Supermarkets told to exclude soy traders linked to deforestation

By Jane Byrne contact

- Last updated on GMT

The Cerrado is a unique ecosystem, home to over 5% of global biodiversity and a store of nearly 13.7 billion tons of carbon.  © GettyImages/Lucas Ninno
The Cerrado is a unique ecosystem, home to over 5% of global biodiversity and a store of nearly 13.7 billion tons of carbon. © GettyImages/Lucas Ninno

Related tags: deforestation, Soy, Cargill, Brazil, Lidl

Supermarkets have been urged to end relationships with soy traders who allegedly continue to buy soy from suppliers contributing to deforestation in the Cerrado region of Brazil.

The call follows a report​ by US non-profit group, Mighty Earth, which claims to have found that suppliers selling soy to traders such as Bunge, Cargill, COFCO, LDC, and ALZ Grãos have deforested at least 27,000 hectares across 10 farms in the Cerrado region of Brazil since August 2020.

Mighty Earth said these traders continue to sell their soy to users and buyers, many of which have committed to an August 2020 or earlier, cut-off date, after which they they are prevented from buying soy or meat with embedded soy that is connected to any supplier engaged in destruction of natural ecosystems.

“It is time for the retailers, manufacturers, investors, and financiers, who support the meat industry with their purchases, investment, and financing, to draw the line and enforce the 2020 cut-off date for deforestation and conversion.”

As part of this endeavor, leading supermarkets such as Tesco, Carrefour, Asda, Lidl and Sainsbury’s, should work with CSOs and the Retail Soy Group (RSG) to set up effective, fully transparent and cross-ecosystem soy monitoring and traceability systems for the Cerrado, Brazil and beyond, said the campaigners.

“Retailers need to have policies that are very clear about what they will accept in their supply chains or not in terms of deforestation and what they are going to do about it if they find evidence of deforestation linked to their supply chains,”​ Alex Wijeratna, senior director, global protein campaign, Mighty Earth, told FeedNavigator.

This is really about accountability and where that accountability resides, he said.  

“The public, the political economy, and the climate crisis demands that the retailers stamp this out urgently,”​ continued Wijeratna.

Contractual clauses urged

“We are engaging the traders on the allegations that are present in the report,”​ said Will Schreiber, representative of the RSG, a pre-competitive forum for retailers seeking to make sustainable soy the norm in the marketplace.

Mighty Earth is urging supermarkets to insert clauses in their contracts with meat suppliers that specify deforestation-and conversion free conditionality in soy-sourcing arrangements and impose group-wide commercial consequences for non-compliance.

Those recommendations tally with core elements of transition plans created through multi-stakeholder initiatives like the UK Soy Manifesto and CGF Forest Positive Coalition, noted Schreiber.

Many of the commitments and actions that Mighty Earth has highlighted as being needed are codified within these sector agreements, based on RSG advocacy, thanks to collaborative cross supply chain work to define these critical priority points of action."

The investigation 

Mighty Earth said it worked with Aidenvironment to conduct an analysis of deforestation occurring within a subset of farm properties across the Cerrado in order to expose specific links between soy traders and suppliers driving deforestation across the Cerrado savannah for soy, non-soy crops, and cattle pasture.

All Cerrado properties managed or owned by three of the largest soy producers in Brazil – SLC Agrícola, BrasilAgro, and Condomínio Agrícola Estrondo – were analyzed.

The Cerrado farms featured in Mighty Earth’s earlier Rapid Response Soy & Cattle monitoring reports were also examined to identify ongoing deforestation.

The researchers allege that

  • Each of the five major soy traders have commercial relationships either directly with the farms engaged in deforestation, or with the parent groups.
  • The most severe case of deforestation identified occurred within Condomínio Agrícola Estrondo in Bahía; research found more than 15,000 hectares were cleared after the 2020 cut-off date. Of this, more than 100 hectares was likely illegal, in what should have been the farm’s protected legal reserve.­
  • BrasilAgro’s Fazenda Serra Grande in Piauí cleared more than 1,180 hectares of vegetation in a single month. SLC Agrícola farm, Fazenda Parnaíba, in Maranhão cleared 668 hectares of vegetation in six months.
  • ­On three of the 10 farms showing deforestation and native vegetation clearance – those managed by Condomínio Agrícola Estrondo, Serra Branca Agrícola, and SLC Agricola’s Fazenda Parnaíba – some destruction took place in the farms’ protected legal reserves and permanent protection areas, and was therefore likely illegal.
  • ­Ongoing deforestation was found in farms owned by suppliers featured in Mighty Earth’s previous Rapid Response reports: including SLC Agrícola, Estreito Agropecuária, Grupo Mizote and Grupo Tomazini. Bunge, Cargill, COFCO, LDC and ALZ Grãos continue to buy from one or more of these suppliers.
  • In the first 12 months after the August 2020, over 106,000 hectares were deforested on Cerrado farms with existing soy crops, indicating a high risk or probability that the deforestation is to expand soy production, within a 50 km radius of a grain silo owned by ADM, AMAGGI, ALZ Grãos, Bunge, Cargill, COFCO, or LDC.

“In some cases, we found the soy traders have commercial links directly with the properties engaged in recent clearing, although soy has not yet been planted on the cleared land; in others, the traders have commercial links with the suppliers’ other farms - those without recent deforestation,” ​claimed the US non-profit organization.

Mighty Earth also alleged that the traders’ commercial links to these soy producers provide the financial capital and incentives to continue expanding soy, and other commodity crops, across recently cleared land.

Reaction from soy buyers

Soy buyers’ feedback to Mighty Earth on their trading links or otherwise with suppliers identified as contributing to deforestation or conversion is contained within the report.

