TNRC Blog Corruption in the wild plants supply chain: Addressing the social, financial, and environmental costs

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Targeting Natural Resource Corruption

Corruption in the wild plants supply chain: Addressing the social, financial, and environmental costs

Anastasiya Timoshyna and Eleanor Drinkwater, TRAFFIC | June 2021 | TNRC Blog Post

This blog post captures expert insights and responses to questions raised in a TNRC Learning Series Webinar on Corruption in the wild plants supply chain: Addressing the social, financial and environmental costs. This webinar expanded on a recent TNRC publication, Understanding corruption risks in the global trade in wild plants with further expert insights on the following learning questions: 1) What does corruption in NTFP supply chains look like? 2) What are the strengths and weaknesses to different approaches to reduce corruption in NTFP supply chains? 3) What recommendations can natural resource management practitioners use when they are implementing NTFP-focused programs? This webinar was attended by practitioners based in 40 countries, a recording is above, and a PDF of slides can be downloaded here.

Key Takeaways

Non-Timber Forest Products (NTFPs) have a major economic and social significance, however this trade is often ‘hidden’ from the agenda of natural resource management (NRM) practitioners, as well as trade chains that use NTFP ingredients.
NTFP harvest and trade is often regulated through a complex set of policies, laws and customary rules that are vulnerable to corruption.
A collaborative approach involving local communities, the private sector, and government, is needed to reduce corruption risks in NTFP supply chains. Experience from Nepal and Cameroon offers valuable insights on improving resource governance and strengthening value chains.
While systematic change is necessary, in the short-term, incremental actions and approaches can be implemented to mitigate risk and reduce corruption. These can include the implementation of voluntary certification, approaches to improve traceability, and empowering harvesters to seek fair prices for NTFPs.

Brazil nuts, shea butter, frankincense and Argan oil are some of the most frequently used wild ingredients in cosmetics, healthcare, and food, but they are often completely hidden from the sight of industry and consumers. Wild plant ingredients, or NTFPs, often come from the most biodiverse ecosystems on Earth, supporting the livelihoods and well-being of local communities. However, there are many challenges around their trade: increasing demand, insufficient knowledge about sustainable harvesting levels, over-harvesting, complex trade chains, lack of traceability, and corruption. The scale and nature of corruption in this trade are poorly understood, presenting significant risks to livelihoods and the success of conservation efforts.

The summaries below capture key insights from experts working on this issue:

Big picture: What do practitioners focusing on conservation, livelihoods, and supply chains need to know about addressing corruption risks in the global trade in wild plants?

Anastasiya Timoshyna, Senior Program Coordinator – Sustainable Trade, TRAFFIC

The harvest and trade in wild plant NTFPs are essential to the livelihoods of millions of often marginalized people, the elderly, and women. However, these supply chains often lack transparency and are complex, with multiple intermediaries, which makes tracking information about the flow of products or finances very difficult. There are frequently no adequate regulations or enforcement, and the regulations that do exist often overlap with customary norms and rules. NTFP ingredients often end up being invisible in final products, hidden in industry supply chains, and invisible to consumers. There has so far been relatively little commitment to broader sectoral sustainability. Understanding the nature and scale of corruption is vital to mitigating risks for people's livelihoods and conservation efforts.

TRAFFIC'S recent brief outlines features of the trade in NTFPs that are important for understanding potential corruption risks (such as bribery, collusion, nepotism, and favoritism) and ways to mitigate those risks. For example, corrupt distribution of harvest permits could lead to overharvesting in designated areas or to harvesters being forced to pay inflated prices for permits from third parties who acquire permits through corrupt transactions. General principles for supporting sustainable and equitable NTFP supply chains may prove useful in addressing such risks. These include introducing more opportunities for communities using wild resources to establish direct links to consumers and benefit from value-addition (such as certification and product processing), well-considered decentralization of regulations to retain control of NTFPs with local communities, as well as multi-level and multi-actor governance.

Three strategies are recommended:

improved resource governance;
increased use of appropriate voluntary certification standards (such as the FairWild Standard, developed for wild plants and fungi); and
enhanced implementation of traceability approaches.

These inform a set of recommendations to include a more in-depth assessment of current and potential corruption risks in NTFP supply chains and multi-stakeholder involvement in developing and implementing strategies to reduce them.

Insights from Nepal: Improving resource governance to reduce opportunities for corruption

Dr. Bhishma Subedi, the Executive Director, Asia Network for Sustainable Agriculture and Bioresources (ANSAB)

In Asia, particularly in Nepal and Bhutan, NTFPs are important to indigenous people who managed them through customary rights, often in a sustainable manner. Moving toward formal legislative control of these resources has led to corruption and bribery around permitting access. In Nepal, NTFPs have a major economic significance. Still, there is often poor governance of these resources—often linked to overlapping governance systems, weak enforcement mechanisms and low penalties, all of which could give rise to situations where there is room for misuse of power, presenting opportunities for corruption.

To address this, ANSAB helped communities develop forest management plans that incorporate the provision of NTFPs to gain legal and transparent access to permits and improve governance. ANSAB has also provided market price information to harvesters across Nepal, allowing for more equitable and transparent price negotiations with traders. The value chains for specific essential oils and handmade paper are prime examples of sustainable resource management and sound business practices, where links to responsible buyers at the global level, including Aveda, have been made. For corruption control methods to work well, actions are needed at multiple levels and to include community forest user groups (CFUGs) and government and community-level systems, and public-private alliances.

