through value chains) will be used to better understand how private companies can contribute to improve the level of sustainability within their global food network. The Global Value Chain theory and the Global Network Theory, as the governance classifications of Bush et al. (2014) will be applied to Mars Food’s rice supply chains and their related sustainability issues.

Furthermore is a part of the desk research assigned to a peer review that is executed to see the more general trends and processes towards global sustainability governance and the way (lead) firms react on that. This is done to capture the general trends in the food industry and to put the findings of the case study in perspective. A part of this peer review study is used for the illustrative practices in chapter three (section 3.3)

16

4.1.2 Empirical Research

The largest part of the empirical research consists of a case study about the sustainability policy and practices of one of the five larges food and beverage companies: Mars Inc, and their food department Mars Food in particular. An in depth case study offers the ability to gather practical knowledge about the way commercial companies actually operate in relation to sustainability governance. It allows going beyond just the annual report image that is exposed by a company, being critical and understanding the decision making behind certain actions. In relation to the research question a case study is a sufficient manner to understand the larger question. An extensive case study offers a detailed understanding of the bigger problem in a smaller situation.

Within this case study the following methods are used:

• (Internal) document analysis • Observation during: meetings, conversations and training • Semi-structured Interviews

4.2 Research Units

4.2.1 The Company

Since this research focuses on the way commercial companies contribute to sustainability governance, the central research unit is a department of an important food beverage company: Mars Food. Mars Food, one of the five segments of Mars Inc.

Mars Food is responsible for leading food brands as Uncle Ben’s, Dolmio and Suzi Wan. To be able to provide the food commodities for these brands Mars Food is responsible for the sourcing of many raw materials. These vary from herbs and spices to wheat and corn. Mars Food deals in several global food flows. The two largest commodities that are sourced on a global scale are rice and tomatoes, which make them two of the priority materials that Mars Inc. wants to source more sustainable. In this research the focus is mainly on the practices involved in addressing sustainability issues around rice.

For several reasons Mars Inc. and thereby Mars Food got motivated to address the sustainability issues present in their supply chains. As a response to this Mars Inc., in collaboration with several consultants and NGOs, developed a sustainable sourcing strategy. This strategy, the interpretation of the strategy by Mars Food and the related practices are central in this analysis.

4.2.2 The Sector

Mars Food is responsible for the sourcing of several raw materials of which the largest are rice, tomato, wheat and corn. As part of my internship I was involved in the sustainability developments around both rice and tomatoes. The continuation of this research will dive deeper into the rice sector and the policies and practices initiated in order to address the sustainability issues surrounding the rice supply chains of Mars Food. I focus on the rice sector in particular because more sustainability initiatives are necessary and present in the rice supply industry compared to the tomatoes industry. Furthermore, Mars Food is more actively involved in addressing sustainability issues surrounding rice

17 and takes a more following position within the tomato sector. This makes the rice sector more interesting to dive into.

4.2.3 The Practices

Mars Inc. tries to address the sustainability issues related to their supply chains in several ways. This research will dive into four of these different practices by which Mars Food aim to contribute to a more sustainable rice supply chain:

• The 2015 Sustainable Sourcing Strategy • The Responsible Sourcing Code of Conduct • The Participation within the Sustainable Rice Platform (SRP) • Vertical Integration of the Basmati Supply Chain

These four practices will be described and categorized by means of the theory of Bush et al (2014). In addition, the practices will be analyses and both opportunities and limitations with respect to creating an impact beyond the chain will be identified. Furthermore the (possible) impact on the rice sector more general will be addressed.

4.2.4 The Respondents

The respondents are chosen on their relevance in relation to the research; no random selection. Also the possibility of doing the actual interview was eventually steering in the amount and type of respondents. I have tried to interview at least three actor representatives related to the practices mentioned above (4.2.2) preferable from different angles. This in order to understand the collaborative dynamics (power relations), values at stake and decisions that are made. Regarding the SRP, for example, I covered the perspectives of the research institutes, the NGOs and consultants and the private company. Unfortunately I have not been able to interview public sector representatives. Appendix A gives a description of the background of the representatives I have spoken to.

Overview of the Respondents’ Characteristics

Total number of respondents 12

Internal to Mars Inc. 5

External from Mars Inc. 7 • NGOs 5 • Public Sector - • Private Sector 1 • Research Institute 1

Table 4.1 Overview of the respondents’ characteristics

18 4.3 Data Gathering

4.3.1 Internship

The case study is mainly fulfilled by means of a 4,5 month internship at the sustainable sourcing department of Mars Food. During the internship I was involved in the three different stages of the sustainable sourcing strategy of Mars Inc.:

1. The mapping of the supply chains Mars Inc. will do this for 23 of it’s priority good but I will mainly be involved in the mapping stages of the Mars Food commodities which are i.e. rice and tomatoes. To be able to map the supply chains of both rice and tomatoes, 30 supplier interviews are conducted. 2. The impact analysis of these chains A first indication of possible impacts based on supplier interviews. This baseline assessment functions as advice for further research. 3. Engaging suppliers Awareness raising and creating engagement among suppliers and Mars associates by means of interviews and trainings.

Although not always directly relevant for this research, the internship activities helped me to better understand supply chain related issues and the challenges and opportunities in addressing them. Furthermore, did being part of the sustainable sourcing team of Mars Food gave me the opportunity to discover the core values of Mars Inc., and Mars Food in particular; I learned how Mars operates, makes decisions, and what influences their decision making. This information is obtained via i.e. my daily practices as an intern, internal and external documents provided by Mars, attending meetings, trainings and having conversations with sustainable sourcing team members and other Mars associates.

Beside practical insights in the business operations and decision-making processes of Mars Food, I also got the opportunity to make use of their network and do interviews with for example business partners or NGOs. Also the thoughtful conversations, brainstorm sessions and discussions I have had with Luc Beerens (Global Sourcing Director at Mars Food) and Louke Koopmans (Sustainable Sourcing Insight Manager at Mars Food Europe) contributed a lot to my level of understanding about the decisions that need to be made and the challenges faced by the company.

4.3.2 Semi-structured interviews

During and after the internship at Mars Food 12 official semi-structured interviews were conducted. For the sake of the research semi-structured interviews were more appropriate to use than structured and unstructured interviews. The semi-structured interviews enhance the interactivity between interviewee and interviewer. This interactivity helped to establish a sense of understanding, which in its turn reduced the influence of the social desirability bias (Patton, 1990). These 12 interviews have been recorded and coded.

4.3.1 The Bias as a Mars-Food intern

It is important to mention, that as an intern and part of the sustainable sourcing team of Mars Food, I might not be completely independent. During the daily practices at the office and by the daily

19 interactions with Mars associates my opinion and knowledge can possibly get influenced. In order to keep an objective eye during analyzing the strategy and practices of Mars and to avoid being biased about their contributions, I tried to view the practices from several angles. The interviews with the NGOs helped me with this as lot. NGOs usually operate from a different perspective than commercial operations. Their opinions and stories contributed a lot to the research and gave me a less one sighted picture. Furthermore I tried not to lose the critical view I intrinsically have.

20 5. Introduction to the Case

As case study I intensively studies the sustainability strategy and practices of Mars Food, a segment of Mars Inc (5.1). Mars Inc. is one of largest food and beverage companies of the world and this chapter will introduce Mars as a company, and their Food segment, where this research is conducted, in particular. Several external and internal trends led to the fact that Mars Inc. shifted their entire company’s approach towards one that is more focussed on sustainability. In this new approach the sustainable sourcing strategy functions as the central element. Section 5.2 discusses the internal and external drivers for this change and section 5.3 the realization of the approach in the form of the responsible and sustainable sourcing strategies.

5.1 Mars Inc. – Introduction to the company

Mars Inc. (from now on: Mars) is one of the ten largest food and beverage companies operating worldwide and is responsible for many brands. Most famous are probably the candy bar brands as Mars, Twix and Milky Way. But, Mars does a lot more and is also the multinational behind i.a. the rice brand Uncle Bens, Freedent chewing gum and Whiskas pet food. It consists of six different business segments: Chocolate, Pet care, Food, Wrigley, Drinks and Symbioscience. Figure A in the appendix gives an impression the different companies that are responsible for a wide range of brands.

Mars is a family owned company, the largest in the world, and positions itself as a strong value-based company. Members of the Mars family still function as the board of directors and even though Mars had a turnover of 33 billion dollar over 2014 (Forbes, 2015) they are not listed on the stock exchange. This makes that the Mars family is still very influential within the business. This is also one of the reasons behind the fact that the company values of Mars are based on the values that are originally exposed by the Mars family. The company is, for instance, build on the concept of mutuality. This concept got in 1947 introduced into the company objective by Forrest Mars sr. and stayed part of it ever since. According to Forrest Mars it is supposed to be Mars’ aim to manufacture and distribute ‘food products in such manner as to promote a mutuality of services and benefits among: consumers, distributers, competitors, our direct suppliers of goods and services and employees’ (Mars Inc., 2015 p8). So, among the chain benefits should be distributed along all actors in the chain. Over the years, four additional principles extended the mutuality principle and nowadays Mars operates according to five company principles: Quality – Responsibility - Mutuality – Efficiency – Freedom. These principles reflect the values of the Mars family and unite the entire business, across the different generations, geographies, cultures and languages (Mars Inc., 2015II), but also serve as guidance for the decisions that associates need to make. The quality principle should be represented in the final product; people should get value for money and, all associates are responsible for creating this final product in an ethical manner. Efficiency points to the use of resources; this should be done efficient and resources should not get wasted. Freedom reflects the importance for the Mars family to operate free and practice the principle they stand for, not being forced by stockholders (Mars Inc., 2015II).

The several segments of the company operate on a worldwide scale and Mars has offices and plants in a rich variety of countries. Because of its size and impact, Mars and its’ products take a share of many peoples’ diets. But, next to responsibility to produce food for their consumers, as a lead firm,

21 Mars is also responsible for many food chains and the effects of these chains on both the environment and social aspects. The cocoa and the coffee production systems are striking examples of value chains that have large impact on both the social and environmental aspects of sustainability. Cocoa en coffee farmers, bigger scale and small-scale farmers solely produce for the international market. Thereby they are all integrated into the international supply chains and subjected to the powerful actors within these chains. This makes smallholder farmers often the less powerful actor is a chain and therefore also the ones that got paid the worst.

Also within these global chains the benefits should be more mutually divided and this is not yet always the case. To be better able to address the issues related to their global commodity chains, Mars is moving its policymaking more towards sustainability. To pursue this aim Mars Inc. developed a new, company wide, strategy to sustainably source the majority of their commodities. Both external and internal pressures are underlying developments towards the formation of this strategy

5.2 Changing to sustainability policies: external and internal drivers

The general awareness in our society about the environment and the unequal distribution of resources in our food provisioning system is increasing. Bit-by-bit pressure is exposed, mainly by activist oriented NGOs or critical consumers, on large commercial food companies to make them change their practices. In the Netherlands the sales of ethically produced and sourced food has increased with 18% over 2015 (LEI, 2015) and with 8% in the UK (Ethical Consumer, 2015).

And also internal to companies, at least in the case of Mars, people start to realize that business models need to be changed and that responsibilities need to be taken. This section describes several of the influences that made Mars move into a more sustainability focussed direction.

5.2.1 External influences

In 2013 Mars got listed by the previous explained (section 2.3) Oxfam (2013) Behind the Brands campaign on its’ practices in relation to sustainability. The Behind the Brands campaign reviewed and assessed the policies and promises of the ten largest food and beverage businesses in the world at this moment, including Mars Inc. The aim of this campaign is to ‘increase the transparency and accountability of the Big 10 throughout the food supply chain’ (Oxfam, 2013 p. 3).

Mars scored the fifth position in this ranking and scored particularly low on the themes women’s rights and land rights. This means that there are little or no policies in place to promote women’s welfare and to ‘encourage their inclusion in the food supply chain on equal terms’ (Oxfam, 2013 p.22). Furthermore there are no policies in place to avoid land grabbing or policies against suppliers who obtain land though land rights violations (Oxfam, 2013). Mars performed relatively well on the topic around the smallholder positions in the chain. Mars tries to help farmers to earn a decent income by investing in agricultural services and education on good farming practices (Oxfam, 2013). This is also connected to the cooperation and the commitments they have made towards Utz Certified, a certification body that tries to ensure sustainable production standards within coffee, tea and cocoa chains. One of the reasons why Mars scores low on their sustainability practices and policies is because they lack sufficient insights on their complete commodity chains for some of their commodities. Hereby claims cannot be made and verified. Furthermore, the low level of transparency and external exposure at Mars led to this result within the assessment. Mars is a very

22 enclosed company. Because Mars is not listed on stock exchange, there is no need to disclose and justify all their actions and decisions. This means that even though Mars might take some actions against inequities in their supply chains, the institutions that preform the assessments on sustainable behaviour, do not always know these.

Nestlé and Unilever preformed the best in this Oxfam (2013) review; they have developed and published more policies to tackle social and environmental issues and risks in their supply chain than the other eight companies. But still the scores of all ten companies, including the ‘best in class’, are rather low. One reason behind this, is that companies with their CSR policies mainly focus on projects about reducing water usage or projects focussed on the training of women farmers but, adequate policies to structurally guide ones own supply chain are missing (Oxfam, 2013).

By means of civil society campaigns like this, public attention is drawn to the practices of large food companies. It gives a sort of balance or guideline on what practices are functioning well and what topics deserve to be addressed more. But also companies themselves become more aware of the position they carry our within the landscape of CSR policies and sustainability projects. The Oxfam scorecard gets updated about each (half) year and you can see that the scores have changed and progress has been made. So companies do address their weaknesses and want to preform better. Within Mars there was often referred to this campaign as well, which shows that companies take it seriously.

Next to Oxfam, also Greenpeace operates as one of the external factors that influences change. For years Greenpeace is know for their actions targeted on for example oil company Shell or the actions against whale hunters from Japan and Norway. But also food and beverage companies became subject to their campaigns, mainly related to deforestation issues in relation to palm oil production. In respectively 2010 and 2014 Greenpeace published shocking videos about Nestlé and Procter & Gamble (P&G) on the effects of palm oil production for these company’s commodities. For P&G this resulted in 400.000 emails to the CEO and eventually a new no-deforestation policy (Greenpeace, 2014). These examples of the videos are often referred to within Mars as something that could have happened to them. For Mars it is not yet possible to track the supply chains of all commodities containing palm oil completely, which could make it possible to find situations within the Mars supply chains where rainforest is cleared for palm oil production. To avoid such situations and negative publicity on the brands’ name, practices need to be changed and initiatives need to be in place.

Furthermore there is the Dow Jones Sustainability Index. This index lists the performances of companies in terms of social, environmental and economic criteria. It focuses on stock market listed companies and provides a benchmark for investors that consider sustainability aspects as important (RobecoSAM, 2015). The results of this ranking are not publically available and therefore cause less pressure, however companies often use their high ranking to expose their good practices. Since Mars Inc. is a family owned business they are not part of the yearly list.

5.2.2 Internal motivations towards more sustainable practices

Besides the external pressure to take responsibility for the socio-economic and environmental side effects of Mars’ production practices, there are also internal reasons to change the business operations. As explained before, mutuality is propagated as one of the important building blocks of

23 the company. In Mars’ global supply chains, however, the division of benefits are not always known, or benefits are not equally divided. This is reflected in the Oxfam (2013) study, but also recognized by Mars itself. Also the Mars family exposed their worries and plea for a more honest business. The five principles and in particular the business’ objective of mutuality should inspire Mars Inc. and its associates to make a difference to people and the planet through their performance.

Within the company, awareness around sustainability is rising among the employees. Even before having an official policy around sustainably sourced commodities, some associates were setting-up their own sustainable sourcing projects. Examples are the practices related to the sustainable sourcing of Basmati rice from Pakistan. This project already started four years ago, in 2011, and will be extensively discussed in chapter seven (section 7.1.3).

5.3 Sustainability Policy

Within the contextual landscape of globalization, increasing interconnectedness, external pressures and internal recognition of a need for change, Mars searches for a suitable approach to address sustainability issues within and beyond their supply chains. They aim for a holistic approach. Two central policies are important steps towards this aim: the responsible sourcing and sustainable sourcing policies.

5.3.1 Responsible Sourcing

In the search for an appropriate policy to address socio-economic issues in the Mars supply chains; Mars developed a responsible sourcing strategy. The in 2013 updated strategy tries to address the soci0-economic aspects related to Mars Inc. and their supply chain partners and focuses mainly of the upstream suppliers (tier 1 and sometimes tier 2). These suppliers are mostly the large processors or traders that supply directly to Mars.

