scp evidence base: sustainable commodities case studies...

SCP Evidence Base: Sustainable Commodities Case Studies Case Study

SOYA

December 2006

Development of the Evidence Base: Sustainable Commodities Final Report Case Study - Soya

Scott Wilson Ltd December 2006 i

TABLE OF CONTENTS

EXECUTIVE SUMMARY ..........................................................................................III 1 COMMODITY OVERVIEW..............................................................................1 2 SUPPLY AND DEMAND STATISTICS AND TRENDS ..................................3 3 POLICIES AND INITIATIVES .......................................................................14 4 SUPPLY CHAIN ANALYSIS ........................................................................19 5 IMPACT ASSESSMENT...............................................................................37 6 SUMMARY....................................................................................................54 APPENDIX I – LITERATURE REVIEW...................................................................58 APPENDIX II – ASSESSMENT FRAMEWORKS....................................................59 LIST OF TABLES

Table 1: European cosmetics & detergent producers ................................................2 Table 2: Total amount of soya beans the UK imports (2004): ....................................3 Table 3: The top trade partners that the UK imports soya beans...............................4 Table 4: The top trade partners that the UK imports soya oil .....................................4 Table 5: The top trade partners that the UK imports soya meal.................................4 Table 6: Top partners global exports of soya beans ..................................................5 Table 7: Top partners global exports of soya oil ........................................................5 Table 8: Top partners global exports of soya meal ....................................................5 Table 9: The proportion of soya beans that UK imports represent.............................6 Table 10: The proportion of soya oil that UK imports represent .................................6 Table 11: The proportion of soya meal that UK imports represent.............................7 Table 12: The proportion of all exports that soya beans contributes to the export

partner's total exports..................................................................................8 Table 13: The proportion of all exports that soya oil contributes to the export

partner's total exports..................................................................................8 Table 14: The proportion of all exports that soya meal contributes to the export

partner’s total exports..................................................................................8 Table 15: The proportion of all exports that soya beans contributes to the export

partner's total exports..................................................................................9 Table 16: The proportion of all exports that soya oil contributes to the export

partner's total exports..................................................................................9 Table 17: The proportion of all exports that soya meal contributes to the export

partner’s total exports..................................................................................9 Table 18: Area harvested for soya beans ................................................................10 Table 19: Area under production of soya beans ......................................................10 Table 20: National Hectares for soya beans ............................................................12 Table 21: National Hectares for soya oil ..................................................................12 Table 22: National Hectares for soya meal ..............................................................12 Table 23: Brazil’s top trading partners for soya beans .............................................25


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Table 24: Argentina’s top trading partners for soya beans.......................................25 Table 25: Bolivia’s top trading partners for soya beans ...........................................26 Table 26: USA’s top trading partners for soya beans...............................................27 Table 27: The Netherlands’s top trading partners for soya beans ...........................27 Table 28: Belgium’s top trading partners for soya beans .........................................29 Table 29: Global soyabean crushing in 2001/02 (in 1,000 MT)................................30 Table 30: European food companies .......................................................................34 LIST OF FIGURES

Figure 1: Area under soya cultivation in selected countries 1960 – 2004 ..................v Figure 2: Graph to show the area of land under soya bean cultivation in selected

countries....................................................................................................11 Figure 3: Soya supply chain overview......................................................................19 Figure 4: Intensity of soya cultivation in Brazil .........................................................20 Figure 5: Soya bean production in Argentina...........................................................22 Figure 6: Map showing the key soya producing areas of the USA...........................23 Figure 7: Farm inputs and outputs ...........................................................................38 Figure 8: Soya production and harvesting ...............................................................43 Figure 9: Map of the San Matias Pantanal area.......................................................47 Figure 10: Processing inputs and outputs................................................................49


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Executive Summary

Global production

In 20041, approximately 5,782,878,000 tonnes of soya beans were producedi and the global total area under cultivation was approximately 91,145,361ha. The cultivation and processing of soya beans yield three types of product:

• Whole soya beans (13% of total world crop) • Soya oil (16% of total world crop) • Soya meal (69% of total world crop)

In 2004, the main producers of soya beans were the USA (43% of world productionii), Brazil (35% of world production), Argentina (11%) and Paraguay (4%). The main global importers of soya beans, were China (30% of world production), followed by the EU (19%) and then Japan (8%). The largest exporter of soya oil2 was Brazil (18% of world production) followed by the EU, in particular the Netherlands and Germany. Key importers of soya oil include China (7.5% of global production), South Africa (7.5%), Belgium (7%) and India (5.9%). The main exporters of soya meal were the USA (63% of total exports) Europe (the Netherlands 10.5% and Belgium (8.3%), Bolivia(4.2%) and China (2.2%) and the largest importers were Spain (12.9% of the total) Australia (10.4%), Belgium (8.1%) and Mexico (6.9%).

