Soy traders in Cerrado under fire for illegal activities

Andre Vasconcelos and Helen Burley

(Read this blog in Portuguese here)

More transparency is needed in soy supply chains to eradicate illegal deforestation in supplies, photo: alffoto

The Brazilian authorities have sent a warning shot across the bows of the big soy traders, imposing fines on five companies for activities linked to illegal deforestation in the Cerrado — recognised as the world’s most biodiverse savannah.

Bunge, Cargill, ABC Indústria e Comércio SA, JJ Samar Agronegócios Eireli, and Uniggel Proteção de Plantas Ltda were fined as part of the Brazilian Environmental Agency’s (IBAMA) Operation “Soy Sauce” in the Matopiba region.

Matopiba has seen rapid soy expansion in recent years, with an increase of 253% between 2000 and 2014. It is often described as the new soy frontier.

The welcome crackdown comes after the second phase of Operation “Soy Sauce” found that the companies were sourcing soy from areas under embargo, put in place due to illegal deforestation. The agency imposed fines of 24.6 million reais (US$ 6.7 million) for purchasing roughly 3,000 tons of soy from these areas.

Big traders, big commitments

Cargill and Bunge are among the top five largest soy exporters from Brazil and in 2015, they accounted for approximately 30% of soy exports from the Cerrado.

The news of these legal infringements go against the public commitments to zero deforestation these companies have made. Indeed, Bunge and Cargill are among the few traders to have adopted zero deforestation commitments which apply to all the areas where they operate.

And earlier this month Bunge announced that it was strengthening its zero deforestation commitment to cover deforestation in areas where deforestation is legal.

It is not however clear whether these commitments cover all the native vegetation in the Cerrado, which includes grasslands, savannah and dense forest.

Greater commitment to implementation needed

The Soy Sauce operation shows that the Brazilian authorities are serious about addressing illegal deforestation in high risk areas. It also exposes the vulnerability of the companies’ systems for monitoring and tracking their supplies.

The fact that they cannot guarantee that their sources are deforestation free has implications for the whole supply chain. It means that there is a gap in the process which all of the companies along the supply chain have an interest in tackling.

Trase helps in filling this gap. It addresses this lack of transparency in the supply chain, allowing traders and retailers alike to see which sourcing areas are most exposed to the risks of deforestation and to identify where the opportunities lie for more sustainable sourcing and production.

The companies involved can benefit from tools such as Trase to help meet their commitments. Bunge, Cargill and the other traders must now refocus on commitments made, and ensure they implement them by engaging with the farmers they source from.