News & Media

Momentum towards a living income for millions in global food supply chains at risk as difficult realities dawn

October 16, 2021

“Today’s bravest companies will be tomorrow’s successful ones,” says Oxfam

Big food companies have hit a crossroads in their efforts to support a living income for millions of farmers in their global supply chains, and, in many ways, momentum could be slowing.

“We need a break-out. Today’s bravest companies will be tomorrow’s successful ones. It’s time for companies to commit themselves to a living income to shore up the foundations of their supply chains, which we all now see are more fragile than anyone thought,” says Irit Tamir, Director of Oxfam America’s Private Sector Department. Oxfam recently published a significant new analysis on the issue.

Oxfam’s report “Living Income: From Right to Reality” is the first in a new series focusing on an issue relevant to inequality in food value chains.

The report says companies are making progress in recognising the need for farmers to earn a living income but many gaps and complexities remain. Companies now realise how tricky it is, and many – though not all – are becoming hesitant at exactly the wrong time.

“We are at a significant inflection point now that the issue of living income has become such a welcome strategic priority for smart companies, most of whom realise their supply chains are unsustainable if they continue to be built upon poverty or worse,” Tamir said.

“While a living income is what a farming household needs to earn a decent standard of living, it’s not necessarily just a simple benchmark. Defining and measuring gaps and effective strategies to close them require context specific approaches,” she said.

“The risk now is that many companies will misunderstand or water down the concept or apply it in ineffective ways. There are even risks that companies could cause harm by pushing the most vulnerable farmers out of their supply chains by concentrating on more established farmers instead. This could reinforce social and economic inequalities rather than reduce them,” she said.

“We need companies to move in a more determined and ambitious way while bringing all the perspectives and realities of others into their new plans and practices. There’s risk and danger in them doing it alone.”

Tamir said that responsibility for solving global inequality has fallen most heavily on the public sector – through regulation like social protection and tax – while the role of the private sector in driving and potentially reversing it has been less analysed.

“We believe that many companies tend to lack real insight about the income situation and barriers facing farmers in their supply chains. This blindside tends to undermine their corporate strategies and is causing inertia,” she said.

The report says that companies need to make specific, ambitious commitments toward providing a living income in a structural way, across their entire value chains. Companies equally need to establish robust feedback mechanisms accessible to all, including at-risk farmers.

“Behind the key determinants of farmer income – like productivity, sales, price, and costs – is a huge architecture that has been designed to deliver profits for business and cheap food for consumers, but not a living income for farmers,” Tamir said.

Oxfam notes that none of the living income commitments it has reviewed so far have been focused on women farmers as the primary target group. In fact, gender and living income continue to sit separately in many companies’ sustainability strategies.

“Gender-blind strategies for a living income are failed strategies for a living income,” Tamir said. “We all must do better by putting women front and centre. Bringing women to the table in the analysis of the problem as well as at the design stage of the potential solutions. Women actually constitute the majority of the actors at the lower income level of agri-business supply chains”.

The report describes some welcome advances by companies striving to establish living incomes.

Unilever, for example, has made a specific commitment for a living income for “everyone who directly provides goods and services to Unilever” by 2030. German food retailers Aldi, Lidl, and REWE, have made similar, although less specific, commitments.

Olam’s Cocoa Compass plan commits to helping 150,000 cocoa farmers by 2030, which is noteworthy although still less than a quarter of all farmers in its supply chain. Other companies such as Mars and Hershey have published encouraging statements in support of a living income but without making a concrete, time-bound commitment, and plan to achieve it. Nestlé is one of several companies that have begun pilot projects which can play an important role but need to be linked to commitments across their entire value chain.

Notes

Read the report: https://www.oxfamamerica.org/explore/research-publications/living-income-from-right-to-realit

Case of the Century decision Climate: the next five-year term(s) under judicial supervision

October 15, 2021

The following is a joint release from Fondation Nicolas Hulot, Greenpeace France, Notre Affaire à Tous, and Oxfam France:

The administrative court of Paris has ruled in favour of the Case of the Century: successive governments will now be obliged to prove themselves and comply strictly with France’s climate commitments. The French State is also ordered to repair the damage to the environment caused by its inaction, by December 31, 2022. This ground-breaking judgement is binding on the current government, but also on the future tenant of the Elysée. This decision marks the start of a new era for France’s climate policies: never again will any President get away with climate inaction without placing the State outside of the law.

Climate justice has forced its way onto the political agenda

For the Case of the Century organisations: “From now on, any President who does not respect France’s climate commitments condemns it twice: first by exposing its population to the increasingly devastating and costly impacts of climate change, and secondly by exposing it to further sentencing by the courts.”

