COFCO said the IFC will support the trader’s subsidiary in Brazil to develop a more traceable and sustainable soy supply chain in the Matopiba region, including direct – farmer – and indirect – co-op or local/international trader – non pre-financed suppliers.
This project will focus on screening soy farms in Cerrado’s vulnerable Matopiba region, the worst hit area in terms of deforestation related to soy, reported US environmental campaigners, Mighty Earth.
The partners said they will strive to ensure supplier compliance with key environmental and social criteria and build farmer capacity to apply more sustainable farming practices.
Although Cerrado’s soy-related land conversion has been decreasing since 2001, the Matopiba region, comprising the states of Maranhão, Tocantins, Piauí and Bahia, has experienced higher land conversion rates linked to rising global demand for soy, reported COFCO.
According to a TRASE report from 2018, as commodity traders have expanded their operations across MATOPIBA, the international market for soy has shifted. “In 2010 the top countries importing from MATOPIBA were Spain (23%), China (22%) and Portugal (12%). By 2015, China accounted for 57% of all exports. In fact, when comparing exports from the region in 2010 to those in 2015, China accounts for 92% of all of the new trade by volume.”
The screening initiative will use farm contours, satellite imagery and other geographical information and official data. The aim is to ensure that supplying farms are free of forced labor, are not located on indigenous land, conservation units or embargoed areas, and are compliant with the Amazon Soy Moratorium, continued COFCO.
“While the Matopiba is mainly in the Cerrado, the Amazon Soy Moratorium is referenced because some of the states that make up Matopiba have territories located in the Amazon Biome,” Allan Virtanen, director, communications, COFCO International, told FeedNavigator.
The project will also establish land conversion profiles for individual farms and assess supplier compliance with the Cadastro Ambiental Rural (CAR), a mandatory electronic registration which combines geospatial data of rural properties with their environmental information, including legally protected areas.
“We, of course, require any supplier to follow local laws and regulations and we would not buy from suppliers who don't comply with our key criteria,” stressed Virtanen.
COFCO International and IFC said they expect the project to cover 85% of COFCO’s direct suppliers in the Matopiba region by 2021, and to fully cover the region by 2023.
Agrosatélite, a Brazilian company specializing in remote sensing satellite images and geographic intelligence, has been selected as the project’s technical partner.
This partnership follows COFCO’s recent announcement that it expects to achieve full traceability of all soy purchased directly from Brazilian farmers by 2023. It will help COFCO International to build on – and go further than – its work on traceability.
“Traceability was never our final destination but rather a tool to go further,” said Wei Peng, head of sustainability, COFCO International in a release. “With this project we will be able to further screen non pre-financed suppliers for key sustainability criteria and identify those with whom we want to engage more closely.”
An equity investor in COFCO International since 2014, IFC is a member of the World Bank Group and the largest global development institution focused on the private sector. It has been instrumental in developing COFCO's sustainable soy sourcing practices, said the Chinese company, supporting it to screen all its pre-financed Brazil soy suppliers for social and environmental risks, as disclosed in the company's sustainable soy sourcing policy.
Pre-financed means pre-harvest financing – farmers are paid in cash or in-kind (typically fertilisers) before the harvest/delivery of goods.