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China, EU are importing soybeans from unregistered Brazil farms: report

2018 may be the first year in which Brazilian soy exports surpass those of the United States. Analysts think that Trump’s China trade war is likely to hurt U.S. soy farmers, while helping those in Brazil. Image by David E. Mead in the Public Domain.

  • Considered one of the main drivers of deforestation in the country, soybean is Brazil’s main commodity, with exports valued at more than $33 billion in 2018.
  • Padding this figure, however, are soybean crops grown on unregistered farms skirting environmental regulations.
  • Twelve percent of soybean farms in the Amazon rainforest and Cerrado savanna lack land registration, but two-thirds of crops from the municipalities with the most blind spots are exported, mostly to China (39 percent) and Europe (12 percent), with 33 percent going to the domestic market.
  • U.S. commodities traders ADM, Bunge and Cargill are the biggest exporters of crops from these areas, along with Brazil’s Amaggi, the world’s biggest private soybean producer.

More than 2.6 million hectares (6.4 million acres) of soybean plantations — an area almost the size of Belgium — are cultivated on unregistered lands in the Brazilian Amazon and Cerrado biomes and exported to China and the European Union, according to a report released today by supply chain transparency initiative Trase in partnership with the NGO Imaflora. Mongabay had access to the report ahead of its release.

Considered one of the main drivers of deforestation in the country, soybean is Brazil’s top commodity, with exports valued at more than $33 billion in 2018. But behind this figure are soybean plantations operating on unregistered lands and likely dodging environmental regulations, contributing researcher and agricultural engineer at Imaflora Luis Fernando Guedes Pinto says.

In the Amazon rainforest and in the Cerrado savanna, 12 percent of soybean farms still lack land registration. Yet two-thirds of crops from the municipalities with the highest concentration of these blind spots of Brazilian agriculture are exported, mostly to China and Europe, the study shows, exposing importing countries to a high risk of buying irregular soy.

“We found that 88 percent of the soy plantations in the Amazon and Cerrado are registered, but 2.6 million hectares [the equivalent to 12 percent] still aren’t,” André Vasconcelos, a researcher at Trase and Global Canopy who contributed to the report, told Mongabay. “That was a huge surprise, especially to see that 67 percent is being exported,” he added.

The findings come amid a huge environmental crisis in Brazil, including escalating deforestation and August’s Amazon fires that triggered an international outcry, as President Jair Bolsonaro makes good on his promises to weaken environmental protections since taking office in January 2019.

Soybeans plantation in Sorriso, a municipality in Mato Grosso state. Sorriso is Brazil’s largest producer of soybeans and calls itself the Brazilian capital of agribusiness. Photo by Thaís Borges, November 2016

Brazil’s Environmental Rural Registry, known by its acronym CAR, gives landowners access to credit and land titles, but also holds them responsible for conservation on parts of their properties. Implemented in 2012, the measure requires all rural properties to georeference and declare their land as a primary requirement to comply with the country’s Forest Code.

At the time, it was a breakthrough in Brazilian transparency and accountability, to be fulfilled by all landowners by 2015. But the deadline came and went amid multiple delays, and a measure finally approved this year simply dropped any specific target date for registration.

Soybeans and deforestation

Of the unregistered soybean production in Brazil, China imports 39 percent, the EU 12 percent, and 33 percent goes to the domestic market largely as feed for livestock, the study found. “We calculate the proportion that is exported from each municipality, and apply this to the percentage of unregistered areas there,” Vasconcelos said. “The exporters don’t know whether they are buying soy from registered or unregistered farms.”

U.S. food processor and commodities trader ADM and China’s COFCO are at a high risk for exporting soybeans to China  from unregistered farmlands; Bunge and Cargill, two other U.S. commodities traders, and Brazil’s Amaggi, the world’s biggest private soybean producer, are the main exporters of high-risk soybeans to Europe.

In a statement, Amaggi said that 95% of its suppliers are registered with CAR, adding that it has a georeferencing system in place for evaluation and monitoring of its suppliers. Bunge, Cargill, ADM, and COFCO declined to comment, deferring to the Brazilian Association of Vegetable Oil Industries (Abiove).