UK consumption

In 2004, the UK imported 732,177.23 tonnes of soya beans which had a trade value of c. $238.5 billion. The UK also imported soya oil and soya meal. Imports of soya oil were 22,890.57 tonnes of soya oil worth $18,458,804 and imports of soya meal for soya beans was 6,904.77 tonnes worth $4,589,183.

The main exporters to the UK of:

• Soya beans are Brazil (80% of total imports), the USA (8.8%), Canada

(3.9%) and Belgium (3.0%) • Soya oil are The Netherlands (84% of total imports), Belgium (12%),

Germany (6.2%) and France (5.8%) • Soya meal are Belgium (35% of total imports), Ireland (20.4%) and the

Netherlands (15.4%)

It should be noted that the Netherlands, Belgium, Germany and France are not cultivators of soya beans, rather they act as both staging countries and locations where processing occurs. These countries source most of their soya beans and products from Brazil, Argentina, Paraguay and Bolivia.

1 All dates are for 2004 data unless otherwise stated 2 Data for soya oil is based on refined figures, for crude soya oil imports and exports see Comtrade


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In terms of total exports of all commodities the export of soya beans and oil is not a key export from any of the countries identified. For example, soya bean exports represent 5% of all exports from Brazil. Of this 5%, the UK is the destination for 3% of Brazil’s soya beans. Other, more significant, importers of soya beans from Brazil include China (30% of Brazil’s soya beans exports), The Netherlands (18%), Germany (9.2%) and Spain (7.8%).

Uses

Soya beans are used by the food industry in products such as tofu, flour, soya sauce, meat substitutes and desertsiii.

Soya meal is an important component of animal feediv and in the EU feed sector alone, soya meal constituted 53% of the total protein supplement used in 2001v. Soya meal is also used to make food products such as noodles, baby food, cereals and flour. Soya meal is used in the production of paints and inks in addition to pharmaceuticals and plasticsvi.

Soya oil is used to make a range of products which include oils and fats for the food industry (e.g. vegetable oil), foods such as soya sauce, cosmetics, chemicals and associated products e.g. soaps, paints, inks, lacquer and diesel.

Trends

Current

Global production of soya beans has been increasing over the past few decades with a corresponding increase in the area under cultivation. Key growth areas are South America and China although the USA remains a high producer. Trends in Brazil, Argentina, Paraguay and Bolivia have been towards the establishment of large-scale mechanised farms with no-till methods of farming being increasingly favouredvii.

In 2004, 41% of the global production of soya was attributable to the USA, the highest producing country in the worldviii. However, current trends suggest that the rate of growth in areas under production in Brazil and Argentina is greater than the US and the total South American3 share of the global soya bean market amounts to 42%. Brazil is now the second largest soya bean producing country in the world with a market share of 24%. Argentina ranks third, with a 15% share of world production but with the highest growth rate (143%) over the past seven years. Paraguay and Bolivia account for another 2% and 1% respectively of world production.

3 Note that South American soya producing countries include includes Brazil, Argentina, Boliva


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0

2,500,000

5,000,000

7,500,000

10,000,000

12,500,000

15,000,000

17,500,000

20,000,000

22,500,000

25,000,000

27,500,000

30,000,000

32,500,000

Ye a r

United States

Canada

Argentina

Bolivia

Brazil

Figure 1: Area under soya cultivation in selected countries 1960 – 20044

Future

The changes in area under production have principally been driven by rising global demand for traditional soya products such as tofu, soya milk and animal feed. This is expected to increase by 60% by 2020 due to ‘growing and increasingly affluent populations’ix. In addition to Brazil and Argentina, Bolivia and Paraguay are also likely to experience further increases in area under soya production (owing to favourable government policies) but limited availability of suitable land for cultivation suggests the US may not follow suit. The production and processing capacity of China is also expected to increase due to the large domestic market for soya products. Increasing global interest in bio-fuels could further encourage soya production.

