Soya: a hot commodity
The soya industry is booming across the world. Since April 2011 the global production of soya has risen 35% in response to widespread demand for the hardy, protein-rich bean. It may come as a surprise to some that it is a common ingredient in chocolate and soap, in addition to its more obvious presence on our shelves as tofu or vegetable oil. However, the greatest demand is from the animal feed industry. Livestock farmers and feed manufacturers favour soya as it has the highest protein content per hectare of any crop, making it a more efficient investment. It also provides a greater complement of essential amino acids, minimising costs spent on supplements for their animals. A sizeable 75% of soya grown is used to make animal feed.
Unfortunately the benefits of soya have been bad news for forests in Latin America.
The other end of the supply chain
Brazil, whose largest export is soya beans, currently only faces competition from the USA as the top producer in the world. Meanwhile, its forests, and those of nearby Argentina, Bolivia and Paraguay, are suffering the spread of soya plantations.
Deforestation in these areas has been vast, with the soya industry being a major contributor, expanding by one million hectares in the Brazilian Amazon between 2001 and 2006. Often soya is an indirect driver through its displacement of cattle ranches, pushing them deeper into the Amazon. Soya is one of the top four agricultural supply chains driving deforestation in Brazil and so presents a very significant risk to Brazil’s water, energy and food security, not to mention the incredible biodiversity found in the country’s tropical forests.
Soya’s sustainable future
The indefinite extension of the Soy Moratorium last week therefore came as extremely welcome news for NGOs and companies committed to zero deforestation goals. This opt-in scheme was established by the private sector and prevents use of soya grown on land deforested post-2006. The result is that soya’s share of recent Amazonian deforestation has declined from one fifth to less than 1%. The 1.3 million hectares of new soya plantation that have appeared have instead spread into land already cleared.
Meanwhile, Brazil’s controversial new Forest Code is also being strengthened. Government-led, this policy has been blamed for facilitating a spike in deforestation, reported in 2013 to have increased by 29%. However, Brazilian financial institutions are now weighing in, refusing loans to farmers and smallholders that don’t comply. These institutions can have a significant influence on company behaviour by ensuring their lendings and investments do not contribute to deforestation (see the Forest 500 for assessments of financial institutions that lend to or invest in agricultural companies).
Such synergies between private sector and public sector policies can be crucial to guarantee their success and prevent them from being undermined. As much as 80% of current Amazonian deforestation is due to illegal activity. Moreover, the lucrative performance of the soya industry in the midst of Brazil’s economic crisis has elicited questions as to whether the government may have limited influence in the future.
A major concern is the leakage of deforestation into areas not covered by the soy moratorium, such as Brazil’s savannah ecosystem, the Cerrado, as well as the Amazon biome beyond Brazil. Another is “on-property leakage” – the clearing of forested land within moratorium-controlled areas for other purposes, such as cattle grazing.
The history of other sustainable soya initiatives is thus far a patchy one. The Roundtable on Responsible Soya has had some success, with over 1.3 million tonnes of RTRS Certified Responsible Soya purchased in 2014. Despite this, for a variety of reasons, it only has about 180 members, which, by way of comparison, is far less than the 2,500 members of the Roundtable on Sustainable Palm Oil (RSPO). Assessments of companies in the 2015 Forest 500 rankings show only 22% of Forest 500 companies in the soya supply chain have soya-specific sustainability commitments in place. In contrast, 62% of those dealing in palm oil have commitments, illustrating the lack of attention soya has been afforded.
It is clear that more needs to be done to ensure soya production does not endanger valuable ecosystems.
Spotlight on China
China is the world’s largest importer and consumer of soya for animal feed – its population’s increasing disposable income means consumers have the opportunity to incorporate more meat into their diets. It is currently Brazil’s top destination for soya bean exports and by 2020 is expected to increase its imports by 50%.
Many companies based in China are currently performing poorly in terms of achieving sustainable practices, as reflected by their scoring in Forest 500 rankings. Forest 500 found that in 2015, the 16 most important Chinese-headquartered companies in the soya supply chain had no commitments to ensure their soya procurement was deforestation-free.
As the world’s largest importer and consumer of soya, China could be solely responsible for a significant reduction in new deforestation if its companies were to put in place zero deforestation commitments, ensure these are followed through to suppliers, and increase the transparency of their operations.
Encouragingly, two of the biggest companies involved in Brazilian-produced soya, Bunge Ltd. and Cargill Inc., were found to have robust policies to address deforestation in their supply chains. Cargill Inc. is a New York Declaration signatory, committed to achieving zero deforestation by 2020. It is also one of the partners responsible for setting up the Soy Moratorium in 2006. Also, Archer Daniel Midlands Co., which, along with Bunge Ltd., Cargill Inc., and Louis Dreyfus Co. is one of the four largest soya traders in the world, has recently developed a new progress tracking tool.
However, a consolidated effort is now crucial to ensure the good work achieved through the Soy Moratorium continues. As well as participating fully in the moratorium, actors within the supply chain, e.g. animal feed producers and consumers, need to make individual, long-term sustainability commitments. In detailing their own time-bound goals, corporate actors can build on the moratorium’s positive impacts, and prevent leakage, by covering their operations in, for example the Cerrado. This should be extended to the Amazonian biome outside Brazil, forests in Argentina and Paraguay, and other areas in which soya is an emerging commodity driving deforestation. They should also cover other forest risk commodities, such as cattle.
Additionally, traceability back to source of the commodity is key, allowing informed decisions to be made on where to change practice, change suppliers or direct money. Coupled with a time-bound zero deforestation commitment, strides can be made in ensuring the health of Latin American tropical forests.
Even though there are challenges ahead, we can be hopeful about the future mitigation of soya-caused deforestation. The Soy Moratorium’s importance in conserving the Amazon has been recognised. Companies in the soya supply chain should continue to embrace their powerful role in achieving zero deforestation. By closing the gaps in Latin America and implementing further policies in emerging soya-producing countries they can help make soya a zero-deforestation commodity.
Author: Sophie Smith, Volunteer, Global Canopy Programme
Contributions: Christina MacFarquhar, Analyst, Global Canopy Programme