July 25, 2007

 

Challenges hover on Brazil's Amazon soy ban

 

 

An industrywide decision to ban the purchase of soybeans from recently deforested lands in the Amazon region isn't going as smoothly as the Brazilian soy industry would like.

 

On Tuesday (July 24), the Soy Moratorium Working Group, or GTS, said in a report that some of the challenges in monitoring and organizing soybean production encroaching on the Amazon forest "will not be solved in the short term, however (this needs) to be discussed in order to reach a solution."

 

In July 2006, the Brazilian Vegetable Oils Industry Association, or Abiove, together with the National Grain Exporters Association, or ANEC, bowed to pressure from groups such as Greenpeace International to prohibit purchases of soy from newly deforested fields in the Amazon region.

 

The decision came shortly after Greenpeace, which is part of the GTS, convinced McDonald's Corporation (MCD) in Europe to stop purchasing chicken from companies that use soymeal animal feed made from soy grown in the Amazon.

 

Since July, the GTS has managed to discuss the matter across working groups, including talks between environmental groups like Conservation International and major soy exporters like Cargill has had discussions about using satellite imagery to identify where soy is encroaching on the forest.

 

Much of the land ownership in the south Amazon region is dubious at best, which GTS recognized in its report Tuesday. Problems with land titles are common in Northern Brazil's frontier states.

 

Abiove and ANEC said that they were finalizing a soy origination proposal that would guarantee that soy planted on newly deforested lands after July 2006 will no longer be accepted by the large soy buyers. The proposal acknowledges that despite signing the moratorium last year, any soy planted on recently deforested land in the region has already been sold because there was no monitoring process put in place when the moratorium was originally signed.

 

"When you read this report you realize that all that's been done is create the rules of engagement, but the real war has not begun," said Jose Zilio, a former Bunge Ltd. (BG) executive who is now a consultant for ALF International in Sao Paulo.

 

"The soy that was planted in these areas in the summer of 2006, after the moratorium was signed by industry, has already been harvested and sold. In practical terms, you won't know who is planting and selling deforested soy until maybe March 2008," Zilio said.

 

Zilio said Abiove members would comply with the rules, but smaller traders might not and begged the question of who would ultimately monitor soy expansion in the Amazon biome.

 

The Amazon biome takes up nearly half of Brazil's land mass. Soy is planted in the north of Mato Grosso, Rondonia and Tocantins state, all considered part of the Amazon biome. The bulk of Brazilian soy is planted in the centre of the country and in the south, hundreds of miles away from the Amazon.

 

"The big issue is the demand side. The Europeans aren't interested in Amazon soy, but the Chinese don't care, I'm convinced of that. If there's no demand, there's no production," Zilio said.

 

Brazil is the world's No. 2 soy exporter behind the US.