Switzerland: A global hub in agricultural commodity trade

Due to Switzerland’s supportive business climate, most notably a tailor-made tax regime, a lack of regulation of the commodity trading sector and a stable political setting, the country has become one of the most important trading hubs for commodities. According to estimates by the Federal Statistical Office, Switzerland is currently home to over 900 companies active in commodity trading. Four of the top 5 trade oil, metals or minerals, and one company (Cargill) trades agricultural commodities. These commodity traders top the list of Swiss companies with the highest turnover. Public Eye investigated several of the most significant agricultural commodity traders and their presence here underpins Switzerland's pivotal role as a commodity trading hub.

However, the mere presence of these companies says nothing about Switzerland’s actual market share in commodity trading. It is the very nature of transit trade that fosters the opacity of the sector and makes it difficult to pinpoint numbers: Most commodities are neither physically imported to nor exported from Switzerland, even though the deals are organised and orchestrated by parties in Switzerland. Thus, goods traded via Switzerland usually do not appear in trade statistics and are therefore difficult to track.

Researchers interested in the subject will at some point turn to data provided by the Swiss Trading and Shipping Association (STSA), the most important industry association for commodity traders. The organisation provides some statistics on Switzerland’s market share and these numbers are widely used in research papers as well as in government reports. However, the STSA has never clarified the underlying methodology it uses nor is it clear which timeframe their data refers to.

It its fifth report on the commodity trade sector in Switzerland in 2018, the Federal Council used figures from a study financed by the Federal Office for the Environment on environmental impacts caused by the extraction, production, and transport of commodities traded in Switzerland. These market share estimates are largely in the same range as the ones published by the STSA. To calculate Switzerland’s market share, the authors of the report used a bottom up methodology analysing individual company data, which was then cross-checked with information from literature. Disappointingly, the 2021 report provided neither more precise information nor new figures.

Public Eye has arrived at its own estimates based on a similar methodology including a thorough analysis of media coverage, yearly company reports and data provided from international trade associations. Even going by Public Eye’s conservative estimates and focusing solely on trading companies (not Swiss manufacturers who also buy agricultural commodities, such as Nestlé), the findings confirm Switzerland's central role in the global trade in agricultural commodities.

Public Eye estimates that at least 50% of globally traded grain and coffee and 40% of sugar is dispatched from computers in Switzerland, as well as at least 30% of cocoa, 25% of cotton, and 15% of orange juice.

Lack of transparency

While the absence of concise data is vexing, it is not surprising. The lack of transparency and the discretion of the whole sector give the individual players advantages in the market and can therefore be considered part of their business model. In addition, the majority of the trading companies are private and many of them are family-owned. Only a few are publicly listed and thus obliged to provide a minimum of transparency. 

Despite publishing seven reports on the commodity trading sector, the Federal Council has to date failed to ensure significant transparency either in terms of financial or statistical data, including even basic figures such as combined turnover or tax payments. This lack of data is inacceptable given that transparency is a key prerequisite to determining responsibilities, ensuring accountability, and providing remediation for victims of corporate misconduct. The Federal Council recognised in 2013 that “as the industry […] increases in size it brings with it additional challenges that must be taken seriously”, especially in relation to respect for human rights, the environment of commodities exporting countries and combatting corruption. Nevertheless, the Swiss government has ignored recommendations to regulate the commodities trading sector – for example Public Eye’s suggestion to create a Swiss Commodity Market Supervisory Authority (ROHMA) – in a bid to maintain the attractiveness of Switzerland as a business location. Since commodity trading now accounts for 8% of Swiss GDP – similar to the financial sector which is regulated by FINMA –, the regulation of this high-risk sector is long overdue. 

Around 100 parliamentary interventions directly or indirectly addressing the commodity sector were submitted since the publication of Public Eye’s 2011 book on the commodity trading sector in Switzerland. Of the several postulates and motions proposed to the Federal Council – which require the Council to take a position – the Council hardly accepted any. It is opting instead to rely on the sector to “conduct itself responsibly, and with integrity”. This is extensively documented in Public Eye’s shadow report to the Federal Council’s 2018 commodity report.