Impacts

Pre-cultivation

Increasing the area under soya cultivation in South America has had positive economic impacts for the multinational companies, financing companies, large landowners and for national government through generation of income and foreign exchange revenue. The establishment of farms however does not necessarily lead to economic benefits for indigenous people as conversion of land to large-scale soya plantations often leads to the loss of traditional livelihoodsx. The dominance of large scale mechanised farms results in impacts to the local labour markets where the small-scale farmers are displaced and rendered unemployed through to the merging of smaller farms in attempts to benefit from economies of scale.

Habitat clearance is a common feature associated with the establishment of soya farms and in particular, deforestation. Deforestation of the Amazon, loss of the Cerrado savannah in Brazil and of native forests in Argentina and Bolivia has been identified as a significant

4 Source: FAO data


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impact caused in part by the clearance to soya plantations. In some areas, particularly in Brazil, land is initially cleared for cattle ranching and is then subsequently converted to soya cultivation. The conversion tends to occur due to the financial gains experienced by ranchers in selling the land and then moving into new areas to develop cattle ranches. This further exacerbates the deforestation problem by contributing to habitat clearance and land degradation 5. The Amazon Forest and Cerrado6 have been identified as key areas of global biodiversity, but deforestation and habitat removal resulting directly or indirectly from soya cultivation, contribute to the continuing loss of this biodiversity and associated loss of species valued for their medicinal, nutritional, economic or intrinsic value. In addition, deforestation can lead to increased temperatures, reduced flood attenuation, reduced evapo-transpiration and reduced atmospheric circulation causing droughts or flash floodingxi. There are also potential climate change implications from the removal of forests altering the rates of cycling of carbon dioxide between different carbon sinks. Poorly enforced conservation measures, inadequate land ownership rights and government encouragement to increase soya production have all exacerbated the problemxii.

Conversion of areas to soya plantations has meant a loss of local people’s access to land and resources and in many cases ways of life due to the loss of habitats that once provided shelter, food and income. Displacement of indigenous people has become particularly common where small farms have been amalgamated into large-scale systems which employ fewer people. Food shortages have also been reported in Brazil due to the conversion of land to soya cultivation from crops destined for domestic consumptionxiii.

Cultivation

Positive impacts of soya bean cultivation include investment in infrastructure such as the improvement and upgrading of roads and railways and generation of income. The dominance of large companies means that in many cases, the poorer members of society do not receive the full benefits. Producers often also experience cumulative economic losses as soil quality and nutrient content are reduced as a result of intensive mechanised farming processes which leads to requirements for increased inputs such as agro-chemicals and to lower yields. Cultivation of Genetically Modified (GM) varieties can lead to an additional reliance on external suppliers as pests have been found to develop resistances and therefore additional pesticides and subsequent economic inputs are required.

The impacts from soya production include: soil erosion, the intensive use of chemicals and pollution. Approximately 500 million tonnes of soil are lost per year due to soil erosionxiv. Erosion of topsoil removes sediments, residues of agrochemicals (fixed to clay particles in the soil) and organic matter which depletes the soil quality and contributes to reduced water quality of water bodies where the materials are often deposited. High agro-chemical use can have effects on aquatic ecosystems as run-off from fields reaches rivers and water bodies leading to bioaccumulation7 in species and eutrophication8.

5 Data is not available to be able to estimate the area that has been initially cleared for cattle ranching and subsequently used for soya cultivation. 6 The Atlantic Forest and Cerrado are recognised as Conservation International biodiversity hotspots and by the WWF as part of their Global 200 ecoregions. 7 Agro-chemicals refers to any chemicals that are used to improve an agricultural crop 8 Eutrophication occurs where the nutrient levels in a water body become elevated which stimulates productivity and algal growth. Algal blooms can have negative impacts on aquatic life as light and oxygen availability are reduced.


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Cultivation of soya in large-scale monoculture systems without rotation also increases the risk of crop diseasesxv, reduced biodiversity and soil quality as nutrients are not replaced by rotation with other crops. This further increases the demand for chemical inputs. No-till methods which are increasingly being favoured, while increasing soil quality, tend to also cause increase agro-chemical use.