An important part of the sustainable sourcing strategy is the supplier code of conduct. The supplier code of conduct is informed by the International Bill of Human Rights and according to the International Labour Organisation (ILO) standards (Mars Inc., 2014). Furthermore the international consultancy body Maplecroft conducted an external benchmark on the code and gave input for it. The Mars supplier code of conduct sets the Mars’ ‘guidelines and expectations with respect to the key areas of responsible sourcing’ (Mars Inc., 2014 p.2). These key areas focus on the socio- economical aspect of commodity production and cover, for example, child labour, (illegal) migrant labour and labour conditions. When suppliers signed the code of conduct, he for example promises ‘not to employ individuals below the age of 16, except if allowed by local law and such exceptions is consistent with ILO guidelines’ (Mars Inc., 2014 p.3).

The code of conduct and the responsible sourcing program applies to Mars’ direct and indirect suppliers in the different Mars categories: food, drinks, chocolate, pet care and Wrigley. The direct suppliers are the suppliers of raw materials and packaging material that contribute directly to the production of the final product. These can be agricultural suppliers, traders or large farms that deliver directly to the Mars factories. The indirect suppliers consist of suppliers of goods that are not used for the production of a final product. This includes goods and services that are bought to construct and run the Mars factories, the transportation system and the warehousing, but also

24 includes the purchased marketing services that are used to promote the Mars’ brands. Indirect suppliers in this case are not the suppliers of the direct suppliers (Mars Inc., 2014).

To measure whether suppliers comply with the code of conduct they have signed, Mars conducts independent third-party audits at their suppliers. These audits are carried-out by the Ethical Trade Initiative and cover: operations, book records and confidential worker interviews (Mars Inc., 2014). The Code of Conduct will be updated each two years to be able to cover the relevant topics.

AIM- Progress Platform Complementary to the code of conduct and the corresponding audits, the responsible souring team also joins the AIM-Progress platform. Within this platform multiple manufactures and suppliers of so- called ‘fast moving consumer goods’ are assembled (AIM-Progress, 2015). Fast moving consumer good are the less sustainable consumer good that last for a period of around a year (McDonald et al., 2001). These goods can be food and drinks, but also cosmetics and household goods (McDonald et al., 2001). The purpose of AIM-progress is to enable and promote responsible sourcing practices and sustainable supply chains (AIM-Progress, 2015). It brings corporations together and provides an exchange forum for sharing knowledge, practices and experiences regarding sustainable sourcing. It herewith aims to achieve synergies among the different companies that are involved and have the same interests.

AIM-Progress developed 4 pillars of responsible sourcing: human rights & labour standards, health & safety, environmental management and business integrity. These four pillars are used as the basis for the third party audits and functioned as a main source input and guideline for the Mars code of conduct as well (Responsible Sourcing Representative, 2016).

Mars joined the AIM-Progress forum to learn from peers and expects to achieve a leverage effects in their pathways to responsible sourcing (Responsible Sourcing Representative, 2016). Furthermore the AIM-Progress forum provides benchmark surveys that give an overview on the positions of the different companies within the landscape of responsible sourcing practices. This benchmark showed that Mars performs relatively well on the four pillars but does not belong to the best in class; these are Cocoa Cola, Unilever, and Nestlé. Figure B in appendix C shows the results of the benchmarks study.

5.3.2 Sustainable sourcing strategy

Although Mars performs well on their responsible sourcing practices and aims for improve by means of i.e. participating in the AIM-Progress forum, responsible sourcing alone is not sufficient enough. The code of conduct focuses on the first (two) tiers of the commodity chain: only the Mars Inc. factories and processing plants supplying to Mars are audited against the code of conduct. Labour and, health and safety issues on the farmer or plantation level are not addressed. Since supply chains go beyond the factory level, all the way back to the level of origin, additional policies are required.

Complementary to responsible sourcing strategy, Mars Inc. therefore launched in 2015 its sustainable sourcing strategy. Mars defined sustainable sourcing as ‘our commitment to drive down the environmental impacts of our top 23 materials, respect the human rights of everyone in our upstream supply chain and help lift farmers out of poverty’ (Mars Inc., 2015 p.3).

25 ‘Mars is committed to source their top 23 materials 100% sustainable’ (Mars Food IV, 2015 p10)

Mars Inc. has identified 23 raw materials (table A in Appendix A) that they prioritize within their sustainable sourcing strategy. These 23 raw materials, are together responsible for 60% of Mars’ business, are the materials that are used in the largest quantities or entail the highest risks. The complete list of the 23 raw materials can be found in appendix C (table A). These 23 raw materials will be assed on five impact areas: land, water, GHG, income and human rights. These impact areas are defined by consulting external partners in the first step of the sustainable sourcing strategy: the development of a strategic framework. For each impact area there is a general aim. The strategies for each specific material on each impact area will be made after having identified the complete supply chain and the most relevant issues that are present within a certain commodity chain. The level of relevance of an issue is based on: the largest contributions that can be made by Mars versus the importance of a certain commodity for the company (Mars Food Representative II, 2016). This is called an ‘impact based approach’ and will eventually result in 23 raw material scouring commitments.

The overall sustainable sourcing strategy consists of three major steps and a process of engagement and improvement. A visualization of the complete sustainable sourcing strategy can be found in appendix C (figure C). The three key stages in the sustainable sourcing strategy:

Stage1. The development of a strategic framework. At this stage Mars prioritized the five impact areas and the 23 raw materials based on the Planetary Boundaries Model of the Stockholm Resilience Centre, the risk assessment studies conducted by the WWF (2013) and Maplecroft (2013) and in collaboration with the World Resources Institute (WRI). Stage2. The mapping stage. Within this phase the supply chains of the 23 top materials are mapped as close back to origin as possible. This is done by means of interviews and field visits. Stage3. Conducting an impact analysis. Based on primary and secondary data a commodity chain will be analysed and issues will be identified.

Sustainable sourcing takes a broader approach and does not only try to address the socio-economic aspects of food production and consumption as human rights and income, but also covers the environmental aspects land, water and GHGs. Furthermore, the sustainable sourcing strategy targets the entire supply chain from the Mars factories till origin workers. To speak in Mars’ terms: ‘responsible sourcing goes above and beyond sustainable sourcing’ (Mars Inc., 2015 p16). Figure 5.1 shows the difference between the responsible and the sustainable sourcing strategies. In the figure the light blue box represents the coverage of the responsible sourcing strategy (two impact areas, final supply chain actors) and the dark blue box reflects the (aimed) reach of the sustainable sourcing strategy (five impact areas, all supply chain actors. Sustainable sourcing covers more impact areas and more supply chain actors.

26

Figure 5.1 Sustainable sourcing vs. responsible sourcing. (Mars Inc., 2015 p16)

Another important development, especially compared with the responsible sourcing strategy, is that the new sustainability strategy is much more embedded within the business practices of Mars. Mars (Mars Inc., 2015 p12) defined the strategy as ‘a menu of strategic options, integrated into MSSM, that align sustainability and value creation’. MSSM in this case stands for Mars strategic sourcing method and implies that sustainability is integrated into the entire sourcing strategy and should influence decision-making.

5.4 Risk Management Approach

Within both the responsible sourcing and the sustainable sourcing strategy Mars operates from reputational risk management approach. Priorities for product policies, supply chain audits and the selection of priority raw materials are based on two aspects. First, the commodity and product risks are identified by means of impact assessments conducted by MapleCroft (2013) and WWF (2013). These impact assessments score, rank and assess the ethical, social and environmental risks of the commodities that are sourced and the countries where these commodities are coming from. This information is used by Mars to determine on which commodities Mars will focus. Next to the ethical, social and environmental risks, Mars takes the so-called brand awareness of a certain product into account. Brand awareness is the extent to which someone knows about the existence and the availability of a product or brand (AMA, 2016). The higher the brand awareness, the higher is the risks for reputational damage. This means that there is a higher urge to change practices to avoid risk and damage to the brand. Dolmio, for instance, is one of the main brands of Mars Food and has a high level of brand awareness in the United Kingdom. This made tomatoes, the main ingredient for Dolmio products, one of the top 23 materials. This while the risk of social and environmental issues in the tomato chains is relatively low. The cocoa and palm oil, on the other hand are commodities that are prioritized because of the high-risk commodity chains.

How the responsible and sustainable sourcing strategies are embodied in an empirical situation will be described in chapter 7. In the coming chapter, the rice sector and the role of Mars Food within their rice supply chains is extensively analysed. Rice is one of the most important sourcing materials for Mars Food and therefore is one of the 23 priority materials. Chapter 6 identifies the risks present in the Mars Food rice supply chains and tries to unravel the vertical and horizontal chains dynamics by using the theories of Gereffi (2005) and Castell (1996).

27 6. Rice Provisioning

This chapter focuses on the rice industry and the global rice provisioning systems. It will provide a general illustration on how the industry looks like and what socio-economical and environmental challenges it faces. In addition the Value Chain Theory Gereffi (2005) and the Global Network Theory of Castells (2000) will be applied to the system of global rice provisioning. The theories are used to identify the vertical and horizontal actors related to (unsustainable) practices in the rice supply chains. The aim of this chapter is thereby capture the complete chain dynamics. A focus is furthermore on the position of Mars Food within their global rice supply chains.

6.1 The Rice Sector

World-wide many people are depended on rice as the main element of their daily nutrition or as their main source of livelihood. According to the FAO (2004) rice is the major staple food for nearly half of the world’s seven billion people, mainly living in countries in Asia, the Pacific, Africa, the Middle east and Latin America. Rice provides a livelihood for 144 million smallholder farmers (Maclean et al., 2013). Smallholders farmers are small size, often family, farming businesses operating on about one half to three hectares of land (Maplecroft, 2013). These smallholder farmers are mostly located in Asia where 90% of the rice is grown. Also within Europe and the United States rice is being cultivated on, different compared to Asia, large-scale farms with highly mechanized farming practices. Rice is cultivated under flooding conditions and depening on the size and resources of the farm, harvested mechanically or manually.

The world produces 403 million tons of milled rice a year (van Dooren, 2005) and although rice is present in diets world wide, only 5-10 percent of the cultivated rice gets traded globally (Maclean et al., 2013; Wailes, 2005, Oosterveer 2015). This however, still represents 30 million tons of rice. To put this in perspective: wheat and soy are two of the largest traded grains in the world. Respectively 35 and 18 percent of the production was traded globally in 2005 (Wailes, 2005). The largest rice producers in terms of volume are: China, India and Indonesia (IndexMundi, 2015). Responsible for the production of respectively 144-, 102- and 36 thousand tons of rice. The world’s largest exporters of rice, in descending order, are Thailand, India and Vietnam (IndexMundi, 2015). Just as the largest producer, China is also the biggest global importer of rice, followed by Nigeria and Iran. Thailand exports a relatively large amount of rice.

6.2 Sustainability Challenges in the Rice Industry

The rice cultivation practices, but also other steps in the rice supply chain, are connected to both socio-economic and environmental concerns. Different origins are faced with different developments and challenges. This section elaborates the majors risks and challenges present in the rice industry by focussing in the environmental aspects (6.2.1) and the socio-economic aspects (6.2.2) of global rice production. Furtermore the additional problem of untransparent supply chains is assessed (6.2.3).

6.2.1 Rice and the Environment

Rice is grown in a wide range of environments and is productive in many situations where other crops would fail. What most cultivation systems have in common is that they need a lot of water (Maclean et al., 2013). Since rice is produced under flooding conditions, rice cultivation is very water

28 intensive. Usually farmers maintain 5 – 10 centimeters of water on their rice field. This requires a lot of rain or irrigation water. Rice is grown in flooding fields because it is a grass and grows well in water. The water helps protecting the rice against weeds and other grasses that would takeover the rice when grown on dry fields (Maclean et al., 2013). The need for water is fulfilled by means of rain or irrigation. Irrigated rice fields provide approximately 75% of the global rice production (Maclean et al., 2013). Efficient water management is vital, especially in water-stressed areas. This is a worldwide challenge for rice cultivation. Different suppliers from Asia, United States, Australia and Europe, that are interview during the mapping stage of the sustainable sourcing program, all mentioned water usage as one of the main challenges for rice cultivation for now and in the future.

Related to the practice of flooding the rice fields, rice production also emits significantly higher levels of GHGs – primarily methane, but also nitrous oxide – than other crops like corn and wheat. In the fields that are flooded with water, methane gas is produced by bacteria present in these anaerobic soils and gets emitted to the atmosphere through the rice plants (Mars Food III, 2015). Rice cultivation is hereby responsible for 10% the total agricultural GHG emissions.

In rice cultivation the consequences of (excessive) fertilizer- and pesticide use, are increasingly visible (Mars Food III, 2015). As a result of the so-called Green Revolution, new fertilizers and pesticides became more easily available (Maclean et al., 2013). Not always aware of the correct use of these materials, or purely to exploit yields, fertilizers and pesticides were used excessively. This resulted in environmental problems like pollution of the soil and water sources. In many countries worldwide, unsustainable farming practices have degraded the soil quality, ecosystems and biodiversity.

6.2.2 The Socio-Economic aspects of rice trade

Poverty is still a widespread problem among rice farmers, especially in the more remote areas in Asian countries like Nepal, Vietnam and Laos (Maclean et al., 2013). The farmers that are living in poverty are mainly smallholders for whom it is less easy to benefit of the Green Revolution. The availability of better quality seeds and fertilizers resulted in higher productivity on many rice farms. Especially the larger and more resourced farmers were able to profit from these new materials. For smallholders living in remote areas, the new and more expensive seeds, fertilizers and pesticides, were often not available. This phenomenon makes it difficult to escape poverty when owning a very small plot of land (Maclean et al., 2013). Another aspect that significantly contributes to the poverty level of many small-scale rice farmers is the high land rents. These rents cause significant amounts of the smallholders’ monthly costs.

Because most of the rice farmers are smallholders, the rice sector and their farmers are very vulnerable. When completely depended on one crop (in this case rice), you are less flexible to cope with stresses as, for instance, bad harvests due to weather conditions. Climate change enhances the vulnerability. Due to the dependency on water rice growers, in particular farmer using rain-fed paddies, are very vulnerable to climate change. Extreme weather conditions as a result of climate change result in persistent droughts or devastating rains/storms (MapleCroft, 2013). These conditions influence the yield quality and quantity.

29 Rice can be harvested mechanically and manually. Mechanical harvesting often is the standard routine on the larger scale, mechanized farms. Manual harvesting is, however still the most common practice in Asia. According to the MapleCroft (2013) study on the risks and vulnerabilities in the rice sector, ‘manual harvesting increases the risk of poor working conditions, and child labor’ (MapleCroft, 2013p.3). Also in at the milling cases of forced labor or child labor have been identified at mills in India (MapleCroft, 2013).

Women play an important role in the global rice sector as both paid and unpaid family labor. In many regions in Asia, women contribute to at least half of the total labor input in rice production, performing tasks such as transplanting and weeding (Maclean et al., 2013; Ricepedia.org, 2015). After harvest, it is usually the women who take care of seed storage and processing of rice (drying, milling) for home consumption (Ricepedia.org, 2015). Women’s rights are however not always recognized (Maclean et al., 2013). This makes women empowerment a topic in Asia.

6.2.3 Un-transparent supply chains

An additional challenge for the rice industry and especially in the context of achieving sustainability in the industry, is the un-transparency of the supply chains. Especially in Asia the supply chains are very un-transparent. In Asian countries, rice is often produced by a large amount of small-scale farmers. Because they operate a small plot of land, their yields are often small to supply directly to the rice processors. Sometimes processors source directly from these farmers via contract farming more often, there is an extra supply chain actor situated between the rice farmer and the processor: mandis or collectors. In India the mandis are situated in-between the farmers and the processors. These Mandis can be best described as spot markets where local farmers bring their produce. Processors can than directly buy the large amount they need. In Pakistan, Vietnam and Cambodia collectors perform this function. Collectors are hired by a processor and drive with a large truck by the smallholders until they got their truck loaded. Because all the rice produced by several different smallholders is mixed together, the supply chains with such additional actor are much harder (and sometimes even impossible) to trace back to the level of origin.

6.3 Mars Food Sources Rice from 9 Counties

Mars Food currently sources rice from 9 countries: Brazil, Cambodia, Hungary, India, Italy, Pakistan, Spain, Thailand and the Unites State (figure 6.3). Basmati rice gets sourced from India and Pakistan. These are also the only two countries in the world that are allowed to grow the official Basmati rice (Mars Food representative I, 2015). The rest of the Asian countries where Mars Food sources its rice from, grow Jasmine rice. Long grain rice mainly originates from Europe, Brazil and the United States. In this list of diverse countries, several of the previous mentioned issues are present. The concerns in the souring regions of Mars Food are integrated in figure 6.2 as well. This figure shows that within every sourcing region, GHGs (cloud) and water (drop) are pressures concerns. Within Asia human rights issues (handshake) are present as well.

