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ABIOVE Associação Brasileira das Indústrias de Óleos Vegetais

Soy Agribusiness andSustainability

Environmental Parliamentary FrontGT – Forest

Fabio TrigueirinhoSecretary

Brasília - DFOctober 16, 2008


DEFORESTATION IN THE WORLDAND THE AMAZON FOREST

Intact Forests in the World(areas over 500 km2)

Amazon Forest (2007) Millions of Hectares Part %

Forest AreasDeforestation

298 69

81% 19%

Original Forest 367 100%

Brazil has the largest area of intact forest in the world Brazil

maintains 81% of the Amazon Forest

Brazil maintains 81% of the Amazon Forest

Sources: Map: GreenpeaceData: INPE (National Spatial Research Institute) 2007

AmericaTropical

34%BrazilBrazil18.7%18.7%

of which 90% is in Russiaof which 90% is in Russia

EuropaEurope6.4%6.4%

TropicalAmerica

34%

Brazil has

18.7% of the

world’s intact

forests

(Greenpeace)

Brazil has

18.7% of the

world’s intact

forests

(Greenpeace)


AMAZON – “A CONTINENT”

• 420 million hectares

• 49% of Brazilian territory

• Equivalent to 101 times the area of Holland

• 18.8 million inhabitants

Challenge:

How to generate sustainable development for 18.8 million Brazilians

Source: IBGE

Amazon Amazon Biome:Biome:


Important causes of deforestation in the Amazon Biome

1. Institutional weakness of the federal and state public organs responsible for the monitoring and control of deforestation

2. Opening of roads and other infrastructure works without adequate policies for land ordinance and environmental management

3. Absence of public policies (credit, technical assistance, research) to provide incentives for valuing the forest, for the purposes of environmental handling and services and better use of areas already deforested

4. Illegal occupation of public land, where deforestation has been used to establish ownership, often in situations of social conflict

5. Creation of rural settlements in inadequate areas with no conditions for the survival of families

6. Expansion of agribusiness chainsSource: Ministry of the Environment


Knowledge Dialogue Communi-cation

FORMATION OF ARES


Extensive area to Extensive area to inspect and difficult inspect and difficult

to accessto access(420 million hectares)(420 million hectares)

Badly defined Badly defined property rightsproperty rights

Difficulties to contain illegal deforestationDifficulties to contain illegal deforestation

++Between 40% and 47% of Between 40% and 47% of

Legal Amazon territory are Legal Amazon territory are public lands under disputepublic lands under dispute

Badly defined property rights are the main reason that the environmental laws to contain illegal deforestation are inefficient

Badly defined property rights are the main reason that the environmental laws to contain illegal deforestation are inefficient


1. Simplification / adaptation of the legislation;

2. INCRA management contracts with state land institutions;

3. Creation of an executive agency.

Estimated period: 5 years

Is it enough to end illegal occupations?Will it allow the identification of illegal deforesters?

Land RegularizationFederal Government Proposal:

Source: Minister Carlos Minc, Oct. 15, 2008


Comparative production costsIowa, USA Argentina Paraná Mato Grosso

Price, FOB Port (US$/ton) 450.00 450.00 450.00 450.00

Freight -15.00 -26.50 -60.00 -120.00

Port Expenses -3.00 -3.00 -12.00 -12.00

Taxes/Subsidies 16.00 -157.50 0.00 0.00

Producer Price (US$/ton) 448.00 263.00 378.00 318.00

Total Cost (US$/ton) 209.13 138.90 281.19 334.05

Producer Margin (US$/ton) 238.87 124.10 96.81 -16.05

Source: IMEA.

Soy price today is about US$330/ton


Drastic differences in environmental

legislation=

Competitive imbalance

Source: IPAM - Daniel Nepstad

Brazilian Amazon vs.

the U.S. Grain Belt

Privete Land Forest Reserve

0%

80%

0%

20%

40%

60%

80%

100%

Amazon (Br) US

Protected Areas

2%

33%

0%

10%

20%

30%

40%

Amazon (Br) US

Mandatory Riparian Reserve Width (meters)

0

60

0

10

20

30

40

50

60

70

Amazon (Br) US

Do other countries have an environmental policy

that is as strict as Brazil’s?

Do other countries have an environmental policy

that is as strict as Brazil’s?

Legal Reserve in Private Areas

Protected Areas

Minimum Obligatory Width for Border Forests(meters)

USA

USA

USA


How can environmental conservation be improved?

New Economic Instruments

Make environmental conservation economically sustainable in Legal Amazon

BBAA

Economic Instruments are an efficient alternative to complement environmental

legislation

“A producer in the Red cannot look after the Green”

Adding Value to ProductionBB



New Economic Instruments to improve conservationNew Economic Instruments to improve conservation

Payment for“Standing Forest”

Exchange ofForest Assets

VoluntaryCertification

What is it?

Creation of an international fund to pay for:

– environmental servicesfor the forest

– CO2 emissions that areavoided

– the economic potentialof the biodiversity reserve

As long as a “Standing Forest” is worth “less” than a cleared forest, there is no economic stimulus for conservation.

Creation of an Exchange for trading CRFs (Forest Reserve Quotas) in the Amazon region:

Payment of a “bonus” for maintaining the Legal Reserve (80%).

Payment for not using the exploration quota (20%) that is an owner’s right – which would lead to a reduction in legal deforestation.

Creation of remunerated Voluntary Certificates (“Green Seal”) that pay a premium to those producers who go beyond what is established in Brazilian legislation.

Voluntary Certificates stimulate the spread of good agricultural practices and respect for environmental legislation.

