Pepsico commits to beefing-up supplier code of conduct

Oxfam tackles PepsiCo, Coke over 'disastrous impact' of sugar land grabbing


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Coke/Pepsi Picture Credit: Sean Loyless/Flickr
Coke/Pepsi Picture Credit: Sean Loyless/Flickr

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Oxfam insists that PepsiCo, Coca-Cola and Associated British Foods – the three most powerful firms in the global sugar industry – must do more to police the 'disastrous impact' of land grabbing in their supply chains.

PepsiCo responded immediately to the demand - contained in an Oxfam report published today - and in a statement sent to a spokesperson insisted that its suppliers had all assured PepsiCo that they complied with applicable laws.

"We continue to engage with our partners to further understand how they are addressing the issues raised by Oxfam," ​the spokesperson said.

"At PepsiCo we believe acting ethically and responsibly is not only the right thing to do, but also the right thing for our business. Therefore, we remain committed to working with our partners and external organizations like Oxfam in this area."

So what is land grabbing?

‘Land grabbing’ involves land acquisitions that violate human, social or legal rights. And in its report, ‘Nothing Sweet About It: How Sugar Fuels Land Grabs’, Oxfam associates the problem with massive world sugar demand – set to rise 25% globally by 2020.

Of the three key agricultural commodities – together with soy- and palm oil – sugar uses the most land for direct food production, Oxfam explains, and is widely used for soft drinks particularly in the EU; the world trade in raw sugar was worth $47bn in 2011.

Since 2000, 800 large-scale land deals globally mean that an area four times the size of Portugal has been sold off to foreign investors, after the 2008 boom in food prices triggered investor interest in agriculture.

‘Time to take responsibility’ – Oxfam

But crops grown on the land rarely provide sustenance for the people who live there, according to Oxfam, since 60% of foreign land investors intend to export everything they produce on the land, which leads to especial problems in developing world countries suffering from food insecurity.

“It’s time for some of the world’s largest sugar buyers and producers – PepsiCo, Coca-Cola and ABF – to acknowledge their responsibility for addressing the growing threat of land conflict in their supply chains and the disastrous impact these cases can have on communities,” ​Oxfam insists.

Coke is one of world’s largest buyers of sugar – given its 25% global soft drink market share – while PepsiCo has an 18% share, while annual profits were $9.02bn and $6.18bn respectively.

“These companies continue to preside over supply chains within which risks have increased of land grabs and land conflicts. Yet they are doing little if anything to prevent land grabs in their own supply chains,”​ Oxfam said.

Consumer will demand transparency

But as consumer awareness grows over the role sugar production plays in displacing communities from land, Oxfam insists world consumers will increasingly demand products made with land rights in mind.

For instance, a recent study in China found that 75%+ of people will not buy or will reduce purchasing of food made by companies that aren’t socially responsible, and Oxfam insists that Coke, Pepsi and ABF have the “power and responsibility”​ to end land grabs once and for all.

Oxfam defines acquisitions as ‘land grabs’ when they do one or more of the following (1) violate human rights, particularly equal rights for women (2) flout principle of free, prior and informed consent  (FPIC) in local communities (3) disregard assessing social, economic and environmental impacts.

(4) Avoid transparent contracts with clear and binding commitments to employment and benefit sharing (5) Eschew democratic planning, independent oversight and meaningful participation.

These violations often take place in concert, Oxfam insists, where lack of FPIC (for instance) means that companies buying land have no way of properly identifying the rights of communities living thereon.

“In doing so, they often offer financial compensation that is much lower than market value, if they offer it at all,”​ Oxfam states.

“As a result, smallholders are robbed of self-sufficiency, their property is destroyed, and they are left destitute and stripped of their source of food and income.”

Coca-Cola and Bunge in Brazil

One ‘land grabbing’ instance cited by Oxfam relates to sugar trader Bunge in Brazil’s Mato Grosso do Sul, where the Guarani-Kaiowa tribe have struggled to reclaim land for 30 years, and finally regained rights in 2011.

Coca-Cola supplier Bunge bought a mill on the land in 2008, and – unlike other sugar operators in the region, according to Oxfam – claims it will keep buying sugar cane from five farms located on the tribe’s land until the Brazilian government (which has recognised the tribe’s rights to the land) finishes the demarcation process.

Indigenous people struggling to cope with this loss of land and livelihood told Oxfam that local sugar plantation workers were intimidating them – firing guns into the air and sending bulldozers and other machinery to work on the land as if there were no people there.

'Zero tolerance' for land grabbing

Oxfam says it is in dialogue with Coca-Cola, PepsiCo and ABF and has asked the companies to talk to their suppliers to discuss the details of the cases referenced in the new report.

“We are asking the companies to play a constructive role in ensuring that their suppliers and relevant local authotrities address the concerns of impacted communities,” ​Oxfam says.

Namely, by (1) Disclosing palm oil, soy and sugar sources and assessing risks to communities (2) Committing to zero tolerance for land grabbing on the part of suppliers (3) Advocate for government and traders to tackle land grabbing and support responsible agriculture investments.

PepsiCo's spokesperson said the firm had a global code of conduct for suppliers covering labor, associate health and safety, environmental management and business integrity, that forms part of the contracting process with suppliers.

"To further enhance the code, PepsiCo is rolling out more rigorous processes around accountability, engagement, risk assessment and mitigation,"​ he added, noting that the company took questions about supplier practices seriously.

Responding to the Oxfam report, Petro Kacur, media relations director, The Coca-Cola Company, told this publication: "At The Coca-Cola Company, through our Sustainable Agriculture Guiding Principles, we are asking our suppliers to recognize and safeguard the rights of communities and traditional peoples to maintain access to land and natural resources.

"We are working to promote respect for Human and Workplace Rights by the farm and the employer of workers at the farm, whether or not the employer is the farm itself."

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