Trase and Imaflora Press Release
The Trase platform and the Brazilian NGO Imaflora launch a brief that evaluates the level of exposure of markets to soy produced on farms without the Environmental Rural Registry (CAR), the first step to the Forest Code compliance. Our results show that 40% of soy produced in properties without CAR was exported to China in 2017. The brief is launched as the Brazilian President Jair Bolsonaro had just come from a visit to China to discuss increased trade.
Soy is Brazil's largest crop by area and its most valuable export commodity. Almost half of all Brazil’s cultivated cropland was used for soy in 2017 (43%). Most of the recent deforestation linked to soy expansion has been in the Cerrado and Amazon biomes.
This brief focuses on the global markets for soy grown on farms in Cerrado and Amazon not registered in the Rural Environmental Registry (CAR), which is a mandatory land registry for all rural properties in the country and a first step for compliance with the Forest Code - a law that establishes the regulatory framework for land use and environmental conservation of the rural properties in Brazil.
Although almost six million rural properties have been registered in the CAR, more than 170 million hectares remain unregistered. Around 2.6 million hectares (12%) of soy plantations are on farms that are not yet registered, which is an area 16 times the size of Greater London.
Under the new Forest Code, farmers must registry information about the environmental compliance of their properties in a public and electronic system. CAR registration is also a requirement when farm owners apply for deforestation licences, which are needed to prove that deforestation is legal.
It is estimated that two-thirds (67%) of the soy grown on unregistered farms was exported in 2017, with almost 40% of this exported to China. The European Union is also exposed to soy from unregistered farms. It is estimated that 12% of the soy grown on unregistered farms was shipped to Europe.
A quarter of the soy plantations on unregistered farms in the Amazon and Cerrado are concentrated in just 15 municipalities, located in the States of Mato Grosso, Mato Grosso do Sul, Bahia and Goiás.
There is no deadline for the CAR registration anymore, as initially defined, but in order to exclude illegal deforestation of the soy supply chain and move forward the environmental compliance of the sector, key stakeholders need to include it as a prerequisite of their purchases and as part of the risk management assessments.
In the brief, Trase and Imaflora recommend the CAR registration to be a requirement of multilateral agreements, such as the Mercosur-EU, and included as a requirement in financial mechanisms, such as the US$ 2.1 billion sustainability-linked loan that the Chinese-owned trading firm COFCO International agreed with a consortium of 20 banks last July, amongst others.
- 88% of the soy plantations in the Amazon and Cerrado biomes are on farms already registered in the CAR.
- 2.6 million hectares of land used for soy in the Amazon and Cerrado are not registered in the CAR.
- A quarter of the soy plantations on unregistered farms in the Amazon and Cerrado are concentrated in just 15 municipalities, located in the states of Mato Grosso, Mato Grosso do Sul, Bahia and Goiás.
- Nearly 40% of the soy produced on unregistered farms in the Cerrado and Amazon is estimated to be shipped to China.
- Nearly 12% of the soy produced on unregistered farms in the Cerrado and Amazon is estimated to be destined for the European Union.
- There is a significant risk that soy production on rural properties without CAR registration in the Matopiba region is linked with illegal deforestation.
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