“Some soy buyers like Bunge won’t confirm or deny any commercial relationship to any of the 10 farms that we went to it with. The issue of transparency of the supply chain is really key and Bunge, at the moment, is just not playing ball at all, it is not assuming its responsibilities,”​ reported Wijeratna.

Bunge has previously outlined​ how it is helping to raise the bar on the sector’s performance by regularly tracking and disclosing progress on its soy sourcing commitments and achievements.

However, Wijeratna said civil society, research groups, and others need to be able to verify that. “If we have allegations that a trader might be associated with deforestation post-2020, which we do, then there have to be mechanisms for interrogating that evidence [Bunge's progress], assessing it and seeing if it is correct or not. But if the company just stonewalls, and says it can’t confirm or verify relationships for commercial reasons, the system doesn’t have accountability built into it and then trust in that supply chain erodes further.”

Cargill was slightly more forthcoming though. “Cargill confirmed relationships and linkages to some of the 10 farms [referenced in the report] so that allowed us to be able to publicly link it to those farms in one way or another, in terms of some form of a commercial relationship, and we have been very accurate to what it told us in terms of what we published.

But it is like pulling teeth. If traders really want to build trust in their supply chains, they are going to have to provide a lot more transparency and traceability. There are laws coming through at the EU level​ that are demanding that transparency and traceability all the way down to an individual farm.

GettyImages-621271582
“Supplier lists and silo lists need to be published so we can map where the deforestation risk really is and the connection of big companies to that deforestation,” said Alex Wijeratna, campaign director, Mighty Earth. "That is why we are focusing on the supermarkets, asking them to put pressure on soy traders to provide this kind of information." Photo credit: GettyImages/gilaxia

‘Factual inaccuracies’

LDC told us it was surprised by the findings related to it. The trader said the report contains factual inaccuracies about the operations of that trader.

“In particular, it is important to note that LDC didn’t purchase crops from the particular farms highlighted in the report. In fact, LDC purchases crops only from eligible direct suppliers farming in areas with zero illegal deforestation and conversion of native vegetation, for which LDC has full traceability to farm.”

The trader cited its recently announced a commitment to eliminate deforestation and conversion of native vegetation for agricultural purposes by end of 2025. “Achieving this commitment will require close collaboration with all key stakeholders of the value chain, especially our suppliers but also government and other supply chain actors and civil society.”

It also outlined how it has developed a detailed monitoring and grievance system​ to ensure that all LDC suppliers comply with our various sustainable policies, including for soy.

“In that spirit, we engage with suppliers where we observe supply chain challenges, to help them adapt their practices in line with our sustainability policies and, in cases of continued non-compliance, take decisions to remove suppliers from our approved supplier list.”

Bunge did not specifically refer to the allegations made by the Mighty Earth report in its response to this publication, but said:

“Bunge does not source soy from illegally deforested areas and has leading traceability and monitoring data of our direct and indirect purchases. We maintain strict control over socio-environmental criteria in our operations in high risk areas in South America – over 12,000 farms, reaching more than 16 million hectares. Our monitoring uses cutting-edge satellite technology and is capable of identifying changes in land use and soy planting on each of the farms we source from.”

Highlighting systemic challenges

Schreiber said investigations such as this one undertaken by Mighty Earth can be very influential. They can highlight “wherethere are systemic challenges that aren’t being corrected.”

Such reports also “provide a triangulation point for some of the monitoring systems that retailers must have to ensure their supply chains are operating responsibly.”

These types of investigations can prompt sourcing and commercial teams to question whether the allegations raised were already captured by their monitoring, reporting and verification systems, whether their supplier has recorded the same information, and what it is doing about any reported violations, said the RSG spokesperson.

He did point out flaws, though, in terms of some of the analytical methods used in Mighty Earth’s research. In addition, said Schreiber, drawing broad conclusions from the location of a trader’s silo within a 50km radius of a farm with questionable soy practices doesn’t really hold water.

“These are technical points, however. The issue is that the conversion is happening, and it is going into somebody’s supply chain; whether it is attributable to an individual trader depends on the ability of that trader to have proper visibility on what they are actually buying and I think that is variable,” ​he continued.

In terms of the feedback to the RSG, to date, from the soy buyers on the claims in the report, he said: “Some of the traders have shown us their systems, where they have investigated the specific farms and they have confirmed that those farms are not present in their direct or indirect supply chains.”

Key for the future, however, is the response of the soy buyer and the response of the downstream end of the value chain to supplier non-compliance with deforestation and conversion-free sourcing pledges, said Schreiber.

What it important is that any violation is identified and acted on by a business so that you have a chilling effect and then people know they can’t deforest or convert and still have market access​,” ​he stressed.

Exclude or engage?

The Accountability Framework Initiative (Afi), which involves CSOs such as Mighty Earth, has a working group specifically focused on red lines, as to when you exclude a farm or supplier from your supply chain, he explained.

That work has been going on for a year and a half because it is very difficult question to answer as to where you draw the line.”

The AFi encourages buyers​ to retain non-compliant suppliers and promote compliance by engaging them to implement specific time-bound actions.

“As a retailer, do you exclude a Bunge or a Cargill for what could be a fringe event that is occurring in their supply chain assuming that the investigation is valid, and it is attributable to one of those companies? Or should the effort be more on asking whether the trader has already identified this issue, whether they have blocked that supplier, and whether they are effectively monitoring their material purchases? Right now, the consensus is you do more of the latter.

“For a downstream customer like a retailer, if there is evidence that a trader is a serial non-conformist, that they don’t have an effective monitoring system in place, that they are not making the necessary changes, that is when there is real concern for what actions you can take to ensure that broader transformation,” ​commented Schreiber.

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