Brazilian soy and deforestation: challenges and opportunities

On 7 December, Trase held a webinar to discuss the findings of its latest research into deforestation in Brazil caused by the expansion of soy plantations. The event coincided with the agreement of a new EU regulation that will require mandatory due diligence on imports of agricultural commodities such as soy from Brazil to ensure they are deforestation-free.

Dr Tiago Reis, Trase engagement lead in South America, said the results showed that the Cerrado and Pampas biomes are the most active hotspots of deforestation for soy. In the five years to 2020, soy plantations in the Cerrado were associated with 264,000 ha deforestation – an area almost twice the size of the city of São Paulo – and 196,000 ha of deforestation in the Pampas. By comparison, soy grown in Brazil’s best-known biome – the Amazon – was linked to 76,400 ha of deforestation in the same period.

Despite this, the new EU regulation only applies to areas categorised as ‘forest’ and fails to protect vast areas of wooded savannah and grassland which make up most of the Cerrado and Pampas. Although the new regulation is a major step towards deforestation-free commodity supply chains, Dr Reis said that it fell short by leaving the Cerrado and Pampas vulnerable to increasing exploitation.

Laurent Javaudin, counselor for climate, energy, environment and health at the EU delegation to Brazil, observed that press headlines stating “Cerrado is excluded” are partly inaccurate, since all Brazilian soy exports to the EU must have a due diligence statement, and therefore the Cerrado is covered by its traceability requirements.

He added that 26% of the Cerrado was covered under the forest definition, according to Trase data, while the European Commission’s figure was slightly higher. Moreover, the regulation requires the Commission to reconsider the inclusion of other wooded lands within one year after its entry into force. “It is not the end – it is the end of the beginning,” he said.

Trase data shows that China is the largest export market for Brazilian soy and is most exposed to deforestation, followed by Brazil’s own domestic market.

Mr Javaudin said that the EU would increase its engagement with producer and buyer countries, including China. He said EU delegates will be meeting China’s representatives at the COP15 biodiversity conference in Montreal. “We will explain to our Chinese partners what we are doing, why it is important and hopefully see them follow suit on the same type of approach,” he said.

Voluntary action has limited success

The results show that the large, well-known commodity traders Bunge, Cargill, ADM continue to be the most exposed to deforestation in Brazil, recently joined in the top five by Olam and Gavilon which have expanded their operations in the country.

Many commodity traders have made ‘zero-deforestation commitments’ to stop sourcing soy grown in deforested areas. However, by 2020, only half of soy producing areas in Brazil were covered by zero-deforestation commitments. Even in areas of the Amazon covered by the Soy Moratorium, Trase finds that 133,000 ha of deforestation linked to soy production had taken place in the ten years to 2020.

Lisandro Inakake de Souza, project coordinator of the climate and agricultural supply chain initiative at Imaflora, said that voluntary sectoral or company commitments and reporting had proved limited in delivering an effective deforestation and conversion-free supply chain. Through its ‘Soy on Track’ programme, Imaflora is working to strengthen zero-deforestation commitments and improve the quality of corporate progress reports.

Lucie Smith, senior manager at the Soft Commodities Forum, said its agribusiness members publish bi-annual reports that disclose deforestation and conversion-free performance based on actual company data for direct and indirect sourcing. Through the Agriculture Sector Roadmap to 1.5°C, the forum is working to align commitments across the whole sector. “Companies don’t move at the same pace, they don’t have the same pain points, sourcing profiles or top management, so company DNA varies when it comes to tackling deforestation and native vegetation conversion,” she said.

Hotspots of deforestation revealed

Trase’s new data reveals that just 13% of soy-producing municipalities (309 out of 2,388) in Brazil accounted for 95% of deforestation in 2020, while the remainder were at low risk.

“A risk-based approach to due diligence should favour sourcing from these low-risk areas while helping to target regulatory measures at high-risk areas,” said Dr Reis. “Increasing transparency in commodity supply chains will make it easier for responsible producers and traders to demonstrate that their products are deforestation-free and meet requirements of international markets.”

In a poll, the webinar audience were asked what is most urgently needed to make the Brazilian soy sector sustainable. Over half thought that Brazil’s government should act to improve land-use planning, monitoring and oversight for commodity production.

Dr Reis said that Brazil should implement a robust, open and transparent system for commodity supply chain traceability. He gave the example of Indonesia where transparency commitments mean that 87% of palm oil exports are sourced from refineries which publicly report on the source of their supplies.

Debora Dias, senior manager at the Consumer Goods Forum, said it is incredibly important for companies, governments and other supply chain actors to have access to transparent data to inform decisions and demonstrate impact and results. “The data that Trase provides is very helpful in this endeavor,” she said.

Read an Explainer of the key findings: Connecting exports of Brazilian soy to deforestation

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Watch a recording of the Trase webinar: Brazil’s soy sector – Challenges to a nature-friendly future