Modernisation of cultivation practices has lead to many farmers becoming reliant on ‘improved’ crop varieties, which are sourced from external suppliers, rather than on indigenous, locally sourced varieties. This has lead to dependence on external seed suppliers and may be also causing a reduction in the genetic resources. The widespread use of Roundup Ready soya beans (the most common type of Genetically Modified (GM) soya beans) in Argentina for example has lead to a number of issues including adaptation of pests to be suited to the Roundup Ready soya beans growing environment and subsequent increase in demand for pesticidesxvi and a resultant dependence of farmers on markets for seeds and agrochemicals. In addition, there have been concerns raised over illegal growing of GM soya beans in Brazil which have been brought from Argentina, despite the Brazilian government restricting GM cultivation.

Development of road and rail infrastructure to reduce the costs of transporting soya have caused destruction and fragmentation in forest and savannah areas e.g. Brazil and have encouraged additional destruction of forests as accessibility increasesxvii.

Soya cultivation has contributed to the marginalisation of smallholders, to changing patterns of land ownership and to infringements of labour rightsxviii in many instances, particularly in Brazil. In the Amazon region, large-scale mechanised systems of production have lead to the exclusion of local farmers where smaller farm holdings and public lands have been amalgamated to create large farmsxix resulting in reduced employment opportunities as the larger farms employ fewer labourers than the smaller holdings. The dominance of large land holdings has concentrated economic and political power into the wealthier members of society and expansions have caused disputes over land tenure. Small farmers also tend to experience difficulty in gaining credit. Heavy agro-chemical use, associated with these large-scale systems of production, poses risks to human health through direct exposure and contamination of water supplies. Large farms often have poor working conditions when compared to the International Labour Organisation Standards (ILOS).

Processing

Processing of soya beans, in Bolivia for example, is seen to have beneficial economic impacts as the sector creates jobs and value is added along the production chain, as processed products receive higher prices. However, a study by AIDE Environment, has found that development of production for export has lead to an uneven distribution of income9 as multinational companies and large-scale landowners tend to receive a considerable proportion of the income, rather than indigenous peoplexx.

9 A similar trend to Paraguay


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The impacts of road haulage increase noise and pollution due to truck movements. Also, the use of hexane in the process has potential implications for accidental spillages causing poisoning of aquatic organisms (although hexane does not readily dissolve, suggesting there is less likelihood of the realisation of this risk). Soya bean crushing plants require fuel and in some instances surrounding woodland vegetation is used which exacerbates deforestation e.g. Paria, Brazil. There is however generally a lack of information relating to the environmental impacts from processing soya beans and wastes arising from processing may potentially be a consideration.

Exposure to chemicals such as hexane, used in the crushing process, pose potential health risks. Redevelopment associated with the industry, such as port development in Brazil, has had social implications such as displacement of local people from harbour areas. However, the data available for the social impacts of processing soya beans is scarce which makes assessing impacts problematic.

Supply Chain

Overview The soya supply chain involves the following main actors:

• producers (increasingly focused into large scale systems of production controlled by multinationals e.g. ADM, Bunge, Cargill, Louis Dreyfus),

• material suppliers (e.g. machinery, agro-chemicals etc), • financial institutions, • processors, • wholesalers, • retailers, and • consumers.

The key actors in the soya industry are influenced by national strategies such as governments of key exporting countries supporting increased production (e.g. Brazil and Argentina) and in some cases processing (i.e. Bolivia). The sector dominance of large multinationals such as Archer Daniels Midlands (ADM), Bunge, Cargill and Louis Dreyfus of all stages of the supply chain also means that multinational companies have a disproportionate level of control over the soya production and processing chain. The supply chain also operates within an institutional context affected by international WTO rules and national laws and standards.

Key nodes

The key nodes of the soya supply chain are the pre-cultivation and cultivation stages. Key actors during these stages which could be important for policy initiative development include financial institutions, multinational companies, consumers and national governments.

Conclusions & Recommendations


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The environmental assessment concluded that the pre-cultivation stage of the cultivation of soya beans is the most significant due to the deforestation of a globally important biodiversity source. In addition the social and economic effects at this stage affect sensitive receptors including indigenous peoples and local labour.

