Trase Yearbook 2020

The state of forest risk supply chains

A review of commodity deforestation and expansion, the traders and markets that dominate exports and their exposure to associated deforestation risk, and the effectiveness of zero-deforestation commitments for half of global trade in forest-risk commodities.

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Trends in commodity expansion and deforestation

The value of cross-border trade in agricultural and forestry commodities increased threefold between 2000 and 2018, from around US$500 billion to US$1.5 trillion. The production and trade of these commodities makes a major contribution to the economies of many countries. In 2018 soy was the most valuable export commodity in Brazil (US$33 billion), Paraguay (US$2.1 billion) and Argentina (US$8.9 billion); palm oil (along with its derivatives) was the second most valuable export commodity for Indonesia (over US$20 billion, after coal), while the Brazilian cattle sector overall was worth as much as 8% of the country’s GDP.

The IPCC’s Special Report on Climate Change and Land in 2019 found that 12% of all anthropogenic greenhouse gas (GHG) emissions were from land-use change. Two thirds of these came from tropical deforestation, the major driver of which is the expansion of agriculture to produce globally traded commodities such as beef, palm oil and soy.

Deforestation rates linked directly and indirectly to commodity expansion remain high and are increasing in many parts of the tropics. Data from the University of Maryland, released on Global Forest Watch in June 2020 recorded an increase of 2.8% in the loss of primary forest in 2019 compared to the previous year, and the third highest rate since 2000. A third of the total forest loss recorded in 2019 across the tropics was in Brazil; rates also remain high or are increasing in many neighbouring countries, including Bolivia, Paraguay, Peru and Colombia. New agricultural frontiers raise the prospect of potential further increases in deforestation in the coming years, including in the expansion of oil palm plantations in West Papua and Colombia and soy in the Paraguayan Chaco .

However, according to the Global Forest Watch data there are also positive signs, including a three-year drop in the amount of forest loss across Indonesia as a whole, as well as a marked drop of 50% in primary forest loss in Ghana and Côte d’Ivoire – albeit after decades in which both countries lost the vast majority of their primary forest.



Focus on soy and beef production

To date the work of Trase has centred on Latin America, and the biomes of the Amazon , the Cerrado , the Atlantic Forest and the Gran Chaco , where the expansion of cattle pasture and soy cropland are the main drivers of deforestation . In each of these biomes total deforestation in recent years is more than 70% lower than at its peak in the last two decades, although the Brazilian Amazon saw deforestation increase by 220% between 2014 and 2019, in which time 1.01 million ha were lost. There have also been increases in neighbouring Amazonian countries of 42% (comparing 2000–2014 with 2014–2017) . The dismantling of environmental protections in some countries, especially Brazil, is raising concerns that these increases will continue and may even accelerate.

Across all biomes, pasture is by far the main land use to occupy newly cleared land within five years of deforestation, with estimates of pasture deforestation for 2018 reaching 81% for the Brazilian Amazon, over 95% for the Paraguayan Chaco , and 54% for the Cerrado. However, the annual rate of pasture expansion has fallen sharply across all three biomes in recent years while at the same time the rate of crop expansion has rapidly increased – driven in particular by soy.

Since 2008 soy has been the most rapidly expanding crop in the Amazon, the Cerrado and the Chaco, rising by 270% in the Amazon (an increase of 2.6 Mha), 43% in the Cerrado (increase of 4.1 Mha) and 200% in the Matopiba region of the Brazilian Cerrado alone (an increase of 2.0 Mha). The majority of soy expansion has been into existing pastureland, with soy currently occupying 23% of the pasture that was lost in the Cerrado between 2008 and 2019, and 22% of the pasture lost in the Amazon in the same period.



Illegal deforestation and Brazilian soy: the case of Mato Grosso

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Nevertheless, soy remains an important direct and indirect driver of deforestation. Thanks to the Amazon Soy Moratorium there has been very little deforestation directly linked to soy in the Amazon since 2008 (although deforestation continues within soy-growing farms but in areas that are not planted with soy – with most of this deforestation being illegal). Direct conversion of the Cerrado for soy has declined by over 70% since the early 2000s, but Trase estimates that soy will occupy at least 15% of the land that was deforested in 2018 by 2023 (amounting to nearly 100,000 ha).

In the Argentinian part of the Gran Chaco, where soy has historically been a major driver of deforestation, annual clearance fell by more than 70% between 2015 and 2018 (the years Trase is reporting exports for). In neighbouring Paraguay, clearance of the Chaco fell at around the same rate between 2013 and 2018 but very little, if any, of the deforestation in the Paraguayan Chaco to date has been for soy. However, are concerns that without strong environmental protections, continued and rising demand for exports combined with the introduction of new drought and salt-resistant crop varieties and the promise of new infrastructure developments have the potential to reverse the trend, especially in Paraguay.



The sharp fall in the conversion of native vegetation for soy expansion across the Amazon, Cerrado and Chaco should be seen as good news. However, there are two critical caveats to keep in mind: the spectre of indirect land-use change, and the fact that in the more denuded biomes of the Cerrado and especially the Chaco, the declining levels of deforestation are partly due to the dwindling amounts of native vegetation that are left to clear.

Indirect land-use change

Estimates of direct deforestation for each commodity only tell part of the story when it comes to the role of each commodity in driving forest loss. If we step back far enough in time all of the agricultural cropland in the Amazon, the Cerrado and the Chaco was, of course, once native vegetation. But even as little as 10 years ago, approximately 7.5% of today’s soy cropland in the Brazilian Amazon was covered by native vegetation, with 8% in the Cerrado and 6.4% in the Chaco – indicating the importance of longer-term market speculation for export crops like soy in driving wider deforestation dynamics.

Indirect land-use change deforestation linked to soy threatens prospects for sustainable intensification in Brazil

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It is impossible to disentangle the importance of land speculation linked to high-value export crops like soy from longer-term deforestation dynamics. Analyses by Trase have found that in both the Brazilian Amazon and the Cerrado, for every hectare of soy expansion onto pasture there is at least one hectare of pasture expansion onto forest. This dynamic strongly suggests that soy might be indirectly linked to deforestation via the displacement of cattle pasture .

Deforestation impacts are about more than absolute numbers

As for the second caveat, both time and geography matter. As biodiverse tropical ecosystems are diminished in size, a hectare of deforestation today is a far greater loss than it would have been a decade ago.

For example, the Brazilian Amazon and the Cerrado both have lost approximately 20 Mha to agricultural expansion since the early 2000s, but the relative impact on the Cerrado has been much greater as it is less than half the size of the Amazon.

In crude terms of hectares of deforestation per hectare of forest remaining, one hectare deforested in the Chaco has 1.3 times the impact of the same loss in the Cerrado and 6.5 times the impact of the same loss in the Amazon. If the deforestation rate from 2010 to 2018 continues, by 2100 we will lose the equivalent of 75% of the native vegetation in the Cerrado and virtually all of the Chaco.

In biomes that have lost most of their original extent and where the majority of remaining vegetation is in areas that are unsuitable for farming (including areas that are within protected areas), levels of clearance necessarily go down over time. A particularly striking example of this is the case of the Atlantic Forest in Paraguay, which has been the main frontier of soy expansion in the county, and where only very small and degraded forest remnants amounting to less than 200,000 ha remain in a handful of protected areas.