Supply Chain Council of European Union |
Supply Chain Risk

Ikea, Carrefour, Ahold Delhaize urge Brazil to maintain soy deforestation ban

Dive Brief:

  • More than 60 investors, suppliers and retail groups representing roughly $2 trillion in assets sent a letter to the Brazilian government urging it to uphold the 2006 Amazon Soy Moratorium (ASM), which bans the trade of soybeans grown on recently cleared land.
  • “Our position is clear: we want to be able to continue to source from, or invest in, the Brazilian soy industry but if the ASM is not maintained, this will risk our business with Brazilian soy,” reads the letter organized by the sustainability-focused investor coalition FAIRR and signed by Ahold Delhaize, Carrefour, Ikea, Marks and Spencer, Tesco, Seventh Generation, Waitrose and more.
  • Farmers say the ASM is too restrictive and are lobbying to throw it out, claiming to have the support of Brazilian President Jair Bolsanaro, according to Reuters. The letter’s signatories contend the existing capacity to increase Brazil’s soy output by 600% using existing land is reason enough for local authorities to continue upholding the ASM. Brazil’s soybean traders association Abiove is in favor of upholding the agreement, which was also signed by global grain traders.

Dive Insight:

When the Amazon fires caught the attention of the world in August, soy-purchasing supply chains had an incentive to achieve transparency. No business wants to be caught contributing to the destruction of the world’s most import check on climate change — the Amazon rainforest.

However, deforestation in Brazil has nuances that make it more difficult to identify in supply chains — potentially protecting the practice from the usual pressures raw materials buyers can exert to prevent it.

The first challenge is the overall complexity of the soy supply chain, Katie Anderson, supply chain manager for the Environmental Defense Fund, told Supply Chain Dive. Brazil is a rising global player in the soy supply chain, especially since the U.S.-China trade war has sent the world’s largest soy buyer, China, shopping for sources.

With a considerably more complex supply chain than other deforestation-risk crops like oil palm, and more variation in uses and forms, tracking soy from source to end-user may not be a realistic or prudent use of resources, said Anderson.

“Companies can work through their supply chain, and that’s really important. But to really reach systemic change, government also has to be involved. And in a place like Brazil with what we’re seeing right now, that can be challenging,” said Anderson, who added that President Bolsanaro’s laissez-faire attitude toward environmental concerns has emboldened farmers who may have previously abided by the trading ban.

The ASM was relatively effective in decreasing the likelihood that the forest would be cut for soy cultivation starting in 2006, but the practice continues for other purposes. The new letter is addressing concerns that Brazil could backslide.

“While soy produced in the Amazon is only around 10% of Brazil’s total soy production, the ASM provides reputational benefits for the whole Brazilian soy sector and its $32 billion annual trade,” reads the letter.

Today, the majority of deforestation in Brazil is owed to cattle grazing. So why are international pressure efforts focused on soy? Anderson said that’s where the leverage is.

“Brazilian beef is the major driver of deforestation, and 80% of that stays in Brazil. So it’s consumed domestically. These international players and international companies have less of an opportunity to impact cattle production in Brazil,” Anderson said of international efforts in general and not this letter specifically. To end deforestation on the whole in Brazil, much more immersive work in cattle producing areas and in government will be necessary.

Furthermore, just as the investors expressed that more productivity can be gleaned from existing land, Anderson’s work in Brazil’s cattle industry also includes educating ranchers and encouraging better agricultural practices so existing land can be more productive and farmers feel less of an inclination to clear more forest areas.

Related posts

Quad Joint Leaders’ Statement | The White House


Guterres condemns attack on Abu Dhabi airport and oil facility |


Q&A: Climate change and risks for future health crises