Effect ReducesDeforestation

Guarantees aLegal Reserve

Stimulates GoodAgricultural Practices

AA



Integrated Production

Model

Current Production Model in the Center-West (freight costs)(freight costs)

??Adding value to grain (soy and corn)

production in the Cerrado through meat (poultry and pork) production for export

Creates income for thesmall and large farmerMakes crop rotation possible

Reduces monocultures

Reduces the use of agricultural chemicals

Reduces propagationof pests

(Asian rust)

Resources needed to conserve the environment

(Legal reserve)

Makes the small farmer in the Cerrado a feasible proposition

Reduces pressure on new areas for

agriculture

SustainabilitySustainability

The success of this model depends on the The success of this model depends on the opening of the international meat marketopening of the international meat market

Production for export in natura

Production for export

BB

ABIOVE Associação Brasileira das Indústrias de Óleos VegetaisHow can grain production be increased in Brazil, without increasing the deforested area?

CropsCrops--Livestock IntegrationLivestock Integration

ROTATIONROTATIONCROPSCROPS--LIVESTOCK LIVESTOCK

INTEGRATIONINTEGRATION

3344

11 22

CornCorn SoySoy

GrainsGrainsCrop Acreage

- Soy retains nitrogen, helping toimprove the soil- After some harvests,

the area can again beconverted into pasture

- Degraded pastures give wayto grain plantations

- The area receives manureand soil correction

LivestockLivestockPasture Acreage

- With recovered pastures,more heads of cattle canbe fattened than before


2006 2020Sugarcane Soy Livestock Total Sugarcane Soy Livestock Total

Area(Millions of Ha) 6 22 172 200 14 30 139 183

Production(Millions of tons) 430 57 9 - 1038(1) 105 11 -

No. of heads(Millions) 169 - 194(2) -

Heads/Hectare- -

1 - 1.4 -

Notes:

1. Increase in sugar production from 30 million to 45 million tons and in ethanol production

from 18 billion to 65 billion liters, using sugarcane bagasse.

2. Estimate considering an annual growth rate of 1.1% per year (demographic growth).

Area occupied by agriculture in Brazil: 2006-2020

Sources: UNICA / ABIOVE / IBGE / FAO / U.N.


SUSTAINABILITY ACTIONSIN THE SOY CHAIN

1. Round Table for Responsible Soy

2. National Pact for Eradication of Slave Labor

3. Soy Moratorium

4. Support of ARES Institute

5. Road Show in Europe in 2007

6. Green Action Institute

7. Environmental Pact: Soy + Green / Legal Mato Grosso Area


SOY MORATORIUM

Start: July 24, 2006

Objective: To reconcile economic development and socio-environmental conservation in the Amazon Biome

Commitment not to trade soy from areas deforested in the Amazon Biome after July 2006 (reduction in deforestation)

Participants: ABIOVE, ANEC, member companies and NGOs – International Conservation, Greenpeace, IPAM, TNC and WWF-Brazil.


SOY MORATORIUM IN THE AMAZON BIOME

GTS Sub-groups

InstitutionalRelations

Education,Information and

the ForestCode

Mapping andMonitoring


Focus: Regional producers, local technical assistance, teaching entities and other interested parties

Channels: Field teams from the companies, ABIOVE, ANEC, ONGs and Internet

Education, Information and the Forest Code Subgroup

Information sheet to tell producers about theSoy Moratorium


ACTIONS BY SOY FARMERS ANDMATO GROSSO (MT) GOVERNMENT

Green Action Institute (Instituto Ação Verde)

Organization created to divulge the sustainable business projects and practices in the state

Environmental Pact: Soy + Green / Legal Mato Grosso region

Signed in August 2007 by Aprosoja-MT, the state government and NGOs - TNC, ISA, Green Action and Land Alliance

Registration and licensing of rural properties with soy acreage in SLAPR by the year 2010

Make the process to issue and regularize LAUs (Sole Environmental Licenses) more agile


• Making the following processes more agile:

1. Registration of Rural Properties;

2. Environmental Licensing of Rural Properties (SLAPR);

3. Ecological-Economic Zoning;

4. Land Regularization Program.

Institutional Relations Subgroup


• Soy acreage representative areas in the Amazon Biome (Mato

Grosso, Pará and Rondônia states);

• Outside the protected areas;

• Areas over 100 hectares;

• In towns with soy acreage of more than 5,000 hectares (2006 and

estimated 2007/2008);

• Areas totally or partially within the Amazon Biome limits.

Mapping and Monitoring Subgroup


FIELD VERIFICATION

Photographs of all the 193 polygons to confirm land use

ID-10

Town: Feliz Natal (Mato

Grosso State)

Use and occupation: open

area and part actually used

as pasture

Area: 27.92 hectares

Photo 1

Photo 2

Photo 3


Global carbon emissions soar

From a historical perspective, developing countries with 80 percent of the world’s population still account for only 20 percent of the cumulative

emissions since 1751.Source: Reuters, Sept. 25, 2008

Interview:Connie Hedegaard,

Denmark’s Minister ofClimate and Energy

Source: Veja Business Magazine,October 8, 2008

Rich Countries Must Pay forRainforest – U.K. Report

Rich countries should pay tropical nations billions of dollars a year to save their forests,

using donor money and global carbon markets to foot the bill, said U.K.-

commisioned report. Source: Johan Eliash, Prime Minister Gordon

Brown’s special representative


G8 Climate Scorecards:Emissions per capita (tCO2 eq)

Source: WWF 2008

5.4

12

23 24

9 10 11 1115

0

5

10

15

20

25

30

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