Approaches to address corruption in the future include:

Improving harvesting and resource access rights;
Integrating species management plans into the forest management operational plans of CFUGs;
Supporting community groups to improve their internal governance;
Establishing and managing benefit distribution mechanisms;
Developing account-keeping/record-keeping capacity;
Supporting policy-level interventions;
Supporting value-adding activities, including through supporting the purchase of processing equipment/capacity-building and certification;
Establishing alternative trade channels that care for environmental and socially responsible practices, also with fewer risks of corruption;
Implementing more transparency and accountability measures; and
Facilitating public-private community alliances.

Insights from Central Africa: A call for collaborative approaches

Abdon Awono, Scientist Forests and Woodfuel, Value Chain, Finance & Investments (VFI) Team at the Center for International Forestry Research (CIFOR), Yaoundé Hub for Central Africa

Within NTFPs, there is a diverse array of products: some destined for domestic use, while others are traded nationally and internationally. The differences in the types of goods and trade patterns mean a range of management issues can arise. Within this complex management system, corruption can occur all along the value chain, but it is likely to start at the local level. For example, indigenous people may collect goods but receive less than they deserve from their neighbors (Bantu).

Next, there may be issues at the markets where struggles with the paperwork to collect and sell NTFPs legally arise and may instead be sold the waybills at higher prices by intermediaries. There may also be corruption in transporting the goods, as officials may abuse their power by requesting permits to pressure traders into paying a bribe to transport perishable goods.

There are currently many problems with corruption along the value chain of NTFPs in Central Africa. Governments have been taking steps to improve the situation, but compliance is very problematic, and there is still a long way to go. While overall there needs to be a collaborative approach to reducing corruption among other parts of the NTFP supply chain, there are several strategies that could help too:

Facilitate the organization of producers. When producers are united, they are in a more powerful position to face and negotiate challenges along the value chain. They can, for instance, have sell points to improve their bargaining power for better selling prices.
Allow private companies to come into the NTFP sector, albeit with strong guidance on how they can join the industry.
Develop and support projects that allow high-value NTFP products to be produced, planted, processed, and protected.
Engage with the Cameroonian government on policy-making, recognizing that this is a long-term process. Regulations need to be product-oriented and locally-specific; also it may be useful to reduce the number of regulations.

What role can voluntary certification standards play in reducing opportunities for corruption?

Bryony Morgan, Executive Officer of the FairWild Foundation Secretariat

Voluntary sustainability standards have suitable mechanisms to address abuse of power in supply chains. One such sustainability standard is FairWild, which requires transparency on market information and income protections for harvesters. These can reduce the potential for collusion to purchase ingredients at lower than market value and exploit the poorest members of the value chain. Compliance with harvesting laws and regulations, traceability of goods and finances are verified through a third-party auditing process for the FairWild certification scheme providing transparency that can help to reduce the likelihood of corrupt practices occurring within a company.

The worst forms of abuse associated with corruption – such as poor labor practices, child exploitation, obtaining illegal access to land and resources – must be proactively detected and eliminated from FairWild supply chains. The FairWild Standard recognizes and values the many different kinds of resource management systems. These can include informal and traditional systems. They may be formalized approaches with a basis in national law and regulations, including payment for harvesting permits. A more formalized, government-controlled system may not always be the best approach for a particular species or geographic area. Introducing such an approach may disrupt existing local management initiatives that prove effective and allow increased opportunity for elite capture and corruption. Therefore, FairWild is not prescriptive about the type of management system that must be in place.

Beyond existing requirements, there is the potential to extend the FairWild sustainability principles and indicators to explicitly cover business ethics and corruption issues on either a voluntary or required basis. Other frameworks, such as the Forest Stewardship Council (FSC), have begun to extend their requirements in this way. Legal frameworks in major markets are also tightening requirements on corporate due diligence regarding corruption in supply chains. However, there are challenges to this approach - particularly where a national context has normalized corruption or corruption is hidden from auditors. The issue would need to be looked at in more detail, together with FairWild's stakeholders. While the voluntary certification standards can provide a range of safeguards, this should be combined with the systemic change to address the issues of corruption in the long term.

The Himalayas and beyond: What incremental approaches should practitioners prioritize?

Professor Carsten Smith-Hall, the University of Copenhagen

Corruption is influenced by power in a value chain and is self-reinforcing. Countries like Nepal export tons of wild-collected plants to India and China every year. Corruption siphons off a share of the profits through actions like bribery (rent-seeking) and collusion. In these trade chains, much of the bribery is associated with taxes and permits, while wholesalers have colluded for years on prices. In areas where there is widespread corruption already, more corruption will follow. To address this issue, either a "big bang" or an incremental approach can be taken. A "big bang" approach may attempt to change the whole system, which is extremely challenging to do. It is worth looking at incremental reforms and approaches to improve the situation in a single value chain.

The following approaches are recommended to reduce corruption risk in NTFP supply chains incrementally:

Remove opportunities for corruption, for example, through simplifying procedures, rules, and paperwork.
Advance transparency, such as through sharing price information, certification and traceability systems.
Decentralize governance of NTFPs by allowing local resource management and free trade and reducing the number of checkpoints.
Support people committed to change already, including those involved in NTFP supply chains.
Identify pathways to longer-term change and agree on the best ways forward with stakeholders.