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Soy giant Louis Dreyfus pledges deforestation-free supply chain

  • The Louis Dreyfus Company (LDC), a global commodities trader, has announced a plan to eliminate the destruction of native vegetation from its soy supply chain in Brazil and across Latin America. Particularly important to environmentalists, LDC pledges to avoid buying soy from producers who have caused new deforestation in the Cerrado biome.
  • The Amazon Soy Moratorium, instituted in 2006 via an agreement between Greenpeace and global commodities companies, has been credited with vastly reducing the cutting of forests to make way for soy planting there. But the companies, until now, have resisted making a similar commitment in the Cerrado, where soy-caused deforestation is rampant.
  • Many environmentalists are hailing LDC’s new deforestation commitment, though they note that the pledge has yet to be backed by implementation and timeline details.
  • Tesco, the UK’s biggest supermarket chain, has also just announced the planned launch this year of a certification system that will only source soy from areas that have been certified as deforestation-free. From 2025 onward, the company also plans to transition to sourcing only from “zero deforestation areas.”
A Louis Dreyfus Company (LDC) grain and oilseeds processing facility and warehouse in Brazil. LDC has just made a sweeping commitment to eliminate deforestation from its supply chain in Brazil and across South America. Image courtesy of the Louis Dreyfus Company.

This month, Louis Dreyfus Company (LDC), one of the world’s largest commodity traders, became the first major soy company to announce a well-articulated policy to eliminate the destruction of native ecosystems and endangered wildlife from its soy supply chain.

The policy, coupled with LDC’s sustainable track record to date, appears to show a genuine commitment to tackling dangerously high levels of deforestation taking place across Brazil and wider Latin America.

“As a leader in agribusiness, LDC has a key role to play in addressing the [deforestation] challenge,” said Gonzalo Ramírez Martiarena, the company’s CEO.

LDC’s new policy applies not only to the Amazon rainforest, but also the vast Brazilian savannah known as the Cerrado, a biome that spans 1.2 million square miles (310 million hectares). The region has garnered global attention from environmentalists because commodities companies that had promised to reduce Amazon deforestation after 2006, simply shifted their focus to Cerrado soy production, leading to widespread destruction of native vegetation in the biome, as soy growers aggressively expand their crops.

Large-scale soy production is rapidly displacing native vegetation in Brazil’s Cerrado. Image by Flávia Milhorance
Soy has become a ubiquitous ingredient in consumer products. And with global demand exploding, agribusiness has rushed to meet the demand, creating a major threat to the forests of Brazil and other Latin American nations. Photo on Visual Hunt

More than 10,000 plant species, 900 types of birds and 300 mammal species live in the Cerrado, but today, less than half the region exists in its natural state. Large commodities companies had, until now, resisted pleas to impose deforestation pledges there.

“Louis Dreyfus is committing to, and has already made progress on, providing a verified large scale source of deforestation-free soy for the world,” said Glenn Hurowitz, CEO of the environmental NGO Mighty Earth, which has spent years investigating the effects of soy expansion on native vegetation in Brazil and Bolivia.

In its new voluntary pledge, LDC has committed to engage with producers, working groups and stakeholders to eliminate the conversion of native vegetation in the Cerrado, as well as to set a realistic target date for their actions.

A recently cleared portion of the Cerrado. The biome is home to 44 percent of Brazil’s agriculture. The forests and native vegetation that remains there is fast vanishing, converted to soy, corn, cotton, sugarcane and other crops. Photo by Rhett A. Butler / Mongabay.

Environmentalists Respond

While Bunge and a few other traders have made similar pledges in the past, environmental NGOs say that little has materialized in the form of concrete steps, including incentives for soy farmers who reduce deforestation, or punishments for those who are non-compliant.

Hurowitz stresses that the strong support that LDC has shown over the last several years for extending the 2006 Amazon Soy Moratorium to the Cerrado, and the company’s selective approach to sourcing, make their commitment evident and their promises trustworthy.

Louis Dreyfus’ new policy extends to all of its soy supply chains in Latin America, not only the Brazilian Amazon and Cerrado – likely demonstrating the firm’s interest in expanding its agribusiness operations onto Latin America’s existing one billion-plus acres of degraded land, instead of clearing intact native vegetation.

Hurowitz believes there is still more LDC could do to ensure their soy supply chain is deforestation-free; including the listing of their soy suppliers online and the development of a clear timeline for the implementation of the new strategy.

Arnaldo Carneiro Filho, Director of the Supply Chains Programme at Global Canopy, an NGO, has spoken extensively with LDC about their pledge and cautions that the company’s deforestation commitment, while it has generated a great deal of PR and media attention, has not resulted so far in a detailed action plan stating clear objectives and deadlines.

Legal Amazonia encompasses the Amazon biome, and a portion of the Cerrado biome. But the Amazon Soy Moratorium as negotiated in 2006 covers only the Amazon biome, and none of the Cerrado. Many large commodity companies continue to resist inclusion of the Cerrado in the soy moratorium. Environmentalists hope that the new Louis Dreyfus Company policy will encourage other firms to remove deforestation from their supply chains. Image by Mauricio Torres.