30

Figure 6.1 Map of the 9 rice-sourcing countries of Mars Food, including the main areas of concern

6.4 Chains and Networks in Rice Provisioning

There is a long chain between the rice farmer in, for example, Thailand and a consumer in a European household. Multiple actors link the primary production of rice on farm level, via processing and international trade, with final consumption. Although only 10% of the produced rice gets traded globally, localities are influenced by global trends like the green revolution or the global fluctuations in rice prices. In the global organized rice supply chains, rice farmers are confronted with the previously elaborated environmental and socio-economical side effects of global production. Side effects that, due to the division of economic and political power within these chains, cannot be sufficiently addressed.

To identify the actors that govern the global rice provisioning system, the Global Value Chain theory of Gereffi (2005) and the Global Network theory of Castells (2000) are applied to Mars Food’s global operating rice supply chains. These theories help to identify, respectively, the vertical and horizontal related actors in Mars Food’s global rice network. The coming section will explain the vertically organized supply chain relations (connected via material power) and the horizontally organized non supply chain relations (connected via non-material power) related to global rice provisioning. Together grasping the network that governs Mars Food’s global rice provisioning.

6.4.1 Vertical Relations – Value Chain

The Global Value Chain theory (Gereffi, 2005) helps analyzing the distribution of economical power within the rice supply chain. This theory thereby helps to understand the way in which global supply chain dynamics are steered by the dominant economic actors (Oosterveer, 2015). Within global rice provisioning the material flows of rice and money connect different actors at different locations with each other; it connects smallholder farmers in for example Cambodia, with Western consumers. Next to the material flows moving from one end to the other, there is a continuous flow of information that go both ways (Oosterveer, 2015). This information entails data about quality and food safety, quantities and prices of certain product.

The global rice supply chain is a relatively simple commodity chain, but is still involves actors in many parts of the world. Local production and local consumption are vertically connected via a value chain as shown in figure 6.4. At each actor of this chain, value gets added to the raw material. The regular

31 rice supply chain of Mars Food looks similar to the chain in figure 6.4. Figure 6.5 represents the direct sourcing supply chain of Mars Food.

Raw Rice material producer Spot market Processing (trading) Mars Food Distribution Retail Consumer

Figure 6.2 A regular rice supply chain of Mars Food

Raw Rice material producer Processing Mars Food Distribution Retail Consumer

Figure 6.3 The direct sourcing supply chain Mars Food

In rice supply chains like this, the level of gains and power is usually disproportionally distributed and higher at the later stages of the value chain. Sustainability issues (section 6.2) partly appear because of this disproportional economical power distribution in global supply chains and the extensive pressure from the powerful actors. Developing countries have, via the global trading, an opportunity to be integrated into the global economy (Bush et al., 2014), but without having power to be dominant over other actors in the chain (Bush et al., 2014). As the producers of primary products in the case of rice, or of low value added basic good, in case of the apparel industry, developing countries are part of the global market, but do not have the power to influence and are mostly subjected to larger powers and global trends.

In the case of global rice provisioning, local smallholders in less developed or upcoming countries operate under pressing conditions. Lower market prices influence the income levels of farmers that produce for the global market, but global market prices also influence the prices on a domestic level (Mars Food Representative I, 2015). More indirectly but also related to pressure to from up-stream supply chain actors are the exploitation of yields and the over-use of pesticides and fertilizers in order to increase yields.

Mars Food’s Position in the Global Rice Chain

Mars is a lead firm within the global rice commodity chain. According to Gereffi (2005), it are the lead firms that ‘construct and manage international production’ (in Bush et al, 2014 p2). This is connected to the fact that the global rice supply chain is a ‘buyer-driven’ (Gereffi, 2004) chain. Buyer driven chains, are chains in which the control is ‘dominated by distributors and retailers’ (Bush et al., 2014 p.2). Capital, technological knowledge and control of market functions are merely located at the buyer levels of the chain. The highest percentages of gains, thereby, belong to the brand manufacturer (in this case Mars) and the retail. This is reflected in for example the bargaining power that Mars has ten towards van their suppliers; the processers mostly located at the country of origin of the rice. Mars

6.4.2 Horizontal Relations – Network

A value chain analysis helps to understand the power relations within a certain chain. Solely looking at economical power is, however not sufficient enough to understand the real dynamics, influences and responsibilities. Not only economic actors link primary production to final consumption, also

32 nonmaterial and social elements are involved. These actors are not per se connected via the material flow of money but by (non-material) flows of knowledge and information.

Therefore there is a need for the broader network approach that includes the horizontal relations that go beyond the global value chain as well. Next to economic power, also civil society, local governments, research institutions and NGOs (the non-economic powers) steer dynamics and should therefore be taken into consideration. Furthermore the biological and ecological limits of agricultural production also influence the value chain dynamics (Busch & Juska, 1997 in Oosterveer, 2015). These should be taken into consideration as well, especially when focusing on sustainability issues. The most important actors that, in addition to the value chain actors, influence the dynamics surrounding Mars Food’s global rice sourcing are listed below.

National governments – The national governments of rice producing countries are responsible for (the absence of) policies on environmental and human protection. Because a large proportion (90% on average) of the produced rice stays within the country for domestic consumption, the government can play an important role with respect to promoting sustainable businesses and practices or by offering guidelines for pesticide use.

NGOs – By means of boycotts, reports and bad publicity, NGOs raise awareness around topics that needs to be addressed. The Oxfam behind the brand campaign, for example, mentioned that Mars Inc. should take more actions towards the position of women in agriculture. Furthermore do NGO potentially have resources or expertise a company does not possess. This could be connection to local government representatives or famer groups. Collaboration with NGOs can also be a means to raise the credibility of certain practices.

Industry Peers – Industry peers can be seen as competition, but also as collaborative partner. Furthermore industry peers can set the standards for the production of certain commodities.

Knowledge institutes – Knowledge institutes have the expertise on, for example, the most efficient and environmental friendly farming methods. Furthermore agricultural knowledge institutes often have insights on the actual farming practices in the field.

Ecological limits to rice production – Soil degradation, water- quality and availability, and available farmland set ecological limits to the amount of rice that can be produced. More important does it reflect the urgency to change global rice provisioning practices.

So, the global network surrounding rice provisioning includes multiple vertical and horizontal related actors. Each of these actors influences global rice provisioning and the governance of it, in their own way by using both their material and non-material powers. To promote sustainable practices in the rice supply chain and to promote sustainable rice provisioning on a global level, these actors are already creating new types of governance. Mars Food is participates in several of these new types of governance initiatives. The next chapter (7) will analyze four of these new governance forms extensively and will also look at whether both the vertical and horizontal chain relations are covered and how.

33 7. Sustainable Rice Sourcing

As identified in chapter six, Mars Food plays a significant role in the rice industry as a lead firm and is aware of the issues present in this sector (chapter five). So what does Mars Food do to address the sustainability issues within and surrounding these chains? Since the policies are explained in chapter five, the focus in chapter seven is on the actual practices of Mars Food with respect to addressing sustainability issues. This analysis identifies how Mars Food engages with supply chain partners and non-supply chain actors in the development of their sustainability approaches, and the execution of the related practices (sub question one). The role and contributions of Mars Food within these practices will be assessed, just as well as the involvement of public, private and civil-society actors and the controversies and challenges that are encountered.

In section 7.2 the four practices of Mars Food will be categorized according to the theory of Bush et al. (2014). Furthermore the opportunities and limitations regarding making sustainability achievements beyond the own rice supply chains are identified (sub-question two). First, there is a need to shortly address the context and motivations for Mars Food’s sustainable sourcing practices in order to understand where these practices are coming from.

7.1 Mars Food Sustainability Practices

Guided by the five company principles (section 5.1) and the motivations of the Mars family, sustainable sourcing became an explicit part of the company objective of Mars Inc.: ‘Sustainable sourcing is essential to become the most mutual company in the world’ (Sustainable Sourcing Strategy: Rice, 2016). Sustainability gets thereby more and more integrated into the commercial operations.

For Mars Food this objective, extended with the personal motivations of associates, resulted in the fact that the segment is motivated to make a change within their supply chains. For ethical reasons: ‘it is the right thing to do’ (Mars Food, 2015), but also because sustianable supply chains will secure supply in the future. This secure and safe supply of good quality products is essential in satisfying the shifting customer and consumer demands (Mars Food, 2015).

Mars Food sources different commodities, from different regions, associated with different problems, and has therefore different positions towards sustainable sourcing depending on the sector.

For rice sourcing Mars Food made the commitment of: sourcing 100% of their rice sustainable in 2020. For this commodity Mars Food, however, wants to go further and not only address the practices in their own supply chains, but also want to be seen as a ‘catalyst for change’ within the rice sector. Mars Food hereby aims to have an impact beyond their direct supply chains and ideally create a sector wide impact. The circumstances in the rice sector offer, in this case, an opportunity for Mars Food to be this catalyst for change. Because currently, not so many companies take-up the challenges that are present in the rice sector (Mars Food representative I, 2016) and it is good to seen as the first commercial company addressing the issues present in the rice chain.

Within other commodity areas Mars Food plays a different role. Within the tomato sector, for example, Mars Food will be much more following the leaders within sustainability within this

34 segment like Heinz or Unilever. These companies are already working in sustainable tomato practices for a long time and Mars can learn and benefit from their practices.

Mars Food is a large player within the international rice trade and purchases 221.000 metric tons a year. This is, however, still only 1% of the total volume of the global rice supply, which means that Mars Food cannot make a change in global rice production by working alone. Furthermore, one international agreed-up standard for environmental and social-economically sustainable rice does not yet exist, which means that different stakeholders need to work together in order to identify and (trying to) address the different challenges present in the rice industry.

Therefore Mars food is already involved in several initiatives promoting sustainability in the rice sector. Mars food is joining forces with peers, universities, NGOs and centres of expertise. By partnering with others in the industry they aim to be the ‘catalyst for broader industry change, and lead the way towards a sustainable rice supply chain’ (Mars Food, 2015III p.3). Examples are ongoing partnerships with reseach institutes and universities, NGOs or supply chain partners like key suppliers. This section will highlight and analyse four of these practices that can contribute to a change in Mars Food’s supply chain and possibly beyond in particular: the operationalization of the Sustainable Sourcing Strategy (section 5.3.2) for rice, the Sustainable Rice Platform, the direct sourcing strategy in Pakistan and the operationalization of the code of conduct (section 5.3.1) within the rice sector.

7.1.1 Mapping – Sustainable sourcing

As explained in section 5.3.2 is sustainable sourcing defined by Mars as: ‘Mars’ commitment to drive down the environmental impact of our top 23 materials, respect the human rights of everyone in our upstream supply chain and help to lift our farmers out of poverty. This will be defined through our five impact policies (GHG, Water, Land, Human Rights and Income) and 23 raw material sourcing commitments’ (Mars Food, 2015III). Section 5.3.2 explains the strategy in general; this section focuses on the operationalization of the sustainable sourcing strategy within the rice sector.

The general sustainable sourcing strategy consists of three successive stages (Figure C in the for additional visualization) that are extended by a continuous process of engaging suppliers and partners:

Stage1. The development of a strategic framework Stage2. The mapping stage Stage3. The impact analysis.

The coming section shows how Mars Food gave a practical implementation to these three stages of the strategy for sustainable rice sourcing.

Aims and practices

As described in section 7.1 Mars Food wants to achieve ‘100% sustainably sourced rice in 2020’ (Mars Food, 2016). This aim covers Mars Food own rice supply chains. In addition to this, Mars Food wants to be seen as a ‘catalyst for change’ in the overall rice sector by ‘driving and promoting wide- scale adaptation of sustainable farming practices’ (Mars Food, 2016). These two goals that Mars Food set itself, guided the implementation of the sustainable sourcing strategy on rice.

35 In relation to the five impact areas (section 5.3.2) Mars Food set the following goals for rice sourcing.

GHGs – Rice is grown with minimal GHG footprint Water – Rice is grown with optimal water usage Land – Optimize yield and remove unnecessary pesticides and fertilizers Income – All farmers in our supply chains are lifted out of poverty Human Rights – No violations in our supply chains

(Mars Food, 2015)

Stage 1 – The development of a strategic framework

In order to achieve the above-mentioned aims, Mars Food developed a strategic framework consisting to two main elements: compliancy towards the standard that is developed by the Sustainable Rice Platform (SRP) and the creation of impact programs in the sourcing regions.

The SRP standard is the only international operating standard focussing on rice specifically. Section 7.1.2 will elaborate more the SRP in itself and the associated SRP standard. The standard covers both social and environmental aspects and includes all the five impact areas that Mars Inc. has identified as relevant. By 2020 all rice supply chains need to be compliant with this standard. The SRP audits that are executed in order to check compliancy, give valuable insights on the areas that could be improved and therefore function as a baseline assessment as well. Furthermore, the use of an international recognized standard makes it easier to expose the practices in internal communication.

Although the SRP standard can offer valuable insights on the topics that are relevant in a certain area, Mars Food believes compliancy towards this standard is not enough (Mars Food Representative II, 2015). According to them compliancy toward the standard generates too little, if any, impact; ‘the SRP only identifies issues, but does not offer support to improve the situation’. Furthermore the audits operate relatively shallow. The focus of the audits is in checking the presence of certain elements, water management programs for instance, but it does not measure the effects of it (Mars Food Representative I, 2016).

Mars Food, therefore, sees being SRP-compliant as not sufficient enough when aiming for a positive change. Mars Food therefore decided to extend compliancy towards the SRP standard with the implementation relevant impact programs. Based on the SRP audits and the baseline assessments, the most relevant area(s) to focus on will be identified. Within these areas programs will be implemented in order to make a change. The actual content and approach of these impact programs is still in the developmental phase.

Stage 2 – Mapping

Aim: Map the entire rice supply chains of Mars Food as far back to origin as possible. This is done in order to identify where exactly the rice that is used by Mars Food is coming from and what possible issues at these regions could be. For the rice supply chains the mapping is executed via telephone conferences with tier1 and tier2 suppliers and field visits done by Mars Food associates.

36 Stage 3 – Impact Analysis

Just as the strategic framework, does the impact analysis consists of two complementary practices as well: a baseline assessment based on the SRP audits, field visits and a review on existing expert research, and an impact assessment executed by a third party.

The baseline assessment gives a first impression of the possible impact areas. This assessment is conducted on the basis of field visits, telephone interviews and desk research executed by Mars Food associates. The expert research consist of for instance, WRI, IRRI, UN cases and field studies and identifies what are the most important issues that need to be covered according the experts. The baseline assessment is also used to identify on which aspects a third party impact analysis in needed. This external impact assessment helps to understand the social and environmental impacts of a raw material and thereby guides the identification of relevant areas for the impact programs.

Achievements

Via the mapping phase of the sustainable sourcing strategy, the actual supply chains of Mars Food commodities became clear. This gives an opportunity to identify the bottlenecks. Via telephone conference or field visits all direct Mars Food suppliers have been made aware of the importance of sustainable sourcing and engaged in Mars’ mission to achieve this. An example of the trickle-down that appeared in this stage: one of Mars Food’s key suppliers of long grain from Italy is very interested in sustainable sourcing and asked Mars to support and help them in expanding sustainable sourcing in their entire business. This supplier is the second largest rice supplier of Italy and delivers to more commercial companies; it is present in multiple supply chains. Currently this supplier is planning to attend meeting

So far, 80% for the rice suppliers are compliant with the SRP standard. By using the impact analyses main areas for improvement that are identified are: water management, pest management and health and safety requirements. Currently Mars Food is working on the development and implementation of the improvement programs.

Future Challenges

Because Mars Food externally exposed their claim of ‘100% sustainably sourced rice in 2020‘ it is important for the reputation of Mars Food to live up to this claim. Living up to their second aim, which is not externally exposes, of being a catalyst for change might however be a bigger challenge. The current practices of mapping the chains and assessing them, mainly affects the own supply chain practices. These practices herewith hardly contribute to improving the rice sector more general. It is therefore important for Mars Food to develop and implement suitable impact programs, in order to develop impact and improvement not only in their own supply chains but also has a broader effect.

7.1.2 Sustainable Rice Platform

One of the main multi-stakeholder initiatives operating in the rice sector is the Sustainable Rice Platform (SPR). This platform is a multi-stakeholder partnership between different actors active in, or related to, the rice supply chain. The SRP is a joined initiative of the United Nations Environmental Program (UNEP) and the International Rice Research Institute (IRRI), launched in 2011. Besides these

37 two initiators the SRP collaborates with several (27) other members and partners representing the public and the private sector, research institutions and non-profit organizations (SRP, 2015II).

Aims and practices

The SPR aims, via multi-stakeholder partnerships, to promote resource efficiency and sustainability on both the farm level and throughout the entire rice value chains (SRP, 2015I). Their mission statement is: ‘To promote resource efficiency and sustainability in the global rice sector through an alliance that links research, production, policy making, trade and consumption’ (SRP, 2015I). The SRP functions as a platform where different stakeholders can share experiences, good practices and can come up with new idea around sustainability in rice, furthermore the SRP is developing a range of tools to promote sustainable rice cultivation.