The next five-year presidential term is the last chance, and the forthcoming elections will be decisive. The organisations Notre Affaire à Tous, la Fondation Nicolas Hulot, Greenpeace France and Oxfam France therefore call on all candidates to demonstrate, with figures to back them up, how they intend to extricate the State from illegality and comply with climate objectives. The organisation will evaluate these roadmaps before the presidential election.

To comply with its Climate commitments, the French State should, for instance:

Reach 700 000 building renovations per year;
Increase the Railway traffic by 20 to 25% compared to 2018;
Multiply by 4 the available surface in organic agriculture.

14 months to catch up on the climate delay which has been accumulating for 3 years Between 2015 and 2018, France emitted 15 million tonnes of greenhouse gases in excess of its legislative commitments. An offence which placed the State in a position of unlawfulness and which the country’s leaders are now obliged to put right before the end of next year. 15 million tonnes of greenhouse gases will therefore have to be subtracted from France’s “carbon budget” for 2022. This decision therefore forces the State to double up on the reduction of emissions planned between 2021 and 2022.

For the Case of the Century organisations: “As of today, any divergence from the greenhouse gas reduction plan may be sanctioned by the courts in the case of any further delay. The State now has an obligation of result for the climate. We have the judges who took on board the climate issue to thank for this necessary break with climate policy as it stands today, as well as the unprecedented mobilisation of the 2.3 million people who supported the Case of the Century.”

It is in this context that the Case of the Century staged a demonstration this morning at the Trocadero in Paris, with two messages in giant lettering: “Climate: justice is on our side!” and “Presidential candidates: no climate, no presidential term (Candidat.es: Pas de Climat, pas de mandat)”.

IMFC backs new trust to channel IMF Special Drawing Rights to vulnerable countries: Oxfam reaction

October 14, 2021

The International Monetary and Financial Committee (IMFC) gave its approval today to set up a new IMF-administered Resilience and Sustainability Trust (RST) that will allow wealthy nations to channel some of their Special Drawing Rights (SDRs) to more vulnerable countries. In response, Nadia Daar, Head of Oxfam International’s Washington DC Office, said:

“While it is positive that the RST will be accessible to a wide range of countries, including vulnerable middle-income countries hit hard by the COVID-19 pandemic, it is vital that the IMF deliver these funds on terms that are as close to grants as possible. It is unacceptable that the RST will likely hinge on countries having a separate IMF loan program in place, bound by conditions like freezing public sector wages and raising taxes on the poorest. Austerity measures like these will only worsen inequality and poverty. We want to see significant SDR channelling, but it must work for countries and communities on the receiving end.

“It is encouraging that the IMFC recognises the importance of helping countries address critical issues impacting their economies, including climate change and inequality. But if the IMF fails to assess and address the impacts of its own policies on inequality, it will hypocritically continue to lead countries down a long and painful path.”

Notes

Oxfam and Development Finance International’s Commitment to Reducing Inequality Index (CRII) shows that 14 out of 16 West African nations intend to cut their national budgets by a combined $26.8 billion over the next five years in an effort to partly plug the US$48.7 billion lost in 2020 alone across the entire region due to the pandemic. Such austerity has been encouraged by the IMF, through its COVID-19 loans.

Between March 1 2020 and March 15 2021, 85 percent of the IMF’s COVID-19 loans to 85 countries encouraged, and in some cases required, countries to pursue austerity measures in the aftermath of the crisis. Download “Adding Fuel to the Fire: How IMF Demands for Austerity will Drive Up Inequality Around the World”.

Oxfam was one of the first organisations to call for a new SDR issuance as part of a broader economic rescue plan when the crisis hit in 2020. Oxfam and 280 civil society organizations and academics called on the IMF and G20 for principles for fair channelling of SDRs.

COVID-19 recovery in West Africa is “austerity on steroids” and sets the region on a destructive path ahead: Oxfam

October 14, 2021

Austerity, spiralling debt and vaccine inequity will bring the inequality crisis to levels never reached before, reveals new index.

West African governments are planning to “slash and burn” their way out of COVID-19 induced economic loss, reveals new analysis from Oxfam and Development Finance International (DFI) today. The organizations are calling for an urgent change of course as West African governments are preparing their annual budgets and participating in the Annual Meetings of the World Bank and IMF, which are crucial discussions to focus the recovery on fighting inequality and poverty.

The Commitment to Reducing Inequality Index (CRII) shows that 14 out of 16 West African nations intend to cut their national budgets by a combined $26.8 billion over the next five years in an effort to partly plug the $48.7 billion lost in 2020 alone across the entire region due to the pandemic. Such austerity has been encouraged by the IMF, through its COVID-19 loans.

This massive raid on public finances could push millions more West Africans into poverty and hunger and potentially trigger the worst inequality crisis in decades. Women will be impacted more severely due to their very high concentration in low paid informal jobs and unpaid care work. Meanwhile, the collective net worth of West Africa’s three wealthiest men surged by $6.4 billion in the first 17 months of the pandemic ―enough to lift 18 million people out of extreme poverty.