Abiove challenged the report, claiming that data of soybean plantations not registered with CAR is overestimated  and that the percentages of unregistered areas in the report are questionable. “The most recent CAR data show that by the end of August 2019 there were 498 million hectares registered in the SICAR base. This means a void of only 4 million hectares… not 180 million hectares,” Abiove said in a statement.

In addition, Abiove said that soy-driven deforestation represents just 1.4 percent in the Amazon and 7 percent in the Cerrado biome, citing an agro satellite study and INPE data.

Soybeans field with one Brazil nut tree standing in the Amazonian state of Rondônia. Image by Shanna Hanbury.

By overlaying their research with satellite data on deforestation from the Brazilian National Institute of Space Research (INPE), the report’s authors also found a strong correlation between the number of unregistered soybean farms and deforestation. “[N]early all the recent deforestation linked to soy expansion has been in the Cerrado and Amazon biomes,” the report notes.

With Bolsonaro’s visit to China last week in search of stronger commercial relations, and a free-trade deal between the EU and Mercosur, the South American trade bloc, in the works, the study’s authors have called for the Environmental Rural Registry to be included as a basic requirement for international trade deals in order to curb illegal deforestation. “China is the largest importer of forest-risk commodities and they have the power to implement measures for more conformity in Brazil,” Vasconcelos said. “We see this as a huge opportunity for increased transparency in Brazilian agriculture.”

But for Fabio Feldmann, a prominent conservationist responsible for much of the environmental legislation in the Brazilian constitution of 1988, domestic pressure is just as important. “One-third is for domestic use. Who is buying this? We need more pressure from Brazilian society as well,” he said. This is also important on a political level, he added, so that pressure for conservation isn’t labeled a trade conspiracy against Brazilian agribusiness.

On Oct. 17, Bolsonaro signed a bill into law removing the registration deadline and penalties for noncompliance. His decision comes amid a series of measures that loosen environmental protections, including expanding permission for mining in the Amazon, paving roads that cut through pristine jungle, and approving hundreds of pesticides.

The bill’s rapporteur, Senator Irajá Abreu, defended the measure, saying that many parts of rural Brazil lack a strong government presence and thus farmers have no other option but to shirk their obligation to register.

But although land regularization can be difficult for small landowners without resources, soybean is a commodity that only makes sense on a large scale of production, according to Pinto. “For soy, it’s a simple requirement because these are big farmers. We know that small farmers often don’t have access to georeferencing and the internet, which is a barrier. But for soy, with big farmers, it’s the first step,” he said.

Pinto warns that without a farm registration deadline, the Forest Code is no longer binding for unregistered farms. “If there is no deadline, then there is no pressure,” he said. “These farms aren’t illegal even though they are outside of the law.” He compared it to driving a car without a license plate and not having to follow any rules.

The report shows that soybean farms are concentrated in a handful of municipalities in a few specific regions of Brazil, which should make registration easier. In just one municipality, Formosa do Rio Preto in Bahia state, more than 70,000 hectares (173,000 acres) of unregistered soybean farms and more than 260,000 hectares (640,000 acres) of deforestation were identified.

In a statement in reply to a Mongabay request for comment, Formosa municipal officials said they “have not encountered any large soy or other plantations without the Environmental Rural Registry,” adding that the local administration was working toward sustainable growth and had participated in several state-level environmental registration campaigns for smallholders.

According to Feldman, the Cerrado has been used as a trade-off for the Amazon by agribusiness. “Today, the Cerrado may be the most threatened biome,” he said. “But there’s a negotiation with agribusiness: We’ll preserve the Amazon but use the Cerrado.”

Update (October 31, 2019): This article was updated to include a link to the report and statements from the traders and Abiove.

Banner image caption: With exports amounting to $33 billion in 2018, soybeans is Brazil’s main commodity but is also considered one of the main drivers of deforestation in the Brazilian Amazon and Cerrado biomes.  Image by David E. Mead in the Public Domain.

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