The key supply chain actors to be focused on are the multi-national corporations that control all the stages of the supply chain. However, the trend of increased consumption of soya may undermine any efforts to mitigate for impacts that occur during production, therefore there is a need to address the end users of soya to reduce demand through the use of an alternative of a more environmentally benign nature.

The majority of the information that was available for this case study has been qualitative in nature. Sources have been biased towards Non Governmental Organisation (NGO) research and in particular the WWF. There have been a number of reports commissioned relating to soya production and processing which include photographic evidence and do not appear to contradict one another. However, this cannot make up for primary research which this case study presently lacks. It has been possible to draw out broad themes for the impacts of soya production and processing but it is crucial to be aware of the differences, which are sometimes subtle, that exist between and within each country of focus.

• The impacts of soya cultivation are only beginning to be recognised in the UK. Raising awareness amongst consumers could help change behaviour and encourage certification schemes

• Financial institutions provide loans for cultivation encouragement to agree on minimum standards e.g. social conditions, protection of forests etc.

• Multinational companies have a major role in the soya supply chain encouraging their involvement in the roundtable or other schemes could be beneficial dialog with national governments for sustainable development of the soya industry

• The significance of the UK’s import power should be assessed in order to determine the most appropriate commodity to focus on for a particular country. For instance, the evidence suggests that the UK may not be a significant influence on Brazilian soya bean production (our imports making up 3% of the Brazil soya bean exports, and that making up 5% of Brazils total imports.


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1 Commodity Overview 1.1.1 Glycine max or the Soyabean (or Soya bean in UK terminology) is a legume which

originated in eastern Asia. The soya bean plant cultivated today varies from its original wild progenitor. The soya bean plant generally germinates, flowers and dies within the course of a year although growth habit and height tend to vary. Heights can range from a maximum of 20 cm to up to 2 meters tall10.

1.1.2 The soya bean is classed as an oilseed and the word soya has its origins in shoyu, the Japanese name for soy sauce/soy sauce11.

1.1.3 In 2004, 41% of the global production of soya was attributable to the USA, the largest producing country in the world12. However, current trends suggest that the rate of growth in areas under production in Brazil and Argentina is greater than the US. The total South American share of the global soyabean market amounts to 42%. Brazil now is the second soyabean producing country in the world with a market share of 24%. Argentina ranks third, with a 15% share of world production and the highest growth rate (143%) over the past seven years. Paraguay and Bolivia account for another 2% respectively 1% of world production. Due in part to restrictions in the area of new land suitable for soya in the US, this change is principally driven by rising global demand for traditional soya products, expected to increase by 60% by 2020 due to ‘growing and increasingly affluent populations’13. In addition to Brazil and Argentina, Bolivia and Paraguay will likely show significant increases in their areas under soya production. Increasing global interest in bio-fuels could encourage soya production yet further in the future. Significant barriers to entry to the soya industry exist owing to the sector dominance of large multinationals such as Archer Daniels Midlands (ADM), Bunge, Cargill and Louis Dreyfus. Ownership of crops is similarly controlled either by large multinationals or other large companies. Key nodes which could be influenced include producers, governments, buyers, investors and regulators.

1.1.4 UK Soya products are principally sourced from Brazil (responsible for 89% of the value for whole and broken soya beans). Soya oils are primarily sourced from the Netherlands and Belgium (responsible for 65% and 22% respectively). Soya meal imports come primarily from Belgium (responsible for 36% of import value). The Netherlands and Belgium source most of their soya beans and products from Brazil, Argentina, Paraguay and Bolivia.

10 WIKIPAEDIA (2006) accessible via: http://en.wikipedia.org/wiki/Soy_bean 11 http://en.wikipedia.org/wiki/Soybean 12 Source of all data in para 1.1.7 is FAO Stat accessible via: http://faostat.fao.org 13 http://www.wwf.org.uk/news/scotland/n_0000001332.asp

http://en.wikipedia.org/wiki/Legume

http://en.wikipedia.org/wiki/Asia

http://en.wikipedia.org/wiki/Oilseeds

http://en.wikipedia.org/wiki/Shoyu

http://en.wikipedia.org/wiki/Japanese_language



1.2 Uses

Compound feed industry

1.2.1 Soya meal is mixed with other ingredients including some soya oil and other meals to form feed for livestock14. In particular, it is favoured for pigs and poultry due to the high protein and low raw cellulose content making it suited to single stomached animals15.