Standard

As a response to the lack of a certification system in the rice industry, the SRP in October 2014 presented the first draft of their SRP ‘Standard for Sustainable Rice Cultivation’ during the annual meeting (UTZ Certified, 2015). By the end of 2016 the SRP wants to deliver a set of instruments that can facilitate ‘wide-scale adoption of sustainable best practices’ (SRP, 2015II) in the global rice sector. These instruments will include standards, guidelines and analysis tools to audit chain actors, but also training modules and incentive mechanism to be better able to achieve good practices. Furthermore attention is given to education and awareness raising.

Currently the SPR is focusing on developing and finalizing three interlinked tools:

- The SRP guidelines for sustainable rice cultivation - The SRP performance indicators for sustainable rice cultivation - The SRP standards for sustainable rice cultivation

(SRP, 2015I)

These three instruments should function as a framework for best practices and were developed in close collaboration with the members of the platform.

The standard defines a set of 8 key requirements. These vary from ‘productivity, food safety, worker health, labor rights and biodiversity’ (UNEP, 2015 p1). To enable a stepwise improvement and progress, each requirement is supplemented with different levels of performance: the ‘quantitative performance indicators’ (UNEP, 2015). These indicators are used to measure the results or changes due to working with the standards on farmer level. Herewith it gives insights in the effectiveness of interventions and changes in farming practices. It also gives the opportunity to reward the progress that has been made.

IRRI1, Utz Certified2 and AinEnviornment3 led the development of the SRP standard. Other SRP members have been involved in the processes of setting priorities for the performance indicators and in the development of the sustainability standards through a multi-stakeholder process. Next to

1 Irri.org 2 utzcertified.org 3 aidenvironment.org

38 the SRP members, also external actors were involved in the consultation. First, via an online consultation, followed by a Standards and Indicators workshop given in Bangkok (February 2015).

Currently the standard is still in a relatively early stage. The draft standard is developed, but before going to the implementation phase, the standard is tested on the farmer level. The SRP aims to make sure the developed framework of standards and indicator is user friendly and of relevance for the local conditions. Within the so-called ‘field validation projects’ the SRP-members test the relevance of both the SRP standards and the performance indicators in the field (SRP, 2015II). The members can do this either independently or with support and coordination from SRP. The feedback that comes from these validation- or pilot projects will be used as input to redefine and finalize the SRP tools and to help achieve wide-scale adaptation of the sustainability practices. Furthermore it should contribute to increasing the value of the SRP standards for the members (SRP, 2015I). Ultimately the standard and the performance indicators should function as a basis for certification and as a benchmark for policy makers (UNEP, 2015).

Stakeholder Motivations and Aim

The SRP consist of multiple stakeholders that can roughly be divided into four categories: the public sector, research institutions, civil society organizations and the private sector. Table 7.1 provides a complete overview of the stakeholder groups.

Stakeholder group SRP Member (Inter) National United Nations Environment Program (UNEP) Public Sector Cambodian Ministry of Agriculture, Forestry and Fisheries. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) Indonesian Directorate General of Food Crops Sri Lanka Department of Agriculture Thailand Rice Department, Vietnam Ministry of Agriculture and Rural Development Research Institutions International Rice Research Institute (IRRI) Punjab Agricultural University NGOs and Civil AidEnvironment Society BASF South East Asia Organizations Network for Aquaculture Centers in Asia and the Pacific Rainforest Alliance UTZ Certified Solidaridad International Fertilizer Association (IFA) VECO Wildlife Conservation Society Private Sector Ahold B.V., Bayer, International Finance Corporation (IFC), Kellogg’s, LT Group Vietnam, Louis Dreyfus Commodities, Mars Foods, Nestle, Olam International, Syngenta, Van Sillevoldt Rijst B.V. Table 7.1 The complete list of SRP stakeholder participants in 2015 (SRP PI, 2015).

39 Mars Food – Mars Food is one of the stakeholder participants involved in developing the most appropriate guidelines and standards for sustainable rice cultivation. Mars has been involved in the multi-stakeholder processes about both the standards and the performance indicators.

In September 2015 Mars started field-testing the SRP sustainable rice cultivation standards at several selected rice farms in Pakistan. The farms involved within this pilot are small-scale rice farms from whom Mars suppliers (mostly a processor) sources directly. The outcomes from these pilots provide according to SRP (2015III) very crucial data because it is used to ‘refine and extend the standards to establish optional and mandatory requirements’. With these practices Mars Food is one of the leading actors in field-testing of the SRP standard with their suppliers.

In October 2015 the SRP together Oxfam initiated the Workshop on a Sustainable and Equitable Rice Sector in Cambodia. At this workshop different members and external stakeholders came together to have a more visionary discussion about the future of the rice sector in Cambodia. The participants were not only SRP members but also several different, also local, stakeholders. Among those where the International Finance Corporation and several rice processors. The different participants aim to address sustainability issues around rice farming in Cambodia. A special focus lied on famer resilience and gender equality, which are relevant topics to discuss in Cambodia. Mars Food was one of the attendees of this workshop as well and invited two of their most important Cambodian rice suppliers. With the presence of their suppliers Mars Food contributes to making a connection with the field and directly involve the users of the standard into the development process.

By the above-mentioned actors Mars Food is described as very active and engaging (Oxfam, Utz Certified and AidEnvironment), especially the on an individual level. ‘On an individual level people seem very passionate about sustainability, it remains however difficult to say whether that represents the entire institution’ (Oxfam Representative, 2015). In particular Mars Foods’ connections with the field by means of for instance, the farmer visits in Pakistan or the direct connections with suppliers are highly valued. ‘Compared to other commercial companies within the SRP there is much more direct involvement with the farmers’ (AidEnvironment representative, 2015).

Achievements of the SRP

The development of the SRP standard is seen as one of the biggest results that derive from the SRP. The standard is developed in an independent process in which all members had influence (Utz Certified representative, 2015). The standard is seen as ‘compact, practical and applicable, while the largest topics are being addressed’ (Utz Certified representative, 2015).

An important development toward achieving a sector wide change is the fact that the Cambodian government wants to improve the national rice industry by using the SRP standard. In 2010 the Cambodian government qualified their national rice sector as one of the three strategic areas for development. Since Cambodia has a large amount of fertile land, high levels of agricultural employment and a production rate that is currently below potential, the rice sector would offer a potential comparative advantage (SRP, 2015I). Within its plan, the government aims to develop the local rice sector and to increase the production, and thereby transform Cambodia into a major rice export country. The SRP standard and performance indicators are intend to be used in order to meet the potential growth in production. By implementing the SRP practices the Cambodian government intends to boost both the productivity and the quality of the rice production and aim to have a

40 surplus that can be exported (SRP, 2015I). The Rice Department of the Cambodian government is currently looking at way to test the standard to make sure that it is applicable for the Cambodian farmers (SRP, 2015I). Mars Food and their Cambodian supplier Golden Rice will be involved in the field-testing of the standard in Cambodia.

Besides the Cambodian government also the Thai government is looking into ways to integrate pieces of the SRP standard into their national guidelines on good agricultural practices in rice production (Utz Certified Representative, 2015). Furthermore, the Vietnamese government showed their interest in the standard, which might result in integrating the standard in their national policy as well (Utz Certified Representative, 2015).

One of the biggest achievements in the opinion of Oxfam is the recognition of the corporate accountability. Within the SRP there is an aim to focus on the entire rice farming community and not focussing on specific supply chains. It is about ‘giving something back to the local community’ and all the participants recognize this. Related to this Oxfam (2015) also prizes the comprehensiveness of the standard and in particular the performance indicators in which a lot of topics are covered. Especially the indicator focusing on women empowerment distinguishes the SRP from other standards in a positive sense. Women empowerment contributes to overall rice sector and does not have a direct commercial benefit.

Mars Contributions

Within multi stakeholder initiatives, large commercial companies like Mars Food can contribute in several ways. First of all, private companies pay a membership fee depending on their turnover. In the case of the SRP these fees do not apply for research institutions and government representative and are significantly lower for NGOs (SRP, 2015IV). This makes private companies, next to funds, one of the major sources of income for multi-stakeholder initiatives like the SRP. In addition to this, the presence of large private sector companies in multi-stakeholder initiatives attracts public actors (Oxfam representative, 2016). This is of relevance when considering changes on a national level.

Secondly, the participating private companies give input in the development of standards or requirements. This is a crucial point, since the private sector should also become the one implementing the standard in their supply chains. Although this might sometimes result in making concessions on the strictness of a certain standard, private sector representatives also make the standard practical. This makes it easier to actually work with and implement the standards on a supply chain level. By cooperating with the private sector, acceptance is created within the private community, for the SRP this resulted in the fact that private sector actors also want to use the standard. According to Utz Certified (2015II) the SRP standard could have been stricter but, ‘it creates impact when the largest rice brand wants to use your guidelines’.

When specifically looking at the role of Mars Food in relation to the SRP, Mars Food contributes to the platform by means of the input they have delivered in the development phase of the SRP standard and their field-testing practices. Next to that, Mars Food is the first company that made a real commitment by using the SRP standard (Utz Certified representative, 2015). In November 2015 Mars Inc. publically announced that Mars Food aims to deliver ‘100% sustainably sourced rice by 2020’. Within this mission Mars Food will make use of the SRP standard to assess their supply chains (sustainablerice.org, 2015). For Mars this means that they take a risk as well: when actually making a

41 claim, NGOs keep a close eye on you and definitely condemn you when necessary’ (AidEnvironment Representative, 2015).

Controversies

Within multi-stakeholder initiatives different actors with different interest are united and this, unavoidably, results in firm discussions and sometimes concessions (AidEnvironment Representative, 2015). Also within the SRP discussions precede the important decisions that have to be made. Within the phase of developing the standard many different actors delivered input, inputs from actors with conflicting interests. The chemical companies present as members of the SRP, did for example not immediately agree with one of the elements of the SRP standard that focuses on the minimization of fertilizer usage. Still the element got integrated into the standard and these companies are still participants of the SRP. This is because within the SRP the aim is to focus at the overall picture and therefore take all the aspects of rice production (like fertilizer or water usage) integrated. It is recognize that all aspects together result in the best result. (AidEnvironment Representative, 2015)

According to both Utz Certified and AidEnvironment these discussion and the following decisions did not result in shortcomings within the standard or influenced the results in a negative way. Still, also controversial topics exist within and around this multi-stakeholder initiative.

A Uniform Standard

Both the standard and the performance indicators that are developed during the multi-stakeholder processes of the SRP are universal. This means that the same standard is used to assess the farming practices of farmers in Asia, Europe, Africa and the United States. According to Utz Certified, one of the key-consulting actors within the SRP, this should not be considered as a problem and will this universality no result in any issues: ‘it is about the same farmers and the same issues that we would like to address’ (Utz Representative, 2015).

However, IRRI (2015) argues that this is not always the case and that major differences exist between rice growing regions. The gender issue in Pakistan might be, for example, completely different compared to gender issues in Thailand or Europe. The same applies to production issues: the way pesticides are used in developed countries versus in developing countries differs a lot. According to IRRI it is therefore important to ‘modify the standards and the audits in terms of what is really attainable, since there is no sense in having a program that you can never pass or pass immediately’ (IRRI Representative, 2015). With this standard a rice farmer in the United States will probably pass without making any changes, while still a lot could be improved on for example efficient water usage. For an Indian rice farmer it will be hard or even impossible to get to the level current level of the American farmer, due unavailability of equipment or a different water infrastructure.

Also Oxfam (2016) - a dialogue partner of the SRP and representing the voice of the smallholder farmers - expressed their concerns about having one universal standard and gave this advice to extend the universal standard with country specific modules.

Mars Food’s position

Mars Food (2016) agrees with the comment made by IRRI and Oxfam. Farming practices and the circumstances under which farmers are operating largely differ per region. This is also one of the

42 reasons for Mars to extend the SRP standard with relevant impact programs within the sustainable sourcing strategy for rice (section 7.1.1). The SRP standard functions for Mars Food as an audit and benchmark that helps to identify the issues that are at stake (Mars Food Representative, 2016). The SRP standard helps Mars Food to keep in mind the broader range of topics, and not to get lost on one specific impact area (Mars Food Representative, 2016). Compliancy with the standard only, lacks when it comes down to creating impact.

‘When taking sustainability seriously, the compliance against this standard is not enough’ (Mars Food Representative, 2016).

Furthermore, it is important to note that the SRP standard does not include capacity building on the farmer level and does not help the farmers in improving their practices. The audit tells the farmer which aspects are important for the standard, but not how to become compliant towards, or how improvement of their practices can be achieved (Mars Food Representative, 2016; Oxfam Representative, 2016). According to Mars Food (2016), you therefore need to add an extra step and translate the standard into relevant farming practices. Also concerning this matter there is a difference in the capacities of farmers to change their practices; some need more support and while others need less.

So far, these comments, just as well as the comments of Oxfam and IRRI, did not result in any changes on the standard itself and the performance indicators, or any extensive mechanisms.

Representation of the Farmers

Within the SRP no direct representatives from the farmer communities are present. At the moment Oxfam and other NGOs try to represent the voice of the smallholder farmers and try to look after their benefits. Oxfam for example has close relationships with farmers and farmer committees (Oxfam, 2015), but farmers themselves are not represented and according to Oxfam the ‘SRP needs to find a way to integrate the farmer’. Farmers need to be motivated to use the SRP standard, it is however ‘very hard to achieve this motivation when farmers are not taken into the dialogue directly’ (Oxfam Representatitve, 2016). Also AidEnvironment argues that farmers are not represented well- enough in the platform (AidEnvironment Representative, 2015)

Utz Certified agrees with the comments made by both Oxfam and AidEnvironemt, but argues as well that this does not directly imply that the famers’ interests are neglected. The farmers and their interest are supposed to be the central focus of the platform and according to Utz Certified (2015) they really are.

‘There are indeed no farmer organizations among the members of the SRP; so far NGOs try to represents their interests. Furthermore, the interests of the farmers are the explicit basis principle of the farmers’.

43 Mars Food’s position

Mars Food (2015) recognizes the fact that farmers are not directly being represented in the SRP. Mars Food elaborates on this by telling the farmers’ first contact with the SRP is during the field- testing phase of the standard. Within the developmental phase of the standard or consultation meetings, farmers were not involved (Mars Representative, 2015). But what is important to know, Mars Food explains, is that most of the rice farmers from Cambodia, Thailand, India or Pakistan are not always willing or able to join the SRP in every meeting. These Asian farmers do not want to be involved in a platform on sustainability because they need to survive and make money. Sustainability is also something abstract and not one of the farmers’ priorities (Mars Food Representative, 2016).

The interests of farmers however, definitely need to be taken into consideration when developing the standard that needs to be used by the farmers. The usage of the standard will only be achieved when farmers experience advantages from using it.

When you want to implement a standard, you cannot ignore the farmers. Without the usage of the standard by farmers the platform is useless (Mars Food Representative, 2016).

The field-testing phase is therefore very important for the integration of the farmers’ interests and experiences towards the standard. Within this phase Mars Food and other SRP members tests the standard in the field with their supplying farmers. In this phase IRRI and Mars’ local rice supplier Rice Partners Ltd assist Mars. The experiences of the end users should be highly important input for the development of the standard. On the basis of these trials Mars Food gives recommendations to the SPR.

The IRRI Representative (2015) who is cooperating with Mars Food within the field-testing and also trialled the SRP standard is however hesitative about what will be done with the advices and recommendations Mars and IRRI give, based on their field-testing experiences. According to IRRI it is possible to give recommendations, their representative is however not sure about the extent to which these recommendations are taken into consideration.

Future challenges

One of the most important challenges related to the SRP standard are the representation and capacity building of farmers. As shortly mentioned in the section about the uniformity of the SRP standard, the SRP standard only functions as an audit and does not include capacity building on the farmer level and does not offer farmers support in improving their practices. Furthermore, are farmers not directly represented in the platform and thereby not consulted during the development of the SRP-standard. The exclusion of farmers from the platform and (the early stages of) the development process of the standard is a weakness of the SRP. In addition to this, the SRP assumes that there is no to need the farmers in order to know their interest and motivations to use a standards. This is very Eurocentric assumption.

According to Oxfam (2016), this can be problematic for farmers. The Oxfam representative (2016) explains that some farmers feel confident about their capacity to implement of the standard, while other farmers are very concerned about this. Farmers are most concerned about the introduction of

44 bookkeeping practise and the compliancy with the environmental- and labour rights aspects of the standard. These farmers do not know how to implement the good practices and are unsure about what will happen when they do not comply (Oxfam Representative, 2016). Currently the SRP did not develop a strategy on how this capacity building will be achieved. Oxfam (2016): ‘you cannot expect the farmers to make the total investment on their own’.