“This plan is austerity on steroids,” said Oxfam’s West Africa Regional Director Assalama Dawalak Sidi. “Rather than investing toward a positive new future for the people of West Africa, the region’s governments are instead reaching back to a 1980s playbook ―despite it being a hugely discredited one. The danger is that these governments will cut their way into worsening poverty and skyrocketing inequality.”

“This comes at a time when the region has lost the equivalent of seven million jobs, infection rates are increasing, there is no vaccine in sight for the vast majority of people and the Sahel is facing one of its worst hunger crisis,” said Sidi. “This is not the time for governments to be ripping away the public goods, support and services that millions of people need.”

The index ranks 15-member states of the Economic Community of West African States and Mauritania (ECOWAS+) on their policies on public services, tax, workers’ rights, smallholder agriculture and pandemic response spending, all areas pivotal to reducing inequality and weathering the COVID-19 storm.

The index highlights that West African governments are again the least committed to reducing inequality in Africa. Most support measures in response to COVID-19 were temporary and did little to reduce inequality, while triggering a sharp increase in debt ―debt servicing in 2020-2021 will siphon off about 61.7 percent of government revenue in West Africa. The support programs have been replaced with austerity measures as COVID-19 infection rates are increasing in many countries of the region. Less than 4 percent of West Africans are fully vaccinated.

Sierra Leone ranks low (13th) on the index. Its government was trying to implement anti-inequality policies before COVID and sharply increased education and health spending. But large corporations pocketed 92 percent of government pandemic support funding, while only 1.5 percent was spent on social protection. Sierra Leone’s $860 million upcoming spending cuts (2022-26) are equivalent to two and a half times its annual healthcare budget.

Nigeria was the region’s worst performing country in tackling inequality going into the pandemic. Nigeria’s health budget (as a percentage of its overall budget) is the third lowest in the world (3.6 percent) and 40 percent of its population does not have access to healthcare services. Nigeria loses $2.9 billion a year from tax incentives to corporations but in 2021 increased value-added taxes (VAT), which apply to everyday products like food and clothing and fall disproportionately on poor people, from 5 percent to 7.5 percent.

Mali has the highest level of income equality among ECOWAS countries with a tax rate on the richest people that is 9% higher than the world average. But it ranks last on healthcare spending, devoting less than 5 percent of its annual budget on health. Nearly 38 percent of Mali’s population (8 million people) have no access to healthcare and 6.5 percent of households face catastrophic healthcare costs spending each year. Women’s labor rights are often not respected and they lack legal protection from marital rape and sexual harassment. Mali plans to slash its budget by $3.3 billion over the next five years.

Burkina Faso ranks middle (9th) on the Index. It spends nearly 23% of its budget on education, the highest share in the region and 9th in the world. But the wealthiest 20% of the population has 44% of the income, and in rural areas, 47.5% of the population lives in poverty. According to the IMF, such a level of inequality reduces Gross National Product growth by at least 1% per year. The government plans to cut $1.27 billion through 2026.

If the governments of West Africa were to increase fairly their tax revenue by 1 percent in the next five years, they would raise $56.89 billion. This is more than enough to cancel the planned $26.8 billion budget cuts and build 600 fully-equipped hospitals across West Africa.

Matthew Martin, Director of Development Finance International, said: “West Africa is at a crossroads. Will the region come out of COVID-19 with policies which exacerbate inequality, or implement a recovery plan that works for everyone and not only for the privileged few?”

“The pandemic has taught us it is urgent to invest massively in public education, health and social protection and to use more progressive taxation of income and wealth to pay for this. We also need to increase worker’s rights ― especially for women who disproportionately take on the most precarious jobs.”

Notes

Download Oxfam and DFI’s index “The West Africa Inequality Crisis: Fighting Austerity and the Pandemic” and country profiles.

Oxfam and DFI published in 2019 the first “West African Commitment to Reduce Inequality (CRI) index” showing that West African governments were the least engaged across the continent in reducing inequality.

Download “Adding Fuel to Fire: How IMF Demands for Austerity Will Drive Up Inequality Around the World” for more in-depth analysis on austerity measures encouraged by the IMF through its COVID-19 loans. Between March 1, 2020 and March 15, 2021, all countries in West Africa received IMF emergency support to respond to the pandemic through various types of loans. For more information on austerity measures encouraged in the loans received by West African countries refer to Annex 1 and Annex 2 of the report.

Oxfam Aotearoa reaction to Emissions Reduction Plan

October 13, 2021

The Emissions Reduction Plan is a hodgepodge of responses from Ministers, some of whom appear to not be grappling with the very real urgency of climate breakdown, says Oxfam Aotearoa Campaign Lead Alex Johnston.

