Soy is the commodity imported into the EU that caused the most deforestation between 2005 and 2017. The brunt of this deforestation has been borne in Brazil's soy-producing Cerrado region, where most of the deforestation and conversion of native vegetation and associated biodiversity loss is occurring.
A new report by Harvest and Rainforest Foundation Norway finds that this trend is accelerating rather than reversing. The European Commission has proposed legislation to mitigate the impact of European soy imports on deforestation, but it remains unclear the extent to which these deforestation hotspots will be covered by the UN Food and Agriculture Organization (FAO) forest definition suggested by the European Commission as a basis for the legislation.
“The Cerrado is a case in point: The European law for deforestation-free supply chains needs to go beyond forests-only. We need a European law for ecosystem-destruction-free supply chains," notes MEP Delara Burkhardt (S&D), European Parliament’s rapporteur on the European Parliament's legislative initiative report on deforestation-free supply chains.
"Ecosystems like savannahs, peatlands and wetlands need to be urgently covered by this law. Otherwise, pressure to give way to agricultural expansion will simply shift to these ecosystems, which have a similar value for climate and biodiversity protection to that of forests.”
Soy industry resists traceability
In 2019 the Soft Commodities Forum (SCF), a platform formed by six major soy traders ADM, Bunge, Cargill, COFCO, LDC and Viterra (formerly known as Glencore Agriculture), selected 25 municipalities in the Cerrado with high deforestation-risk, as areas for prioritized coordinated action. In 2021, this list was expanded to a total of 61 municipalities, which encompass 70% of recent native vegetation conversion to soy in the Cerrado.
This analysis gives a clear indication that the major soy trader’s are not being effective in their approach to tackling deforestation and conversion of native vegetation. In addition to the trends described above, 235,917 hectares has been deforested in the 61 municipalities between August 2020 and July 2021. Any soy grown on this area is non-compliant with the 2020 cut-off dates set by various soy buyers and industry standards.
Most soy traders including ADM, Amaggi, Bunge, Cargill, Bunge, LDC and Viterra have zero-deforestation commitments encompassing all their soy volumes, regardless of the market it is sold to. But in a recent article in the Guardian, ADM, which holds the Fediol vice-presidency, suggests that the current EU proposal is problematic for the industry and advocates for mass balance instead of the current suggestion to require traceability for the commodities placed on the EU market.
This statement is surprising given ADM’s own policies to not trade in soy that has caused deforestation in their entire operations for all volumes traded. To reach their own zero-deforestation commitments the soy traders have to develop systems for traceability and reporting, which includes geolocation. Industry criticism, therefore, that geolocation and traceability will raise the cost of soy if the European Union adopts this regulation is disingenuous.
Without full traceability, the regulation could risk not impacting deforestation and conversion caused by soy production. This is because companies could meet EU demand with volumes produced on areas deforested before the 2020 cut-off date. They could also continue to deforest high-risk areas without the need for traceability or control mechanisms. Given that most soy is grown in areas deforested before the 2020 cut-off date, attention needs to be given to the few selected high-risk areas.
“The shortcomings of voluntary private sector pledges are evident and it is now up to EU legislators to ensure effective mechanisms to curb deforestation and the loss of biodiversity” says Anahita Yousefi, director of the NGO Harvest.
Investors and customers of the traders must look at the results and deforestation dynamics associated with soy production, rather than simply assessing traders based on their corporate zero-deforestation policies.
“The soy industry has for too long been allowed to destroy some of the world’s most valuable ecosystems. We are encouraged to see that investors such as Storebrand are putting high deforestation-risk traders on watchlist, other responsible investors should accelerate their action on mapping their exposure and managing the deforestation-risk in their portfolios,” notes Nils Hermann Ranum, Head of the Drivers of Deforestation Program, at Rainforest Foundation Norway.
"This report comes to prove once again that only voluntary measure against deforestation from market agents isn't enough. We need an underlying national policy. Right now, we don't have legal tools to enforce the soya sector to comply even with their own commitments. This makes the new EU proposal of a regulation against imported deforestation a vital instrument for getting the private sector to clean up supply chains, in soybeans and other commodities", said Marcio Astrini, executive secretary of the Climate Observatory, a leading network of 70 Brazilian NGOs.
Please see the full report here: State of the Soy Industry.