To capture the farmer capacity building, Mars Food tries to go one step further after the audit against the SRP standard, and aims to connect experts with the farmers to translate the standard into concrete farming practices (Mars Representative, 2016). ‘This can be Bayer Crop Science that explains about pesticide usage or Oxfam who helps with the social aspects’ (Mars Representative, 2016). As far as known, not of the other SRP member companies are doing this. The fact that every multi-national that uses the SRP standard can decide for themself whether or not to include famer capacity building in their sourcing strategy, and the lack of guidelines that are set by the SRP, facilitate a very negative development:

Large food companies could solely use compliancy towards the SRP standard as the requirement for having a sustainable supply chain. When third party certification or compliance with the standard can only be afforded by large companies that have the resources and the capacity to comply, the smallholder come for a disadvantage. Globally smallholder farmers produce the majority of the rice. So, ‘If these smallholder farmers cannot afford to use the standard, the rice sector will not transform’ (Oxfam Representative, 2016).

When looking at the future and considering the ambition is to transform the total rice sector, the current Asia-centred focus should be extended with looking at the upcoming rice countries in Africa, or current large rice-producers in South-America or the US (Oxfam, 2015). They need to look at the emerging markets like Africa and the two large producers: Australia and America (Oxfam, 2015). In the long run the horizon needs to be broaden in order to cover the rest of the global supply chains. Oxfam: there is a big need to improve the global rice sector.

Furthermore, it is important that there always is a supply chain incentive for farmers to apply the standard. Since the farmers need to invest in changing their practices, there also needs to be a benefit for them. To know what is important and appreciated by the farmer you need to talk to them.

Input for Mars’ Sustainable Sourcing strategy

Section 7.1.1 explains the role of the SRP standard in relation to the sustainable sourcing strategy for rice in more detail. Compliancy with the standard is one of the key practices in this strategy. Together with the impact programs developed by Mars Food, these practices should result in ‘100% sustainably sourced rice by 2020’. The SRP standard contributes in achieving this aim by delivering input for the impact assessment and thereby helps to identify the most important focus areas. Furthermore an internationally recognized standard as the SRP contributes to the credibility-level when publically exposing a claim.

Next to this, the SRP functions as platform were people and organisations can share their experiences and ideas about sustainability in the rice sector. Participating in the platform more

45 general helps Mars to investigate what others are doing, learn from them or, find potential actors to collaborate with.

Sub conclusion

So, within the Sustainable Rice Platform, different actors from different stakeholder group come together and aim to ‘promote resource efficiency and sustainability in the global rice sector’ (SRP I, 2015). To life up to this aim they i.a. developed a standard for sustainable rice production practices. In order to let the SRP standard, indeed, be one means of achieving positive change in the global rice sector both, some challenges need to be overcome of which the most important one is attention and guidelines on capacity building at the farmer level. As long as the SRP standard stands on itself, it will not necessarily contribute to a positive change in the rice sector.

7.1.3 The Direct Sourcing Program in Pakistan

Four years ago Mars Food got confronted with large quality issues within the Basmati rice they sourced from India. In 2011, 80% of the Basmati rice intended to use by Mars was rejected due to too high levels of isoprothiolane residues. Isoprothiolane is a synthetic pesticide that is used against insects and fungi that can damage the rice stems or leaves (PPDB, 2015). Excessive use of this pesticide can lead to residues in the actual harvest. India is a source of origin that is more often connected with quality issues; on average 20% of the Basmati from India gets rejected by Mars on its quality. This can be either the level of chemicals within the rice or the quality of the actual rice kernel.

Next to India, Pakistan is the second country, of the only two counties in the world, where Basmati rice is grown. To reduce the supply risk of being dependent on India as the only source of Basmati rice, Mars Food started to develop a second sourcing stream for Basmati rice in Pakistan. However, also Pakistan got subjected to purity-, pesticide-, and aflatoxin issues (aflatoxin is a dangerous mould that contaminates the rice, it appears post harvest when the crops are inappropriately stored).

To ensure good quality rice and address the above-explained issues, the Basmati supply chain for Mars Food should look different than the current supply chain infrastructure in Pakistan. Currently all rice that is produced by Pakistani smallholder farmers gets traded at open market places. This means that the produce of dozens of farmers gets delivered at the markets place or Mandi, before it gets sold to a national rice company. Within this system full traceability back to the actual farms is almost impossible and on farm appearing pesticide and purity issues can hardly get addressed.

With the new sourcing strategy Mars aims to bypass the open markets (Mandis) or middleman stage in the supply chain by cooperating with national mill-owning rice companies that can source directly from the farmers. This ‘direct sourcing’ strategy helps to identify which issues appear at which farm and how they should be best addressed. On farm level the strategy is extended by education and training on better farming practices, this helps to improve the safety of the farm workers and the quality of the produce.

Aims and practices

The two major aims of the direct sourcing practices are to ‘secure and safe supply of basmati rice’ and ‘optimizing farming practices focussing on water and farmer income’ (Basmati Global Souring

46 Strategy, 2015). The underlying idea behind this is furthermore, that an increase in farmer income will result in an increase of the entire household standard (IRRI Representative, 2015).

The direct sourcing strategy therefore also is two-sided. First, removing the practices of the spot markets will increase visibility and the ability to control. Second, offering on-farm training about good farming practices that aim to result in both better quality products, and better farming circumstances for the farm workers (Basmati Global Sourcing Strategy, 2015).

Within the new supply chain, farmers no longer bring their harvest to the spot market, in stead; farmers sign a one-year contract with a national mill-owning rice processor (Rice Partners Ltd.) that supplies to Mars. This allows Mars Food and Rice Partners Ltd. (RPL) to get farmer specific insights in the purity of the seeds and the level of agro-chemicals that is used. Furthermore, the rice harvest will be collected directly after harvesting, which reduces the risks of aflatoxin issues. The contacts between RPL and the farmers get signed before the crop season starts. Once the cropping season has ended and the rice is sold to Mars Food, farmers get the opportunity to sign the next contract. For farmers these contracts secure for a demand of their crops, but also predetermine the price per tonnage of rice a year in advance.

The on-farm, the direct sourcing program focuses on improving the farmers’ agricultural practices by means of education and control. IRRI, another partner within this program, educates and trains the farmers in good agricultural practices that cover i.e. responsible pesticide-, fertilizer-, and water usage. These practices should contribute to better quality harvest and better farming circumstances. Subsequently, quality control officers that are part of RPL record and control the farmers’ practices. These officers keep a logbook and check whether farmers are performing according the proposed standards and give the farmers recommendations on best practices for every state of the crop. Based on the recommendations farmers can improve their practices. Via these control officers IRRI, but also RPL and Mars better understand the impacts of the sourcing strategy and their recommendations on the ground. This is important since regularly direct farmer contract is not always possible. In order to keep the farmer eager to participate in the program and more willing to comply with the guidelines, the program also contains an incentive system that aims to support the farmers in reaching the standard that is used by the mill: when farmer reach the entry qualities farmers receive a bonus. Currently 430 farmers are involved in this project.

Since last year the program got extended via the involvement of an additional actor: the Swiss NGO Helvetas. The aim of this cooperation is to pay more attention to water usage and water governance issues and to connect water management into the environmental perspective.

Stakeholders

Within the direct sourcing program different stakeholders participate. The several stakeholders or partners involved in the direct sourcing program can be subdivided into three groups: Research Institutions, NGOs and the Private Sector. There is no (local) government institution or government representative involved in this program. The role and contributions of Mars Food will be more specially addressed.

47

Stakeholder group Direct Sourcing Participant (Inter) National - Public Sector Research Institutions IRRI NGOs and Civil Helvetas Society Organizations Private Sector Mars Food Rice Partners Limited 430 Small-scale farmers Table 7.2 Stakeholder participants in the direct sourcing progam

Mars Food

Mars Food is the initiator and the most important driver for the project. Mars Food got in contact with their partners because of serious quality problems within their rice supply chain; problems, which were impossible to solve on an individual basis. Several other actors needed to assist them in achieving their aim of safe and secure supply. Within the cooperation IRRI, adds the technical skills and knowledge about addressing quality issues via different farming practices. RPL adds the strengths and relations on the ground (IRRI Representative, 2015) and Helvetas helps to keep a focus on the environment and natural resources. Mars Food can be seen as a powerful actor that gathered others that add skills and recourses Mars does not have on its own.

Although RPL also functions as an important financial supporter of this program (IRRI Representative, 2015), Mars is the actor that creates the market for the sustainably produced rice and thereby for RPL. According to RPL (2015), RPL would not have been able to put sustainable produced rice on the global market with the same result as they currently have in the cooperation with Mars. Mars is the guaranteed customer of the rice, which gives security to RPL, but also gives Mars Food the opportunity to make RPL do the things they want.

Achievements

Although Mars Food seems to be the crucial actor within this program, all actors together made the several achievements. First, the direct sourcing practices resulted in a decrease of the rejection rate of Basmati rice. Where as in 2011, 80% of the Basmati was rejected by Mars (20% on average), less that 8% of the rice was rejected in 2015 (Sustainable Rice Sourcing Update, 2015). Due to better control and the implementation of better farming practices.

‘The fact that we started with a rejection rate of 80% and now, we have reduced to less than 8%, is definitely a measure of success’ (IRRI Representative, 2015).

Second, also on the farmer level, the direct sourcing program has its effects. The farmers’ net income increased with 20% (Sustainable Rice Sourcing Update, 2015) and via contract farming, farmers are more secure of an income and get paid much quicker for their produce compared to traditional supply chains (IRRI Representative, 2015). Furthermore, the program resulted in (on-farm) education of good agricultural practices. Better farming practices do not only contribute to the quality of the

48 crop, and therefore the price, but also improves the working conditions of the farmers and farm- workers.

A third and promising achievement is the fact that this direct souring project is seen by Helvetas as an inspiring good practice. A part of Helvetas’ activities is sharing good practices among farmers, making them aware, inspire them and help them adopting these good practices. Within this part of their business Helvetas wants to role out the direct sourcing program to more farmers. Currently 400 Pakistani rice farmers (all farmers that grow for the Mars supply chain) are covered by this project and Helvetas wants to extend this scope to 2000 rice farmers in Pakistan. This means that the project will extend beyond the rice suppliers of Mars Food only and that these good practices reach a bigger share of the rice sector in Pakistan. Furthermore, Mars Food is doing pilots with this concept in India. The first experiences with these pilots are positive, which could possibly result in an extension of the program in India.

Overall this program is seen as an important step for sustainable and ethical sourcing in the private sector. Also because it is one of the first multi-stakeholder cooperation initiated by a commercial company itself. Within the rice industry, but also in other sectors, this is something that is not often done before.

Mars Contributions

You notice during the interviews that Mars Food is the actor with the most power within this collaboration. They are the initiators of the program and the customers of the rice and other actors depend on them. Mars did, however, not only contribution to the program by setting it up and creating a market. Mars Food came across as highly involved in the entire project, especially on an individual level. The Mars Food’s sourcing associates for example have been involved in developments in the field and their practices are highly appreciated.

‘Different that other multinationals Mars goes talking to rice farmer in the field: for the first time farmers met their costumers and that is a really important development, it breaks down a barrier. Luc gave a lot of commitment and dedication. He is in the field’. (RPL Representative, 2015)

As the driving force of the project, it is also Mars Food’s contribution that the program does not only focus on quality issues but also incorporated the environmental aspect. As will be explained in the next section, Mars initiated and maintained the involvement of an environmental oriented NGO (Helvetas), while the other partners did not deem such cooperation necessary.

Furthermore, programs like this and collaborations with the private sector in general, become more relevant for the rice industry. Due to higher production levels and trade liberalization, the rice sector is moving towards a more global commercial cooperation. ‘In many countries rice is no longer a staple food, but moving towards more commercial production’ (IRRI Representative, 2015). The importance and influence of the international operating commercial companies will increase in the rice sector.

49 Controversies

According to the partners in the program, the collaboration proceeds highly transparent and the involved actors feel and say that they have the same interests within this program. Some topics, however, appear to be rather controversial. The three most interesting controversies and the different positions will be discussed in this section: the role of an NGO, the role of the local government and contract farming.

The Role of an NGO

Since 2015 Helvetas got involved in this program as an NGO focussing on water governance and social issues, gender in particular. Helvetas sees itself as the actor that connects the practices into the environmental and social perspective (Helvetas Representative, 2015). Furthermore the organisation aims to spread best practices among farmers and thereby inspire them to adopt these practices (Helvetas Representative, 2015). Both IRRI and RPL, however, debate the involvement of Helvetas within this partnership.

IRRI is in particular sceptic about the possible contributions that Helvetas could deliver. According to their representative (2015) there is no need to involve an extra actor in the form of an NGO to address topics like environmental- and social issues. According to IRRI (2015) the ‘social issues are already covered by us anyways’ and ‘there needs to be a reason to pay people to be involved’. Furthermore they are very negative about the fact that Helvetas has not yet been involved in the implementation on the ground (IRRI Representative, 2016)

RPL adds to this that NGOs are not always pragmatic and even seem bureaucratic. ‘When an NGO wants to help you, you first have to write a 15 pages document before they might maybe help you; there is no time for this’ (RPL Representative, 2015). This makes RPL sceptic about the involvement of Helvetas. Furthermore he doubts about the intrinsic motivations of Helvetas and NGOs in general: NGOs became more of a business instead of an NGO.

Mars Food’s Position

Mars recognizes that cooperating with Helvetas can be time consuming. This however does not outweigh the benefits that the cooperation brings. First of all, Helvetas gives financial support to the project: money that comes from the Swiss government. Secondly, Helvetas contributes by doing in- depth studies on studies on the role of women in the Pakistan rice industry. This is necessary in order to identify the underlying causes behind social issues.

According to Mars Food (2016) it is indeed true that both environmental and social issues were already taken into consideration within the project, before the involvement of Helvetas. The most important reason for Mars Food to involve Helvetas within this program therefore is the aim of having a broader impact.

‘In the program without Helvetas we only focussed on the social aspect around our 500 farmers, but we did not look further than that. When aiming for being a catalyst for change and not only impact our own supply chains, Helvetas offers an opportunity. Helvetas gives financial and content-wise support on identifying how to go beyond these 500 farmers. – So Helvetas certainly adds something’ (Mars Representative, 2016)

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In order to create an effective outreach of the current practices and influence beyond the supply chains of Mars Food only, Helvetas plays an important role. The impact of the program can potentially be much broader with the involvement of Helvetas compared to operating without them. An important aspect here, as well, are the relations Helvetas has with the local government.

Furthermore, it is important for Mars Food to involve a ‘third party’ for the legitimacy and credibility of the program. Mars Food needs to make sure that they can live-up to the claims they make. An NGO like Helvetas can offer a critical and more independent view.

Within a multi-stakeholder initiative like this or the SRP, but also this direct sourcing program, the involvement of an NGO or other actors different from commercial companies, limits the level of self- regulation of a corporate business (Keller, 2008) in this case Mars. The pressure of an NGO can direct towards the implementation of (more) social or environmental regulatory norms (Keller, 2008). It is important to add another actor into the commercial operation for both the justification of your practices and to keep a focus the practices that do not directly result in money. In the case of this project Helvetas contributes to keeping track of the water governance and gender issues.

The Role of the National Government

The (local) national government is not involved in any way within this program. Although RPL, IRRI and Helvetas work, or have tried to work, with the Pakistani government, they understand the reason why the government is not represented in this program.

IRRI is used to work with the government in Pakistan and recognizes that it is different to work with the government compared to working with a private sector group. IRRI-representative (2015) on cooperating with a commercial actor compared to working with a public actor:

‘We cannot afford to miss on this one. It is a commercial operation. The problem with public sector groups is that they get paid irrespectively of what happens. If it does not happen this season, it might happen next season. And we don’t give ourselves this luxury here: we have to address the problems each year and make progress for the next’ (IRRI Representative, 2015).

IRRI (2015) also explains that it is perceived that the government might be willing to help. The difficulty lies however in the role the government aims to fulfil. According to IRRI (2015) the government would take a research perspective within this collaboration. As a research actor the government would operate much slower than, for example, IRRI does. IRRI has experience with this program and within the commodity specific. ‘When the government fulfil a research perspective, we would be leading the way for them’ (IRRI). This would make a government contribution ineffectual.

Because of the previous experiences, RPL (2015) argues that the government should not be involved around any commercial activity. The government should arrange education, health care and electricity for their citizens, but not be directly involvement in this project. RPL sees the government as a limiting factor mainly due to bureaucracy and corruption (RPL Representative, 2015)

51 ‘ The less the government is involved, the less regulations and paperwork you face. The less interaction with anyone of the government is better’ (RPL Representative, 2015).

Also Helvetas recognizes that the government is often hard to work with and understands why the private sector rather avoids working with them.

