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Soybean trader vows crop traceability

Soybean trader vows crop traceability

Traceability should help slow deforestation that has devastated some parts of Brazil.

By Andy Hoffman and Tatiana Freitas

Cofco International Ltd. vowed full traceability for all the soybeans it buys directly from farmers in Brazil by 2023, a promise aimed at reducing environmental damage that would be a first for a major crop trader.

The commitment would force the global trading arm of China’s biggest food company to be able to trace back all of the soybeans it buys in Brazil to specific farms and locations that are not from land cleared of natural vegetation, Cofco International said in its annual sustainability report.

Full traceability, which Cofco said would be verified by a third party, should help slow deforestation that has devastated some parts of Brazil including the Cerrado biome.

Global agricultural traders have come under fire for their role in the Brazil environmental crisis that has spread from the Amazon rain forest to Cerrado savanna grasslands that cover more than 20% of the country and account for more than half its soy crops.

“We make our traceability commitment public because we are prepared and we want to be held accountable for it,” Wei Peng, Cofco International’s global head of sustainability, said in a statement.

The company is vowing to trace more than 50% of its Brazil soy purchases in 2020, according to Peng. Cofco has previously estimated it will handle between 6.7 million tons and 7 million tons of soybeans in the nation in the 2020-21 season, which began in February.

Rival Louis Dreyfus Co. said in its annual sustainability report this week that it was able to trace about 30% of its direct Brazil soy purchases in 2019 and committed to 50% traceability in 2020.

Cargill Inc., the biggest agri-trader, said this week it had mapped 100% of its soybean supply base in Brazil, meaning it has a geographic location for farms it has purchased from as well as for intermediaries it has bought soy from such as crushing plants and export terminals.

“We are working to transform our supply chains to make them deforestation and native vegetation conversion free,” said John Hartmann, the global sustainability lead for Cargill’s global agricultural supply chain. “The mapping enables us to do the monitoring and identify what is happening at the ground level.”

Cofco’s goal of full traceability would identify the exact origins of where the soy came from and its history with supporting documentation that would ensure it wasn’t from farmland recently converted from natural vegetation.

Mapping has different methods and objectives compared to traceability, underscoring the varying approaches traders are taking to tackle the problem.

“We’re focused on mapping because with traceability it is really difficult to untangle the co-mingling,” Hartmann said, referring to what happens when soy from different locations is mixed together in storage terminals or in shipping. Still, the company offers full traceable products to clients if requested at a higher cost.

Cargill also said this week that 96% of its soy sourced from Brazil is grown on land that is deforestation and conversion-free.

The trader commitments arise amid mounting concerns of deforestation in Brazil, home to a wealth of biodiversity in the Amazon forest and Cerrado’s savanna. Amazon deforestation reached record levels last year, fueling international outrage and consumer criticism even as Brazilian President Jair Bolsonaro dismissed the fires and proved reluctant to boost actions to fight them.

The soybean industry has largely used satellite images to monitor deforestation and the conversion of forests into soy farms since 2006. That’s when Brazil’s soy-processor group Abiove created the so-called “Soy Moratorium,“ a public commitment to not purchasing soybeans from newly deforested land in the Amazon.

The act helped to reduce Amazon deforestation rates through 2012. Then the clearing of forest land began rising again and hit a record in 2019. While soy plantings in the Amazon biome rose more than four-fold since the moratorium started, only 1.5% of the plantings are in areas that were deforested after the soy pact took effect, according to Abiove.

The success of the soy moratorium in the Amazon put pressure on trading houses to replicate the same model for the Cerrado, the nation’s grassland savanna that has come under increased pressure from the sustained boom in Brazilian soybean production.

Yet the industry has, so far, refused to do so, saying the battle against deforestation in Cerrado must be addressed using financial incentives to encourage farmers to stop killing trees.

To contact the reporters on this story:
Andy Hoffman in Geneva at ahoffman31@bloomberg.net;
Tatiana Freitas in São Paulo at tfreitas4@bloomberg.net
To contact the editors responsible for this story:
David Marino at dmarino4@bloomberg.net
James Attwood
© 2020 Bloomberg L.P.
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