However, according to Carneiro Filho’s analysis, LDC has less of a challenge ahead in curbing deforestation due to soy production compared to other large scale traders. That’s because LDC’s deforestation footprint is already very small – their presence is mostly located in already consolidated soy growing areas.

Still, Carneiro Filho believes the company deserves credit for stepping forward and making a sincere commitment to finding a workable solution to the problem of widespread deforestation in high-risk regions like the Cerrado.

Hurowitz is more unequivocal in his support. “LDC has shown today that it is possible to source deforestation-free soy on a large scale,” he said. “We call on the entire meat supply chain to immediately shift their sourcing to responsible suppliers like Louis Dreyfus.” Large transnational traders like Cargill and ADM, and Brazilian commodities giants like Amaggi, have yet to make similar continent-wide deforestation commitments.

Tesco, Britain’s largest supermarket chain, this month made a commitment to eliminating new deforestation from its supply chain, a policy conservationists applaud but which, they say, still lacks a detailed implementation plan and timeline. Image by Maxwell Hamilton licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Further down the supply chain, Tesco leads the way

Seventy companies, including many retailers, have signed a statement of support for the Cerrado Manifesto, a call to action issued in 2017, urging urgent action to halt the conversion of native vegetation in the Cerrado biome. The UK’s biggest supermarket, Tesco, was one of the core supporters of this pledge, and many of the same principles have informed its “Soy Transition Plan” issued earlier this month.

This year, Tesco says, it will launch a certification system meaning it will only source soy from areas that have been certified as deforestation-free.

While environmentalists laud the pledge, they have concerns about Tesco’s new policy. In a blog post Tesco Responsible Sourcing Manager Daniel Salter admitted that while soy credit schemes like the one Tesco is putting forward are an important first step, “certification on its own has not halted forest loss” worldwide.

By 2025, the company says that it plans to transition to sourcing only from “verified zero deforestation areas.” Asked for clarification about how designation of these areas will be made, Tesco responded: “A verified zero deforestation area is an area where there is a credible zero deforestation policy for soy production supported by effective monitoring and verification of compliance to this policy (e.g. soybeans grown in the Amazon that are compliant with the Amazon Soy Moratorium are from a verified zero deforestation area).”

Mighty Earth’s Hurowitz pointed out that Tesco’s plan “lacks meaningful timelines,” but he is “encouraged that the company has committed to rapidly investigate and take action on its supply chain in response to the Brazilian government’s large fines against Cargill and Bunge for illegal destruction of native vegetation.” In May of this year, the Brazilian environmental agency IBAMA fined grain exporters and farmers, including Cargill and Bunge, R$105.7 million (US$29 million) for illegal deforestation.

“Beyond our own supply chain, we hope that our plan inspires similar action across the industry – in line with our commitment to lead the industry in addressing sustainability challenges in our supply chains,” said Salter.

Mongabay contacted fast food giant McDonalds to find out why they had not developed a similar plan, and whether they intended to develop one in the coming months, but received no response.

A fenced and gated Cargill facility in Brazil. Cargill and other large commodity companies have yet to make a real commitment to eliminating deforestation in their Cerrado soy supply chains. Image by sara y tzunky via VisualHunt.com / CC BY-NC

Could LDC’s pledge bring other soy giants on board?

“Ultimately, we hope that Louis Dreyfus’ action is a wake-up call for its competitors, [letting them know] that they need to move rapidly to set up industry-wide action to eliminate destruction of native vegetation,” Hurowitz said.

Graphic courtesy of Trase.earth

Bunge is the largest soy trader in Brazil, exporting 11 million tons in 2016. Stewart Lindsay, company Vice President of Global Corporate Affairs, released a statement to Mongabay that Bunge is committed to eliminating deforestation from all of its supply chains globally. Notably, however, this “time-bound commitment” will take the commodities trader until 2025 for full implementation ­­– a seven year period that allows for continued soy-driven deforestation.

Also, nowhere in the company’s literature on soy sustainability does Bunge outline how it plans to deal with non-compliant farmers. Lindsay’s statement more generally notes that Bunge is looking forward to making “additional progress” and to “further collaboration within our sector and with civil society.”

Cargill is the second largest soy trader in Brazil, with extensive operations in and around the Amazon and Cerrado. Mongabay contacted the company to find out whether it had plans to develop a pledge along the lines of that promised by LDC, but received no response.

“We really believe that working together towards [zero-deforestation] goals is most important.… Because just as we all face the same challenges, we can only address them if we work together,” said LDC CEO Martiarena.

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An Amazon soybean export facility in Itaituba, Brazil. The conversion of forests to cropland isn’t the only way in which soy production contributes to deforestation. The infrastructure needed to move soy to market – the grain elevators, soy ports, industrial waterways, roads and railways – all add to the loss of native vegetation. Image by Wevertoncordeiro licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

Correction: The sentence from the bullet points ‘Soy giant Bunge previously made its own sweeping deforestation pledge, but has never offered any information on how the firm will pragmatically carry out the plan’ was removed following the discovery of periodic reports on the status of implementation of Bunge’s zero deforestation commitments.