‘The government in Pakistan is know for operating very slow; you have to deal with very long and bureaucratic procedures. This irritates the private sector. To get small things done it takes hours of procedures; this makes people say: ok we can do it without the government’ (Helvetas Representative, 2015).

Helvetas, on the other hand, also highlights the importance of focussing on the longer term as well. Because projects and multi-national collaborations are often temporary, it is important to focus on the permanent actors as well.

‘Sustainability is a long-term thing and you will go, I will go, Mars will go, and what stays are the farmers and the government. This makes the government a vey important actor, we need to strengthen’ (Helvetas Representative, 2015).

Mars Food’s position

Mars Food recognizes the important opportunity, and the potential role that the Pakistani government could fulfil. Especially when looking at the aim of creating impact in the national rice sector in Pakistan. Since national governments offer a long-term, present actor, they offer opportunity to achieve national wide good practices.

‘The government could help spreading best practices and make them more attractive for the farmers; when you see that you can improve the water situation in Pakistan by improving the water infrastructure, or legislation, as subsidies, you definitely see a task for the local government’ (Mars Food Representative, 2016).

Furthermore, just as the involvement of an NGO, also governmental actors can contribute to the level of credibility and reduce the level corporate self-regulation of a project (Keller, 2008). This could be an extra motivation of Mars Food to involve them.

The problem is still that the Pakistani government is very hard to work with. Their representatives are often not eager to deliver a contribution and the institution itself operates very slow and seems highly bureaucratic (Mars Food Representative, 2016). This stands in the way within the collaboration between Mars Food and the government. Yet, there is no strategy developed on how to approach this and make use of the government in the best possible way. Helvetas will possibly play a role in this. This can be as a mediator.

52 Contract Farming

As part of the program farmers sign a one-year contract with RPL. Contract farming makes smallholders less insecure about marketing their yields and thereby about the income they will receive. Oxfam (2015) however points a critical note towards contract farming and mentions that it is often a challenge for many farmers as well. According to Oxfam (2015) contact farming only works when information is widely provisioned and farmers can make a fair choice. This is, according to Oxfam, not always the case. Furthermore (smallholder) farmers are considered to have a weak bargaining power in ration to the buyer.

Different from this comment, the contracting firms could also easily prefer to deal with larger growers (Kirsten and Sartorius, 2010). Evidence is already emerging that agribusiness firms prefer to deal with larger farmers in order to reduce transaction costs and achieve greater consistency of quality and supply (Kirsten and Sartorius, 2010). This makes the relationship much more profitable for the firm, but contributes to many smallholders being shut out from production (Kirsten and Sartorius, 2010)

Mars Food’s Position

According to Mars Food (2016) it is important to keep in mind that they do net set a price for the rice in advance. The price that a farmer receives for their product is based on the market price, whether or not substituted with a premium depending not the quality of the product. This is our way of motivating the farmers to sell their produce to us and not to someone else. ‘It is not our intention to force farmers to sign a contract which is not in their interest. This is something that won’t work and will never happen in our case’ (Mars Food Representative, 2016).

What, however, can become a topic surrounding the contract farming practices in this program are the prerequisites that Mars Food and RPL impose on the farmers that are, or want to become, part of the program. By these prerequisites both Mars and RPL are able force farmers to live-up to the requirements. ‘When you want to change human rights issues, we probably have to be stricter. Many farmers do not care enough about their workers, due to caste system or migrant workers. There is no financial incentive in treating your pesticide sprayer better’ (Mars Food Representative I, 2016)

Considering the focus on larger scale farmers, Mars Food (2016II) explains that the program actually attracts many smallholder farmers: ‘because we work with a premium in our program, smallholder farmers are very interested in joining is. For large-scale farmers the premium is less interesting, they already make enough money’ (Mars Food Representative II, 2016). The famer participants in the program in Pakistan are according to Mars Food (2016II) a diverse mix of smaller and larger farmers. Mars also agrees that project management-wise, it is much easier to for larger farmers.

Future challenges

Over the last four years the direct sourcing program in Pakistan made several achievements and all Mars’ supplying farmers in Pakistan are currently involved (Luc, 2016). The most important challenge for the future will be up-scaling the program and achieve adaptation good agricultural practices among more farmers in Pakistan. Helvetas will play an important role in this, and aims to reach 2000 farmer via sharing good practices. This will be a challenging operation and much more difficult to achieve without the direct incentive given from Mars Food as a buyer of the rice. The focus therefore

53 needs to be on incentives for the farmers to perform better farming practices, independent from the premium for the sold goods. This can be the use of less water and/or pesticides, which can result in higher yields, but also a decrease in expenses. It will be most difficult to implement the good farming practices that are good for the environment but not for the farmers income. In this case the private sector or the government should create these incentives via for example subsidies.

A challenge within the rice sector in Pakistan more general is the gender inequality in combination with a high level of illiteracy amongst women. The different parties involved in this program aim to reduce gender inequality and involve Pakistani women in this program and integrate women into the farming business, via for example bookkeeping. This seems however extremely hard because many Pakistani women are illiterate. In order to address gender inequality and have a social impact, this will be a difficult phenomenon to deal with.

Input for the Sustainable Sourcing Strategy

The direct sourcing practices of Mars Food are often referred to as a good practices example of sustainable sourcing and function as motivation or inspiration for other segments of the company. Within the sustainable sourcing strategy for rice in particular, this program plays a vital role. Via effectively engaging the farmers that are currently involved in the program and by making them ‘the ambassadors for change’ (Mars Food, 2015) Mars Food aims to drive wide-scale adaptation of best agricultural practices among other farmers. With this approach Mars Food aims to source their Basmati rice sustainable, but influence other Basmati farmers as well by 2018 (Mars Food, 2015).

Sub conclusion

By cooperating with IRRI, RPL and Helvetas in this direct sourcing program, Mars made several achievements in their own basmati rice supply chains: the quality of the rice is improved, less water and pesticides are used and the farmer income has increased (Mars Food Representative, 2016). The next step is to role-out the program and influence not only the Mars Food farmers, but also contribute to improving the livelihoods of many other rice farmers in Pakistan. Helvetas gives an important opportunity in achieving the aim of making a sector wide difference; they can either function as a mediator between the private sector and the government or, more likely to be successful, driver for change via the distribution and sharing of best practices among farmer communities in Pakistan

7.1.4 Code of Conduct – Responsible Sourcing

Section 5.3.1 extensively explains the responsible souring strategy in general. This section will discuss how the implementation of the responsible sourcing strategy for the rice supply chains, look like in practice. Furthermore it will touch upon the controversies around the company’s code of conduct and the relation between the responsible sourcing and the sustainable souring strategy.

Aims and Practices

The general aim of the responsible sourcing strategy is to improve the socio-economic aspects of commodity production at the direct and indirect suppliers of Mars. The focus in this strategy is on the direct and indirect supplier of Mars. This means that at the end of the rice supply chain, the

54 supplier companies operate according to the ILO standards and that for instance, child labor is banned, no forced labor is present and that workers get a minimum wage for their activities.

The responsible sourcing strategy applies to any of the commodity that is sourced by Mars. This means that also the supply chains of Mars Food, and in this case the rice supply chain, should to function according to the responsible sourcing guidelines. This mean that all direct and indirect rice suppliers have signed the code of conduct and operate accordingly. These suppliers are often located in the country of origin, close to the rice- fields and farmers. The countries of origin for rice vary from Italy to Pakistan and from Hungary to Cambodia. This mean that a diverse group of suppliers, with different local laws, need to comply with the same standard. The practices towards achieving this can be divided into four stages.

1. The direct suppliers need to sign the code of conduct. 2. A third party conducts a factory audit on the practices against the code of conduct. 3. The supplier either complies with the code and does not need to change their practices, or the supplier does not comply with the code of conduct and receives recommendation for improvement. 4. In the case a supplier fails to incorporate the recommendations, there is a chance that another supplier will replace it.

Stakeholders

Several actors are (in) directly related to the development of the responsible sourcing strategy and the company code of conduct as described in section 5.3. The Mars code of conduct is based on the international standards of the ILO and Maplecroft (2013) benchmarked a draft version of the code. AIM progress (section 5.3.1) helps to improve sustainable sourcing initiatives like this code of conduct.

Stakeholder group Responsible Sourcing Participant (Inter) National - Public Sector Research - Institutions NGOs and Civil International Labour Organization (ILO) Society Ethical Trade Initiative Organizations Private Sector Maplecroft AIM-Progress Members Table 7.3 Stakeholder participants in the responsible sourcing program

Mars itself does the first phase of implementing the code of conduct and makes the direct suppliers sign the code. The second phase of the factory audit, is always executed by a third party organization: the Ethical Trade Initiative. Together with Mars the Ethical Trade Initiative tries to accomplish full compliancy with the standard at the supplier level.

Achievements

For the rice segment specific, the responsible sourcing team has achieved that almost all direct and indirect supplier have signed the code of conduct and are audited against it. Only one supplier in Brazil that supplier long grains rice has not yet signed the code. The reason for this probably lies in

55 the fact that suppliers need to sign a large amount of contracts and codes when producing for the international market. There exist a high diversity of codes and contracts, each one different for every customer.

The fact that all direct suppliers are audited does not automatically mean that they all comply with the code. It does however offer insightful information about the current level of compliance, particular topics that need extra attention and present concerns are certain regions.

Within Basmati almost a 100% of the suppliers are compliant. When suppliers are not compliant with the code the main reasons is that these suppliers are not early enough involved in the process (Mars Food Representative, 2016) or, when Mars Food is responsible for buying only a small percentage of the volume of a supplier. In that case a supplier does not always want to change their complete business according to the Mars code of conduct.

Controversies

One of the biggest issues surrounding private sector code of conducts or ‘corporate self regulation’ is, irrespectively of the quality of the code, the level of legitimacy (Doucin, 2011). Company codes of conduct are ‘typically developed without any outside participation’ (Keller, 2008 p17) and have often been used for green washing practices. This resulted in the fact that company codes of conduct have a reputation of not being credible. Compared to public codes or voluntary codes developed by NGOs, the legitimacy of corporate codes is much lower. Also multi stakeholder initiatives have a wider public credibility.

Mars tried to increase the level of credibility by consulting third parties in the developmental phase of the standard. Furthermore the code of conduct is based on the ILO, which is a credible international organization. ‘Based on the ILO standard, however does not directly imply that all ILO standards are integrated into the actual code.

Future challenges

The implementation of the responsible souring code of conduct in the rice industry does not differ from implementing responsible sourcing practices in other commodity categories. Within every commodity sector the biggest challenges regarding responsible sourcing are: working hours and health and safety issues (Responsible Sourcing Representative, 2016). To cope with this issues and to be better able to tackle them, Mars tries to collaborate with other commercial companies that are working on responsible sourcing via the AIM progress platform.

Furthermore there is the proliferation of different standards and (corporate) codes of conducts to which suppliers need to comply (Mars Food, 2015; Keller, 2008). ‘The proliferation of voluntary codes has led to a bewildering plurality of often competing standards, resulting in a regulatory system that is fundamentally fragmentary in character’ (Keller, 2008 p.3). This is also experienced at the supplier level of Mars Food. Rice suppliers are sometimes irritated by the fact that they have to sign and live up to a variety of codes, especially the ones that deliver to other multinationals, as Unilever or Nestlé, as well. Furthermore, these suppliers are subjected to food quality and safety audits. Becoming compliant with the several standards and codes takes a lot of time (company audits can take days) and administrative work.

56 A positive development around this phenomenon is the participation within the Aim-progress forum. The platform tries to develop one audit that can be used, and is recognized, by all Aim-progress members. Herewith they aim that suppliers only have to go though one audit to be compliant with the requirements of several of their costumers.

Contributions to Sustainable Sourcing

The sustainable sourcing strategy (section 5.3.2) focuses on assessing five impact areas: land, water, GHGs, human rights and income, throughout the entire supply chain. The last two impact areas overlap with the responsible souring strategy. The responsible sourcing team is, however accountable for assessing these themes at the level of the direct suppliers: the factories where the rice gets processed, and the own Mars factories. Sustainable sourcing associates are responsible for improving human rights and income issues at the all levels of the supply chain, with the farmer level as highest priority. This means that the previously executed practices by the responsible sourcing team are highly valuable for sustainable sourcing.

Furthermore, the responsible and sustainable sourcing departments collaborate and share information and experiences. Since the responsible sourcing strategy is already active since 2013, the sustainable sourcing team can make use of the internal network of buyers and quality managers that is build by the responsible sourcing team so far.

Since the overall aim of sustainable sourcing is to make the full supply chain, from farm to factory, 100% sustainable according to the five impact areas, sustainable sourcing will cover responsible sourcing as well. In the end the responsible sourcing team will functions as a sub-program of sustainable sourcing and be responsible for the implementation their practices at the direct supplier level and Mars factories. This makes it easier to get a hold on improving the practice in the entire supply chain.

Sub-conclusion

So, via a company code of conduct and the associated audits, a large company like Mars can check whether their suppliers live up to the socio-economical standards they consider as important. It might be an effective measure for checking the socio-economic situation at the last stages of the rice supply chain. To address the entire supply chain the responsible sourcing needs to be extended by sustainable sourcing, that starts at the other end of the supply chain: the farmer-level. The code of conduct cannot stand on its own in order to achieve sustainable and responsible sourced rice, it therefore needs to be substituted with other practices.

Via the collaboration with industry partners united in the AIM progress forum (section 5.3.1), there is a way to affect other (rice) supply chains than the ones of Mars Food, still, these responsible souring practices stay limited to the supply chains of large multi-nationals that integrated responsible souring in their business. Considering the small percentage of globally trade rice, this impact is also relatively small.

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7.2 Sustainability Achievements in, of or through the Mars Food Rice Supply Chain

According to Bush et al. (2014 p8) ‘governing through chains identifies a number of external tools and approaches for extending the impact of sustainability beyond the boundaries of direct economic activity and firm actors’. To be able to answer the main research question and identify whether Mars Food is able to make sustainability achievements that go beyond their supply chains, the four highlighted practices will be divided into the three categories developed by Bush et.al (2014): governing sustainability in, of and through the company supply chains (chapter 3). There will be explained why practices belong to a certain category and what supports or hampers the external oriented tools and approaches. Lastly, there will be discussed if the practices of Mars Food really contribute, or offer an opportunity to contribute, to positive changes in the rice sector more generally speaking.

7.2.1 The Sustainable Sourcing Strategy for Rice - through approach, of practices

The strategy

With the sustainable souring strategy for rice, Mars Food does not only want to achieve 100% sustainably sourced rice by Mars Food itself. They want to go further and by operating ‘as a catalyst for change’ (Mars Food, 2015III) positively affect the global rice sector. This is supposed to be achieved via the implementation of sustainable farming practices that can be adopted on a wider scale (Mars Food, 2016). To positively affect practices beyond the own supply chain activities, the practices of Mars Food should not only focus on their own supply chain actors (the vertical relations) but also, involve the additional actors surrounding that supply chain. These actors can be NGOs, government representatives, research institutes and/or industry peers (the horizontal relations). The involvement of various chain and non-chain actors can be seen as approaching governance through the supply chains of Mars Food.

NGOs and research institutes indeed got involved in the developmental phase of the strategy. Their principles, norms and values got integrated into the general sustainable sourcing strategy. Furthermore, Mars Food recognizes that their supply chains are part of a broader environment, and recognizes the responsibility they have to take for their own supply chain actors but also for the boarder rice sector. This suggests that Mars Food operates from an external perspective. The sustainable rice sourcing strategy can therefore be considered as approaching sustainability governance through chains. The different practices that build strategy, and should turn the aim into reality, make it however hard to categorize the strategy and the associated practices as a whole. The next section therefore categorizes the interpretation of the strategy.

The practices

Currently the implementation of the strategy is still in the mapping (stage 2) and assessment phase (stage 3). In these stages Mars Food focuses purely on the own rice supply chains. In the execution of the mapping stage, the own chains are researched and no additional non-chain actors are involved. Mars Food itself conducts the baseline assessment of the supply chain practices based on their field experiences, SRP audits and expert research. In this phase third parties are consulted, but non-chain actors are not closely involved. The focus in these to stage of the strategy is clearly on the supply

58 chains. The mapping and assessment phase can be considered as sustainability governance of the supply chains, just as the compliancy with the SRP standard (section 7.2.2).

Based on the results from these two stages, Mars Food will work on implementing the impact programs. Depending on the level of involvement of additional actors and the targets that are set, during the development and execution of these improvement programs, the programs can possibly govern sustainably through the supply chains of Mars. Mars Food can achieve this i.e. by cooperating with local governments and social and environmental focussed NGOs within these programs. The current practices that are used to execute the sourcing strategy can be considered as governing of chains, the impact programs however, offer and opportunity through.

