Is Soy the Next Palm Oil?

Tropical forests continue to be threatened by rampant agricultural production of key commodities, such as palm oil, sugarcane, and soybean. While these commodities are traded and consumed the world over, the bulk come from just a handful of countries where they are produced. According to 2016 FAO data, more than 80% of palm oil was produced in just two countries: Indonesia (53%) and Malaysia (29%). And over 80% of soybean was produced in three countries: the United States (35%), Brazil (29%) and Argentina (18%). Meanwhile, almost 40% of the world´s sugarcane was produced by Brazil alone.

Specifically, levels of soy production has become an ever-greater factor in the deforestation debate. Soy is now South America’s most traded agricultural commodity – with production soaring in response to growing global demand, largely for soy as an animal feed to keep pace with our appetite for meat, eggs and dairy.

This worries environmentalists because much of the world’s soy is coming from the Tropics which are at serious risk of deforestation. Expansion of soy since the 1970s in Brazil, Argentina and Paraguay has seen almost half of the important ecosystem provided by the Cerrado grasslands completely wiped out. According to PRODES, the Brazilian government’s monitoring agency, some 1.8 million hectares of soy in the Amazon (40% of the total area) in 2016 had been native vegetation six years before.

Important for economic growth

Yes, productivity rates have improved, with farmers in Brazil managing to triple yields since 1970 – from 1.1 tonnes to 2.9 tonnes per hectare – the rate of soy expansion certainly gives cause for concern.

Of course, producing agricultural commodities that are bought and traded globally is hugely important to growing economies in places through the Tropics. The newly-elected President of Brazil, Jair Bolsonaro, has indicated a desire to allow further expansion of plantations and mining operations into forests to boost economic growth. 2016 figures suggest that in Brazil, sugarcane, soy and maize – the three largest crop commodities by production volume – contributed 3.4% of GDP, with soybeans being Brazil’s most valuable export commodity, worth more than US$20 billion.

Deregulation poses its own threats over the short term. But the fact that the area cultivated for soy production in Brazil grew 25 times between 1961 and 2016, for example, is having a big impact. Expansion on such a scale is playing a big role in deforestation and the loss of important habitats such as the Amazon and Cerrado landscapes of Brazil, and the Gran Chaco of Argentina and Paraguay.

The corporate response

Clearly soy poses as big a threat as much-debated palm oil in the context of deforestation. Unlike palm oil, soy is something of a hidden commodity because much of it is not directly consumed, rather it is embedded in animal products. And it is these extra layers of supply chain that create more complexity for those at the end of the chain, such as manufacturers and retailers.

According to Trase, more than 42% of all soy exports from Brazil in 2016 were covered by a form of corporate zero-deforestation commitment made by soy traders, proving that many companies are now including soy as part of their sustainable sourcing policies. This is supported by the Amazon Soy Moratorium which has helped to reduce soy-driven deforestation in the Amazon. Elsewhere, the Cerrardo Working Group has effectively convened players across the sector players to find ways to eradicate deforestation – or land conversion for soy – in the crucially-important biome as quickly as possible.

While the uptake of independent sustainability certification for soy has not kept pace with that seen in the palm oil sector, for example, developing principles and guidelines at a local level is proving popular. Alongside the global Roundtable for Responsible Soy (RTRS), there are a number of regional roundtables across Europe supported by the governments signed up to the Amsterdam Declarations.

In China, a regional approach is being used to learn from the experiences of buyers and traders of soy in Europe, while developing solutions adapted to the China context, given both the cultural and market situation differences. As such, the Chinese soy industry, under the Sustainable Soy Trade Platform, is developing China Responsible Soy Sourcing Guidelines.

What happens next?

Soy will continue to expand. The ongoing US-China trade wars will see more soy traders switch to South America. In fact, government projections of Brazilian soy production suggest 10 million hectares of land will be converted to soy within the next 10 years.

But that doesn’t necessarily mean that more forests will be lost. In the Cerrado alone, around 20 million hectares of already cleared land is said to be suitable for soy. Driving production to these areas will need to be prioritised and incentivised – something that will demand ongoing collaboration, collective action and greater transparency across supply chains.