Is London Pursuing a Due Diligence Standard for Ukrainian Sunflower?

This past week UK lawmakers tried to gain ground on the forthcoming due diligence legislation that will impact palm oil. Although there are some clear proponents of a simple regulation that assesses legality in the country of production, there are also some members of parliament – and NGOs – that are pushing for stricter forms of due diligence that assess a broader range of international laws and principles.

We assume they must be thinking about Ukrainian Sunflower.

Ukraine is the world’s largest producer of sunflower oil and sunflower meal, hitting around 13 million tonnes annually. Sunflower is a major competitor to palm oil in food markets. It should then follow that sunflower oil should be treated in a similar manner to palm oil when it comes to due diligence tests for legality. More importantly, if these tests are extended – as some NGOs wish – to other areas of law such as human rights, the same tests should apply.

Here’s why:

Ukrainian Land Tenure Legality, or Lack Thereof

Over the past few years, illegalities in the agriculture sector in Ukraine have emerged. EOS Crop Monitoring has recently noted that there are as many as 4.3 million hectares of ‘shadow farmland’ in Ukraine. It estimates that around USD3.8 billion of untaxed profits is generated from this land annually.

The EOS work is part of a larger World Bank project on land governance in the Ukraine. According to the one report, ‘the project discovered 291,000 acres of rapeseed crop coverage in the Kherson region in the country’s east, an area 33% larger than what is officially recorded.’

Deforestation and Illegal Logging

Deforestation and illegal logging are also a problem. Specifically, there is genuine concern regarding illegal logging and deforestation in the forest areas in the Carpathians.

NEPCon, a NGO that advocates for sustainable forest management wrote the following about illegal logging in Ukraine:

“Illegal logging is a considerable problem in Ukraine (Regional Environmental Center, 2010) due to illegal logging, illegal wood exports and timber related corruption (Earthsight, 2018). Ukraine is also a complex country because of the imperfection of the current legislation and the existence of conflicts between laws (FSC, 2018). The low efficacy of some legislation is not caused by the activity or inactivity of permanent forest users, but by multiple interpretations of the same laws (FSC, 2018).”

And the risk goes beyond uncertified timber. Some campaign groups have gone so far as to criticise the certification efforts of the Forest Stewardship Council (FSC). The NGO Earthsight – which has its biases – stated

“On October 2019, an experienced forester from an FSC-­certified Carpathian enterprise told Earthsight of just how cosy the relationship between FSC auditors and senior officials of the state logging companies they inspect can be. He said once the formalities of the “dog and pony show” inspection were completed, the auditors and SFE leadership would retire to a summerhouse in the woods to party on alcohol, meat skewers and spicy ‘bogracz’ stew. Even where auditors are intent on doing their job, the same whistleblower confirmed how easily SFE officials can hoodwink them.”

In other words, there is not just an illegal logging problem in Ukraine; there is a governance problem that extends throughout the forestry and agriculture sectors.

Similarly, just as NGOs and some MPs are pushing for stricter provisions on human rights, Ukraine has a problem.

Human Rights Violations According to U.S. State Department

There are wide and systematic problems associated with some citizens being unable to purchase or own land in some areas based on their political orientation. This places a cloud over the idea of land tenure and free, prior and informed consent with commodities from these areas.

Similarly, there are documented cases of human rights abuse in the agricultural sector, which extends to the use of psychiatric patients as forced labor on some farms.

These are not the accusations of NGOs or other labor groups: they come straight from the US State Department.

This extends into cases of forced labor.

The UN International Organization for Migration at this time last year revealed what it called a “shocking case of mass trafficking” on a farm in Ukraine. 

Likewise, the US Department of Labor’s reports on child labor and forced labor in Ukraine has found multiple reports of child labor in the agricultural sector.

Fair and Equal Treatment?

Ukraine is just one country among many that exports commodities and food products to the UK and the rest of Europe.

Advocates for tougher due diligence measures have their sights set on so-called tropical deforesters. The problem is that it’s not possible under global trade rules for importing countries to assess exports from tropical countries on human rights and labour grounds and not do the same for other countries. This is the case whether there is deforestation or otherwise, and whether the forests are tropical or not.

Ignoring human rights and illegal logging infractions in Europe is like saying that human rights there matter less, or that some forests – such as the Carpathians – aren’t worth saving.

The point of using the Ukraine sunflower oil as an example is not just because it is a competitor with palm oil in EU and global markers. It’s also to point out that implementing tougher due diligence laws is complicated, and there’s a reason that a simple legality based approach is the preferred model.

And finally, we think it is clear that the commodity debate in the UK has been too focused on non-European areas. There has been a clear effort to sweep problems within Europe under the rug. There is a fear that Ukraine is “Too Big to Fail”, hence the treatment of the entire sunflower sector with kid gloves — while continuing to denigrate palm oil.