Opportunities and limitations

This case clearly shows that although there are motivations to achieve impacts that go further than the own economic practices, it is not a matter of cause to achieve these. Mars Food has in this case the power and resources to check and assess their own supply chains, and to make the upstream suppliers compliant with their wishes (of). In affecting practices further that the reach of their economic activities it is important to involve others. Non-supply chain actors help to guide Mars Food in their practices and offer external expertise Mars Food does not possess. Targeting women empowerment or illiteracy among women, for examples are topics of which Mars Food does not have the expertise to address them. Also on the use of pesticides in rice farming external expertise is required. The impact programs could offer an opportunity to go for a more through approach in the execution of their practices. Mars could for instance take a similar approach as towards the direct souring program (7.2.3) and gather a network around you consisting of local connections, NGOs.

Furthermore, there needs to be mentioned that the execution of this strategy is still in a relatively early stage. Due to external exposure and the responsibility for the own supply chain’s performances it is rather logic that the practices within the own Mars supply chain have the priory to get targeted.

What’s in it for the rice sector?

In the sustainable souring strategy for rice, Mars Food defined that they aim to operate as a catalyst for change in the rice sector. Whether they really are this catalyst for change depends on the implementation and the execution of the practices related to the strategy. By making the statement and externally exposing the claim of 100% sustainably sourced rice, Mars Food raises awareness on the presence the sustainability issues within the rice sector. Issues that otherwise might have stayed invisible due to the fact that it has not been addressed by any of the other large commercial companies operating in the rice industry.

Within the execution of the impact programs Mars Food can decide not to operate on an individual basis but to involve different actors from different areas as well. This offers an opportunity to deliver a broader contribution.

7.2.2 SRP – through platform, of standard

In order to position the practices of the SRP in the right category, it is necessary to make a distinction between the SRP as a platform and the SRP standard.

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The platform

The members of the SRP platform are a diverse set of actors, varying from private sector groups, NGOs, research institutes and public sector representatives. Although many food companies operating in the rice sector are present: like Mars Food, Kellogs and Olam, the platform does not focus on upgrading their supply chains and economic activities only. The focus of the platform is on ‘promoting resource efficiency and sustainability in the global rice sector’ (SRP I, 2015). Although many different stakeholders are present and heard via multi stakeholder consultation, not all rice supply chain actors are represented. Farmers (-representatives) and consumers are absent.

Still, (participating in) the SRP can be considered as governing sustainability trough chains. The platform originates from a more network-oriented approach in which both the vertical and the horizontal relations of the rice supply chains are considered to be important. Most of them are involved in the platform. The rice supply chains of Mars Food, but also of other participating multinational corporations, are used as a way to influence the social and environmental effects of rice production.

The standard

The SRP standard got developed by a multi-stakeholder initiative that involves a variety of actors. The implementation of the standard and the compliancy towards it, stays, however (initially) limited to the supply chains of the lead firm that implements the standard. This can be Mars Food but also, Kellogg’s or Nestlé. The fact that the SRP standard is developed in a multi stakeholder initiative does not directly make the SPR standard different from other voluntary certification schemes like Utz Certified or FairTrade.

The SRP standard is used to upgrade the rice supply chains as a whole, but concrete tools and approaches to create impact on the farmer level and thereby positively affect the rice producing communities are missing. The standard and its associated audits are used to check the practices of the supply chain actors but do not offer mechanism or guidelines to improve practices and achieve compliancy. The SRP standard operates the same as other voluntary certification schemes and the functions mainly as a tool to set requirements for the upstream suppliers. The fact that the government is integrated in the platform and can adopt the standard will not make the usage of the standard different. The government could implement the SRP standard on domestic rice production and then take the same position of the lead firm and require compliancy from suppliers. The standard does not focus on upgrading the company’s position only (in), but the implementation of the standard stays mainly a private sector matter.

Due to the fact that attention to improvement programs and farmer capacity building lack, I would argue that the SRP standard fits best in the second category: governing sustainability of supply chains. Furthermore the standard is universal for all rice supply chains. This seems to show that the standard is used to upgrade a supply chain (and its reputation), instead of targeting to improve the situation of the farmer communities.

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Opportunities and limitations

The multi stakeholder approach offers an opportunity to have an impact beyond the commercial operations of the multinationals present in the platform. By integrating NGOs and government representatives, in the platform the focus should not only on the commercial activities of the food multi nationals. A good example is the integration of ‘women’s empowerment’ as one of the topics in the standard. Also the topic of ‘child labor’ within the standard, and addressing it, could have a positive impact on the farmer community. In addition, the SRP offers a platform to connect different (chain and non-chain) stakeholder. These stakeholders can start a program from a more practical oriented approach.

However, the limitation of the platform is definitely the lack of direct farmer representation and the development of a certification tool that neglects farmer capacity building. Topics like gender, child labor and pesticide use are integrated in the standers but smallholder farmer do not know how to improve their practices or do not see the urgency of this. This means that changes to farming practices are most likely be made when compliancy is enforced/required by the lead firm within a certain supply chain. This decreases the opportunity of farmers inspiring each other and adopting good practices. With respect to creating a sector wide, a change in farmer attitude toward certain practices would mean a lot, especially when you realize that only a small percentage of the rice that is produced gets globally traded. A change in mind set is less likely to be achieved by means of ‘enforcement’.

What’s in it for the rice sector?

This means that despite an external oriented approach of the platform and multi stakeholder decision-making, the actual impact of the through approach on the rice sector stays limited. Some contributions or potential contributions to the global rice sector can be made.

The fact that the UNEP is a co-host of the platform makes that national governments are more willing to participate and cooperate (Oxfam, 2016). This representation and involvement of local governments in the platform is important, because ‘in order to promote sustainability in the rice sector, public sector participation is crucial’ (Molenaar et.al, 2013). Within the rice sector the role of the national government is more present, compared to other commodity sectors in which the percentage of global traded produce is higher. Their participation to the platform can result in local governments that adopt the SRP standard. The standard herewith focused on the economic practices of a rice supply chain. Different than the use by lead-firms this affects domestic rice supply chains of producing countries.

An achievement of the standard is also, that it raised awareness around the sustainability issues that are associated with the production of rice. Standards and platforms that look into sustainability issues regarding rice production specifically did not exist so far. Furthermore the platform connects private sector actors with NGO, research institutes and local governments. This offers an opportunity to more in-depth collaborations in addressing more specific topics.

61 There needs to be notified that the platform and especially the standard do not yet exist for a long time. This also makes the impacts on the sector rather low. The standard for example is still in the field-testing phase. However, I would say that farmer representation in the platform and attention capacity building in the standard, are crucial. These two aspects can make a difference between a standard that functions to reduce the reputational risks of multinationals in the rice sector and a standard that goes further and aims to contribute to the livelihoods of farmer communities and the earth’s resources.

7.2.3 Direct Sourcing – through approach and practices

Currently the direct sourcing practices of Mars Food affect the livelihood of the 430 Pakistani farmers that are part of the Mars Food supply chain. Due to the incorporation of and specific targets on themes like water management and gender (via Helvetas) and the on-farm education to improve farmers’ practices, the effects of the program do not stay limited to the commercial operations of Mars Food. Although initiated to overcome the quality issues Mars Food was confronted within their Basmati supplies. Mars Food recognizes that their quality issues are part of a broader context and wants to address the real causes of it. In order to try to address the issues Mars Food takes the network approach in which they unite NGOs, research institutions (horizontal relations) and farmers.

Furthermore the actors in the program recognize, that the farmers producing for Mars Food are not the only rice farmers in Pakistan that face social-economic difficulties. The environmental degradation due to rice cultivation neither stays limited to these 400 farmers. Helvetas therefore aims to expand the practices from the program among a wider level of farmers. The direct sourcing program can be considered as organizing sustainability governance through chains.

Opportunities and limitations

Although a controversial issue and not directly appreciated by all partners in the program, involving Helvetas in the program offers a major opportunity to have effects beyond the economic practices of the Mars Food rice supply chains. Via Helvetas extra attention is given to topics that do not necessarily contribute to the economic position of Mars Food. Furthermore Helvetas offers an opportunity to expand the practices among more farmers in Pakistan.

Currently, the Pakistani government is not involved in the direct sourcing program. Including them could theoretically speaking contribute to a further change beyond and cause a wider impact than the farmers connected to Mars Food. Especially, within the rice sector in which so much is traded domestically the government could play a vital role in the distribution of good practices. There needs to be recognized that corruption and bureaucracy are present within the governing actors in many of the rice producing countries (Helvetas Representative, 2015; RPL Representative, 2015; Mars Food Representative, 2016). This harpers a collaboration between the (local) public- and the private sector.

What’s in it for the rice sector?

The direct sourcing program positively impacts the economic situation the Mars Food supplying farmers (20% increased farmer income). Also on the environmental aspect farmers made positive changes by using less water and pesticides. Because of cooperating with Helvetas (NGO) there is the aim and opportunity to extend this program to many more farmers in Pakistan or other rice

62 producing nations. This could potentially affect many more livelihoods that the ones that are connected to Mars Food.

Because smallholder farmers are involved in the direct sourcing program, the farmer interests are taken into consideration during the development and implementation of good farming practices. The programs might fit the specific circumstances of a farmer. When the farmers are positive about the new practices, it could make them inspiring other farmers. This is very important in an environment where trust in government is low.

7.2.4 Code of Conduct – in approach and practices

The use of the company’s code of conduct and the compliancy towards it, only considers the direct and indirect suppliers of Mars. It focuses on the actors within the own supply chain: the vertical relations. Although external actors delivered input within the developmental phase of the code of conduct, the actual practice of being compliant with the code stays limited to the actors internal to the Mars supply chain. This company code of conduct and the ways that Mars uses it, can be considered as including governance in chains

Opportunities and limitations

The complete internal focus and the intrinsic motivations for Mars Inc. to implement the code of conduct, these are key values that limit a through approach. No direct opportunities to achieve this are present.

What’s in it for the rice sector?

The company code of conduct focuses on Mars Inc.’s own supply chains, and only the last two stages. Compliancy with the code creates hardly any more impact beyond these two stages. This is enhanced by the fact that suppliers also see the code of conduct as an amount of paperwork; suppliers have to work with different codes for different suppliers. This makes it unlikely that these suppliers will introduce the practices of the code on their supplier. What this company code of conduct offers to the rice sector is mainly the elimination of unsafe and unhealthy practices from the last stages of the Mars Inc. supply chains.

Sub-Conclusion

From the analysis above can be stated that both participating in the Sustainable Rice Platform and the direct sourcing practices of Mars Food in Pakistan can be considered as means to govern sustainability through the global rice supply chains. Mainly because of the network oriented approach and the involvement of horizontal relations. The direct sourcing practices differ from the SRP standard with respect to farmer connections and on-farm education. The lack of these two aspects hinder a complete though approach for the SRP. This is furthermore the reason behind the fact that the direct sourcing practices have the most visible effects on the rice sector more generally speaking.

Compliancy towards the SRP standard and impact programs can rather be seen as creating sustainability of the supply chains. The code of conduct stays limited to the last stages of the supply chains and the own factory practices which makes governing sustainability in the chains. What these

63 results imply for the research questions stated in chapter one will be discussed in the coming chapter (8. Discussion and Conclusion).

Figure 7.4 offers a summarizing overview of the key characteristics of the practices that have been discussed, the category to which they belong and whether (possibly) have effect beyond the economic practices of Mars Food.

Category Mars Food Practice Positive Impact Beyond

Governance Company Code of Conduct No in chains

SRP-Standard Governance Potentially. When not only focus on economic of chains Sustainable Rice Sourcing supply chain activities. Integrate farmers’ Practices perspectives and values. Raises awareness. Potentially. When involving the horizontal relations around the rice supply chains.

Sustainable Rice Sourcing Potentially. So far, the execution of the strategy Strategy stays limited to the activities within the own supply Governance chain through chains Participating in the Sustainable Potentially. Connects private sector with NGO, Research institutes and government. The farmer Rice Platform should be incorporated.

Yes. On-farm education on good farming practices. Direct Sourcing programs in Topics as water management and gender do not Pakistan (only) affect the economic supply chain activities. Contribution to the livelihood of farming communities. Increase in farmer income Figure 7.4 Summary of the practices’ characteristics, category and effect beyond the chains of Mars Food.

64

8. Discussion and Conclusion

This chapter evaluates the observations that are made when analysing the four sustainable rice- sourcing activities of Mars Food in chapter seven. These results will be linked to the theoretical framework introduced in chapter three. This theoretical framework offered the main building blocks for the research question that guided this research. In section 8.1 the sub-questions will be sequentially answered in order to be able to answer the general research question. By answering the research question it will be possible to discuss the possibilities for commercial companies, like Mars Inc., to deliver contributions to sustainability beyond their own supply chains. Section 8.2 will function as a reflection section in which the theory and methods that are used to realize this research are reviewed. Lastly, there will be touched upon the value of the research.

8.1 Answering the Research Questions

The research question as defined in the first chapter of this research is:

How do private companies contribute to the sustainability of global food production and consumption and what is their role in sustainability achievements beyond their supply chains

Three sub-questions were formulated to be able to answer this research question and in order to learn valuable lessons from this case study research.

1. Does Mars Food engage with (non) supply chain partners in developing its sustainability approaches? 2. What are the possibilities for Mars Food to make sustainability achievements beyond their chains? 3. What valuable lessons can be learned from the Mars Food case study for other companies in the food sector, but also for policy makers and NGOs in order to realize sustainability governance of global food flows?

In the coming sub-sections the three sub-questions will be answered in order to be able to answer the main research question in section 8.1.4.

8.1.1 Partner Engagement

Mars Food uses at least for different practices in which they try to address the socio-economic and environmental side effects of their global rice production. For this thesis four of these practices were analysed:

1. The sustainable sourcing strategy for rice 2. Participating in the Sustainable Rice Platform (SRP) 3. Initiating a direct sourcing program in Pakistan 4. Making use of the company code of conduct

65 Within these activities Mars Food uses different levels of engagement with their (non) supply chain partners, depending on the ultimate aim of the activity. During the developmental phase of these four practices Mars Food and Mars Inc. (in the case of the code of conduct) engaged with non-supply chain partners (horizontal relations) in the form of external consultancy bodies and consulting NGOs or research institutes. In later, more executive, stages the non-supply chain actors are most actively engaged in the SRP and the direct sourcing program. These activities aim to contribute to respectively ‘resource efficiency and sustainability in the rice sector’ (SRP I, 2015) and ‘optimizing farming practices, by focussing on water and famer income’. These aims make partner engagement important since they go beyond the economic power of a lead-firm. Although the sustainable rice sourcing strategy aims to contribute to a positive change in the entire rice sector as well, no horizontal related actors are involved during the executional phase of the strategy. As a result, sustainability contributions stay limited to the own supply chains. While using corporate code of conduct, Mars only engages with non-supply chain actors by assigning them to conduct the supplier audits. Within the code of conduct operations further active participation of non-supply chain actors is not deemed necessary because the focus is largely on Mars and their direct suppliers.

In all four practices there is none, or low, government engagement. Only in the SRP some government representatives of rice producing countries are present. Reasons not to involve to the local government mainly originate from the bureaucratic reputation and character of local governmental institutions. The lack of government involvement can be seen a missed opportunity when aiming for a sector wide change. Since the majority of the rice is produced and consumed domestically, the local government offers a long-term and an agency-rich actor. Furthermore governmental actors, just as the involvement of NGOs or research institutes, can contribute to the level of credibility and reduce the level of corporate self-regulation.

Supply chain partners (vertical relations) are involved to a lesser extent. In both the SRP and the direct sourcing program supply chain partners are involved and consulted while developing the actual practices. Engagement with vertical supply chain relations helps to identify the best focus areas and the most suitable approach. Within the SRP the engagement of supply chain partners stays, however, limited to the traders and multinationals active in the rice industry, rice producers are not actively engaged. Excluding farmers in developing a standard to improve efficiency and sustainability in the entire supply chain undermines farmers position and decreases the chances for success. Rice farmers, in the end, are the actors that need to use this standard and change their practices accordingly. Within the direct sourcing program in Pakistan farmers are more pro-actively engaged. This makes the initiative different compared to the other three activities.

8.1.2 Possibilities for achievements beyond the own supply chains

According to Bush et al. (2014) governance arrangement that originate from a through-approach ‘create dynamic outcomes that extend beyond the activities within the chain itself’ (Bush et al., 2014 p14). Mars Food operates from a trough approach in three of their practices: the development the sustainable rice sourcing strategy, their participation in the Sustainable Rice Platform (SRP) and the direct sourcing program initiated in Pakistan.

Mars Food’s sustainable rice sourcing strategy aims to go further than positively affecting the situation in their rice supply chains. Herewith Mars Food uses an external oriented approach and recognizes their responsibility to (try to) address the side effects of their global operating chains.