“Taking nine months to come up with a discussion document about making yet another strategy is not acceptable. With COP26 less than a month away, the government clearly isn’t taking the climate crisis with the urgency required to keep a safe climate future within reach. Aotearoa needs to do more to achieve its fair share of keeping to 1.5 degrees.

“We think of our friends, colleagues and loved ones in the Pacific and beyond who will have to continue to endure rising poverty and hunger, farmers who are losing crops, family homes being destroyed by rising sea levels, and loss of their whenua and culture.

“We urge the Prime Minister to exert leadership within the Climate Change Response Ministerial Group to get Ministers to come back to the table with policy levers that will reduce emissions further and faster, while leaving no one behind. Every sector has to play its part – this includes our agriculture sector which is responsible for half of our emissions profile, but has no new reductions forecasted before 2025. He Waka Eke Noa is not going to meet the target the Government has set itself. The handbrakes need to be taken off now to allow agriculture to play its part in our collective effort to reduce emissions.

“We call on the Government to support farmers to adopt regenerative farming practices that restore soil, water and air quality, including funding to help them do this; to bring forward the pricing of agricultural emissions in the ETS; and to phase out the use of synthetic nitrogen fertiliser, which has fuelled the growth in the dairy cow numbers over the past three decades.

“It is obvious that there is a missing link between the Draft Plan and level of emissions allowed in the proposed emissions budgets. There is also a huge gap between the plan, emissions and what is needed to step up our international commitments by 2030 to keep to 1.5 degrees. Much bolder action is needed to allow our domestic plan to do more of the heavy lifting in meeting our international target, which itself is too low.

“Taking bold action to reduce climate pollution is still the best opportunity we have to create a just, inclusive and sustainable world where people and planet thrive. The solutions are in our reach, and the public will back Aotearoa playing its part to make that a reality.”

OECD tax deal is a mockery of fairness: Oxfam

October 13, 2021

In response to the OECD’s tax deal announced today, Oxfam’s Tax Policy Lead Susana Ruiz said: “Today’s tax deal was meant to end tax havens for good. Instead it was written by them.”

“This deal is a shameful and dangerous capitulation to the low-tax model of nations like Ireland. It is a mockery of fairness that robs pandemic-ravaged developing countries of badly needed revenue for hospitals and teachers and better jobs. The world is experiencing the largest increase in poverty in decades and a massive explosion in inequality but this deal will do little or nothing to halt either. Instead, it is already being seen by some wealthy nations as an excuse to cut domestic corporate tax rates, risking a new race to the bottom.

“Calling this deal ‘historic’ is hypocritical and does not hold up to even the most minor scrutiny. The tax devil is in the details, including a complex web of exemptions that could let big offenders like Amazon off the hook. At the last minute a colossal 10-year grace period was slapped onto the global corporate tax of 15 percent, and additional loopholes leave it with practically no teeth.

“This deal is an unacceptable injustice. It needs a complete overhaul. The OECD and the G20 must bring fairness and ambition back to the table and deliver a tax plan that won’t leave the rest of the world to pick up their crumbs and scraps.”

Notes to editor

140 countries have been negotiating the two-pillar tax framework under the OECD-G20 umbrella. The first ‘pillar’ aims to make the world’s largest corporations pay more taxes in the country where they earn profits. Based on current proposals, Oxfam estimates that it will affect only 69 multinationals and would only apply on ‘super profits’ above 10 percent. Loopholes could let the likes of Amazon and ‘onshore’ secrecy jurisdictions like the City of London off the hook. Extractives and regulated financial services are excluded from the deal.

New analysis by Oxfam estimates that 52 developing countries would receive around 0.025 percent of their collective GDP in additional annual tax revenue from the ‘Pillar One’ proposal endorsed today.

The second ‘pillar’ seeks a global minimum corporate tax rate. The OECD tax plan dropped “at least” from a proposed minimum global corporate tax rate of “at least 15 percent” and further delayed its full implementation from the previously planned 5 years to 10 years.

The 15 percent rate is well below the UN Financial Accountability, Transparency and Integrity (FACTI) Panel recommendation made earlier this year, which called for a 20- to 30-percent global corporate tax on profits. The Independent Commission for the Reform of International Corporate Taxation (ICRICT) has called for a 25 percent global minimum tax to be applied. 

A 25 percent global minimum corporate tax rate would raise nearly $17 billion more for the world’s 38 poorest countries (for which data is available) than a 15 percent rate. These countries are home to 38.6 percent of the world’s population.

Developing countries are more heavily reliant on corporate tax. In 2018, African countries raised 19 percent of their overall revenue from corporate tax, compared to just 10 percent for OECD nations.