66 With this strategy Mars Food uses a through approach of governing sustainability. This approach is, however, not directly reflected in the practices that should support the strategy. Mainly due to the fact that the power Mars Food has as a lead firm stays limited to their own supply chain actors and the level of engagement of with non-supply chain actors is low. Furthermore the situation in the own supply chains is prioritized because of a certain reputational risks. The sustainable rice sourcing practices can be considered as governing sustainability of the rice chains and positive impacts beyond the Mars Food supply chains are limited.

The Sustainable Rice Platform also originates from a more network-oriented approach in which both vertical and horizontal relations of rice supply chains are considered to be important. Most of these actors are therefore involved in the platform. Just as the sustainable rice sourcing strategy, the ideology of the SRP is not directly reflected in the practices that they carryout. The main tool developed by the SRP, the SRP-standard, stays limited to the economic practices in a supply chain. This tool is intended to be used by lead firms that can set requirements for their suppliers (governance of chains). The SRP thereby fails to have positive contributions beyond the rice supply chain.

Within the direct sourcing program Mars Food engages supply and non-supply chain actors. Currently the direct sourcing practices of Mars Food affect the livelihood of the 430 Pakistani farmers that are part of the Mars Food supply chain. Due to the incorporation of themes like water management and gender (via Helvetas) and the on-farm education to improve farmers’ practices, the effects of the program do not stay limited to the commercial operations of Mars Food. An opportunity to further extend the impact this the involvement of a governmental body.

Regarding sustainability achievements beyond the own economic practices, Mars Food is able to deliver contributions via the direct sourcing program in Pakistan most clearly. This program has resulted in an increase in farmer income, which could contribute to an increase of the livelihoods of a rice producing community. Furthermore, themes that do not directly regard economic benefits for the supply chain are integrated in the program and in the better farming practices that get educated on farm level. These are themes as women empowerment, environmental friendly farming practices and children’s education.

When linking these observations to the theory of Bush et al. (2014) and their statement that governance arrangement that depart from a through-approach ‘create dynamic outcomes that extend beyond the activities within the chain itself’, it could be stated that this is confirmed by the practices of Mars Food. Although not every through-oriented practice resulted in a change beyond the economic activities of Mars Food, the only practices that did, or have an opportunity to do, were the practices originate from external oriented approach and involved multiple different actors.

8.1.3 Lessons learned

Reviewing this research three major lessons can be learned from the Mars Food case study that can be valuable for other commercial companies operating in global food supply chains and for NGOs, research institutes and policy makers active in sustainability arrangements around global food chains.

67 First. There is a need to recognize that although Mars Food operates from a very open-minded through perspective within their sustainable rice sourcing strategy, the impact of the related practices stay limited due to the dependency on others. Even though Mars Food is motivated to deliver contributions beyond their own supply chains and positively influence the complete rice sector, their power is mainly located in the own chains. More general speaking, the power of private actors stays limited to the own supply chain. This makes private sector actors powerful, but not a silver bullet with respect to sector wide sustainability improvements.

Second. Private sector engagement with both the vertical and horizontal relations is, due to power limitations, very important. Multi stakeholder arrangements on a smaller scale show success in the direct sourcing program. Important in these programs are:

• Connections in the field • Integrate farmer perspectives, -values and -capacity building • Integrate NGOs, private sector and public sector • Set specific targets/focus areas e.g. gender, child labor, water management

Third. It is important to recognize that large multi-stakeholder initiatives sound promising, but that they often lack effective means to address issues as well. In the case of the sustainable rice platform, this is due to neglecting farmer representation and farmer capacity building. Furthermore, wide- ranging multi stakeholder initiatives are large and cumbersome organizations. This makes it hard to set-up specific programs and targets. Large multi-stakeholder initiatives are most useful as a platform to exchange knowledge and build smaller networks of relevant actors to go for concrete programs.

8.1.4 Private Sector Contributions to sustainability in and beyond their chains

Based on the results from the Mars Food case study one could argue that the private sector can use a wide variety of practices to contribute to sustainability within and beyond the supply chains they are active in. The case study on Mars Food shows that this can be done by at least four practices.

1. Developing an external-oriented sustainable sourcing strategy (the sustainable rice sourcing strategy) 2. Participating in a large multi-stakeholder initiative (the SPR) 3. On-farm education on good farming practices via multi stakeholder collaboration (the direct sourcing program in Pakistan) 4. Improving the situation at the own factories (the corporate code of conduct)

All these practices have a positive impact on (parts of) the rice supply chains in which Mars Food is active. Small-scale multi-stakeholder collaborations, like the direct sourcing program in Pakistan, show to be most successful considering sustainable impacts beyond the economic activities of a lead firm. The success of this program, and the difference with the other three activities, lies mainly in these four aspects:

1. Involvement of an NGO and local private actor 2. Farmers representation and connections in the field 3. On-farm education and farmer capacity building

68 4. Specific targets on water management and gender

The success of the direct sourcing program in Pakistan offers opportunities for Mars Food, and other multinationals operating in global supply chains, to have a positive effect beyond the own economic activities. The four elements offer guidance for sustainable sourcing practices and can help Mars Food with fulfilling their aim of being a ‘catalyst for change’ (Mars Food, 2015) in the rice sector. Small-scale multi-stakeholder collaboration like this can be set-up or joined by private sector actors. Large multi-stakeholder initiatives can be used as a platform to connect with relevant actors, but are a less suitable means to develop sustainability practices with concrete impacts.

8.2 Reflections

The coming section will reflect on the conducted research. The results, theoretical framework and methods that are used to carryout this research will be addressed, just as well as the value of the research.

8.2.1 Reflections on the results

The previous stated answers to both the main research question and the sub-questions apply the strongest to Mars Food, and in particular their rice sourcing practices. General findings as: the power limitations of a lead firm, the suitability of smaller multi-stakeholder arrangements and the limitations of large multi-stakeholder initiatives, are valid irrespectively of the commodity. Therefore, these findings can be generalized to other commodities that are globally sourced by Mars Food or Mars Inc. Examples are global cocoa, soy or palm oil sourcing.

Further generalization of the results to other food multinationals similar to Mars Food is possible, especially to food multinationals operating in the global rice industry. Many commercial food companies operate in similar global chains and are faced with socio-economical and environmental concerns. Other multinationals like Unilever or Nestlé are confronted with the same sustainability issues and might be thinking about addressing them. Depending on their motivations, they might find themselves in the same situation as Mars Food.

An important additional note that needs to be made here is that the strategies and practices of Mars Food and Mars Inc. are highly depending on intrinsic motivation of the company and its employees. Ethical values are integrated into the business via and the family. Within sustainability projects, a lot of difference is made by the personal motivations behind certain actions. These motivations are an important prerequisite for the success of sustainability programs. It is important to realize that successful implementation of sustainable souring strategies and practices goes further than replicating the success factors found in the Mars Food case.

8.2.2 Reflection on the theoretical framework

To be able to conduct this research I made use of the theory of Bush et al. (2014). Bush et al. (2014) developed a framework that can be used to analyze how private sector actors can integrate sustainability in their business practices. This theory builds on the Global Value Chain theory of Gereffi (2005) and the Global Network Theory of Castells (2000). These theories helped to better understand the practices and strategies that Mars Food uses to address the sustainability issues they are faced with, but also the context in which Mars Food tries to do this. The use of the framework

69 developed by Bush et al. (2014) particularly contributed to the ability of grasping where a certain strategy is coming from and how it is structured.

In the course of the research I faced difficulties in analysing situations where the developed strategy and the actual practices to execute the strategy did not match. This was the case when analysing the sustainable rice sourcing strategy and the executive practices, and while analysing the Sustainable Rice Platform and its associated standard. In both cases the trough approach and the intended effects beyond commercial supply chain activities, are not reflected in the practices that should execute these intensions. I would like to emphasize these findings in relation to the statement made on governance through chains and ‘governance as normalization’ by Bush et al. (2014 p4). According to Bush et al. governance through chains captures what is called ‘governance as normalization; that is, how external non-firm actors, such as consumers, NGOs and government institutions, structure flows of information that are taken up in the norms and practices of firm and in turn influence practices within and around a particular value chain’ (2014 p4). In addition to this statement, I would like to state that power limitations (in the case of the sustainable rice sourcing practices) and the focus on standardization and efficiency (in the case of the SRP standard) are aspects that hamper the translation of norms and strategies into actual practices.

8.2.3 Reflection on the methods

For this research I combined my thesis research with an internship at Mars Food. This combination resulted in both interesting findings and challenging situations. Via the internship I was able to get in depth insights on the practices, motivations and ways of decision making of a commercial food company. The daily interactions with the sustainable sourcing team provided me a complete and honest view on what Mars Food is doing with respect to sustainability. The research thereby goes beyond general policy research on external exposed documents only. This adds value to the research and distinguishes it from what is previously done.

Throughout the research I was able to conduct interviews with various interesting parties. Challenging during the interviews was fact that I represented Mars Food as an intern and tried to be an independent researcher at the same time. I got in touch with interview respondents via the network of Mars Food and via other interviewees. All of the interviewees were, however, directly or indirectly related to Mars Food. This might be via an advisory role, partner in a project or a supplier of goods. In this situation it is important to recognize that interviewees might be more positive about Mars Food due to power relations or because they want Mars Food to become their business client. Throughout the research I have always been aware of the power relations between the interviewee and Mars Food. During every interview I also explained that the research was conducted on behalf of Wageningen University, but the fact remains that the internship at Mars Food might had some impacts on the interviewees’ responses.

Furthermore there was the risk of getting biased myself. Due to the daily interactions with the sustainable sourcing team of Mars Food, the (amount of) knowledge I received could be influenced by the Mars associates. I have tried to cope with this by interviewing various different persons, representing different chain and non-chain actors. The four sustainability practices of Mars Food were discussed in interviews with at least three different respondents. These interviews provided me a complete picture of the certain practice and the position of Mars Food in this. It was very valuable

70 to speak with interviewees representing organizations with a different perspective than Mars Food. I therefore attached a lot of value to the interviews I had with the various NGOs.

Due to limitations in both time and resources, I have not been able to extensively study the role of consumers and raw material traders with respect to addressing food related sustainability issues. Although the position of consumers in globally organized food supply chains is different compared the position of food multinationals, there is a need to recognize consumer power as well. In the end, it is the consumer that decides to purchase either, cheap and less sustainable products, or more expensive sustainably produced goods. The positions of large raw material traders in global supply chains corresponds more with the position of food multinationals like Mars Food, Unilever of Nestle. Although often not visible, raw material traders are an extremely powerful actor within global commodity chains. In some situations they might even posses more power than the lead firm. Olam and Cargill are examples of large traders present in the rice sector, but they also trade soy and wheat. When considering future research in line with this study, I would recommend taking a closer look at the role and contributions of raw material traders.

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76 Appendix A

Interview Respondents

This appendix A gives an overview of the respondents, and organizations that they represent, that are interviewed during course of the research.

AidEnvironment Representative - Senior consultant at AidEnvironment. AidEnviornment is an November 18th 2015 consultancy body focussing on sustainability and trade. AidEnvironment is one of the initiators of the SRP and partly responsible for the development of the SRP standard.

Helvetas Representative - Country director at Helvetas. Helvetas is and Swiss NGO and partners November 16th 2015 within the cooperation between Mars Food, RPL and IRRI on the direct sourcing program around basmati rice in Pakistan. Helvetas focuses particularly on livelihood improvement, water and risk reduction.

IRRI Representative - Researcher at the International Rice Resources Institute (IRRI). IRRI is November 13th 2015 one of the founders of the SRP and key partner within the cooperation between Mars Food, Rice Partners Ltd. and Helvetas on the direct sourcing program around basmati rice in Pakistan.

Mars Chocolate Representative – Global sourcing director at Mars Chocolate. Responsible for the November 5th 2015 sustainable and responsible sourcing of cocoa. Involved in the International Cocoa Initiative and other sustainability projects related to cocoa sourcing.

Mars Food Representative I & II – Global sourcing director (I) and sustainable sourcing manager (II) at February 4th 2016 Mars Food. The sustainable sourcing team at Mars Food is January 27th 2016 responsible for the implementation of the sustainable sourcing strategy for Mars Food commodities including rice.

Mars Inc. Representative - Sustainable sourcing manager at Mars Inc. Highly involved in the October 23th 2015 collaboration between Mars and the World Resources Institute (WRI). The sustainable sourcing team of Mars Inc. is responsible for the development and implementation of the sustainable sourcing strategy.

MDF Representative - Senior consultant at MDF Training & Consultancy. (MDF) MDF is a October 28th 2015 global oriented consultancy agency. MDF facilitated sustainable cocoa initiatives at Mars Chocolate.

Oxfam Representative - Agriculture advisor at Oxfam. Oxfam is a global operating NGO and is January 21st 2016 involved in the SRP as a dialogue partner (not a full member). In this collaboration Oxfam aims to represent the interests of smallholder farmers and farm workers.

Responsible Sourcing Representative – Responsible sourcing manager at Mars Inc. Responsible for February 3rd 2016 the development, implementation and compliancy towards the corporate code of conduct of Mars Inc.

77 RPL Representative - Rice Partners Ltd. (RPL) one of the key basmati suppliers of Mars November 13th 2015 Food and partner within the cooperation between Mars Food, IRRI and Helvetas on the direct sourcing program around basmati rice in Pakistan.

Utz Certified Representative - Counsellor at Utz Certified and one of the representatives of Utz November 5th 2015 Certified within the Sustainable Rice Platform (SRP). Utz Certified is a certification scheme mainly working on coffee, tea and cocoa. Utz Certified is part of the SRP as a consultancy body and a leading actor in the development of the SRP standard.

78 Appendix B

Topic list used for the semi-structured interviews

Depending both the interviewee and the topic that is discussed during the interview, the following questions are asked/topics are addressed about the four sustainable sourcing activities in which Mars Food is involved.

Introduction

- Introduction of myself - Introduction of the respondent - What is your role within the organization you represent? - What is the role of you/your organization in this collaboration/program/initiative/strategy?

Motivations and Aims

- Why did your organization join this collaboration/program/initiative/strategy? - Does your organization work with private sector/public sector/NGOs/farmers more often? - What is your and your organizations’ measure for success of the program?

Questions on involved actors

Farmers

- Are farmers involved in this collaboration/program/initiative/strategy? o Why/why not? o Would you consider this as positive/negative? o If not involved, who presents their interest? o Should farmers be more involved? o Are farmers/the farmer community represented well enough o How do they react on the program?

NGOs

- Is there an NGO involved in this collaboration/program/initiative/strategy? o Why/why not? o Would you consider this as positive/negative? o When involved, what do think they contribute? o Could this NGO, in your opinion, contribute more to this collaboration/ program/initiative/strategy? How?

Research Institutes

- Is there a research institute involved in this collaboration/program/initiative/strategy? o Why/why not? o Would you consider this as positive/negative? o When involved, what do think they contribute? o Could research institutes, in your opinion, contribute more to this collaboration/

79 program/initiative/strategy? How?

Local Governments

- Is there a local governmental institution or representative involved in this collaboration/ program/initiative/strategy? o Why/why not? o Would you consider this as positive/negative? o Is the government enthusiastic about this project? o When involved, what do think they contribute? o Could local governments, in your opinion, contribute more to this collaboration/ program/initiative/strategy? How?

Private Sector

- Is there a local governmental institution or representative involved in this collaboration/ program/initiative/strategy? o Why/why not? o Would you consider this as positive/negative? o When involved, what do think they contribute? o What do you think of the increasing influence of private sector actors on sustainability related practices?

The Collaboration

- Within this program several different parties worked together. Where you confronted with different priorities among the different actors? - How did you solve it? - Where you able to deliver the contributions you wanted? - Where you/your organization involved in the (…) practice?

Achievement

- What is the biggest achievement in your opinion? - Are the requirements on (…) high enough? - Which topics could be better addressed?

Future Developments

- There is a trend towards multi stakeholder cooperating. Do you see that as a good development? - When you look at the future, what would be the biggest challenge

Closing

80 Appendix C

Supportive Tables and Figures

Figure A. The multi-nationals behind our food brands (Oxfam, 2013)

Figure B. Results of the AIM-Progress benchmark study on the responsible practices of the largest fast moving consumer goods companies (AIM-Progress, 2015)

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23 Raw Materials Coconut Dairy Palm

Sugar Beet Sugar Cane Rice

Tomato Beef Corn

Soy Wheat Pulp & Paper

Peanut Mint Vanilla

Fish Shea Coffee

Tea Hazelnuts High intensity sweetener

Sugar-free sweetener Cocoa

Table A. 23 Raw materials prioritized by Mars Inc. in the sustainable sourcing strategy. 16 of these raw materials are relevant for Mars Food (in bold).

Figure C. Mars Inc.’s visualization of the sustainable sourcing strategy (Mars Inc., 2015).

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