1.2.2 The main producers of feed in the UK are: Mole Valley Farmers and Cherwell Valley Silos.

Cosmetics industry

1.2.3 Soya bean oil and meal are used in the cosmetics industry and soya oil is also used to manufacture other products e.g. soaps16. Table 1 below shows some of the key companies producing cosmetics and detergents.

Table 1: European cosmetics & detergent producers

European cosmetics & detergents producers

Company Country of origin Products

Beiersdorf Germany Cosmetics Henkel Germany Detergents

L’Oreal France Cosmetics Unilever UK/Netherlands Cosmetics, detergents

Chemical industry

1.2.4 Soya bean oil is used in the chemicals industry too as an ingredient in paints, inks, lacquer and diesel. Soya meal is also used to make paints and inks in addition to pharmaceuticals and plastics17.

1.2.5 Globally, these industries increasingly use whole soyabean-derived ingredients.

14 Van Gelder, J. W. & Dros, J.M., (2003) Corporate actors in the South American soy production chain, Research paper for WWF Switzerland, accessible via: http://www.bothends.org/strategic/soy15.pdf 15 Ibid 16 Ibid 17 Ibid



2 SUPPLY AND DEMAND STATISTICS AND TRENDS18 2.1.1 In order to gain a better insight into the supply chain and impacts of soya, a number

of countries are examined in greater depth in this case study. Argentina, Brazil and the USA are examined as they are important global producers of soya, the Netherlands and Belgium as they are important importers and processors of soya and Bolivia is looked at too, as another South American example. Paraguay and China, two other potentially important countries to examine in relation to soya, have not been studied in depth due to resource limitations.

2.1.2 In 2005, 209,975,643 Mt of soya beans were produced globally19. The soyabean production chain yields three intermediate products:

• Whole soya beans 13% of total world crop; • Soya oil 16% of total world crop; and • Soya meal 69% of total world crop.

2.1.3 In 2004, the UK imported 732,177,230kg of soya beans which had a trade value of $238,455,723. The UK also imported soya oil and soya meal. Imports of soya oil were smaller than of soya beans (in 2004, 22,890,571kg were imported into the UK) whilst imports of soya meal for 2004 were 6,904,769kg.

Table 2: Total amount of soya beans the UK imports (2004):

Reporter Partner Commodity Trade Value ($) Trade Quantity (kg)

Soya beans United Kingdom World [SITC Rev.3 code 2222]

238,455,723 732,177,230

Reporter Partner Commodity Trade Value Trade Quantity

Soya bean oil, refined, and its fractionsUnited Kingdom World

[SITC Rev.3 code 42119] 18,458,804 22,890,571

Reporter Partner Commodity Trade Value Trade Quantity

United Kingdom World Flours & meals of soya beans

H2-120810

4,589,183 6,904,769

2.1.4 Tables 3 below shows that the major exporters of soya beans in 2004 to the UK were Brazil, the USA, and Canada. The main exporters of soya oil to the UK are the Netherlands, Belgium, Germany and France (Table 4). In 2004, the main exports of soya meal to the UK were from Belgium, Ireland, The Netherlands, the USA, Canada and Israel (Table 5).

18 All data from Comtrade 2004 unless stated otherwise. 19 (FAO STAT)



Table 3: The top trade partners that the UK imports soya beans

Partner Code Trade Value ($) Trade Quantity (kg) World 2222 $238,455,723 732,177,230Brazil 2222 $193,151,995 594,600,485USA 2222 $20,872,831 82,636,801Canada 2222 $9,261,719 25,122,718Belgium 2222 $7,148,398 7,608,265Italy 2222 $2,975,320 6,679,397Ireland 2222 $2,280,032 9,000,511Netherlands 2222 $1,367,097 3,721,454Argentina 2222 $554,581 1,252,640China 2222 $485,305 851,943Sweden 2222 $166,898 600,522

Table 4: The top trade partners that the UK imports soya oil

Partner Code Trade Value (kg) Trade Quantity (kg)

World 42119 $18,458,804 22,890,571Netherlands 42119 $13,791,191 19,275,851Belgium 42119 $2,211,362 1,750,792Germany 42119 $1,143,213 501,110France 42119 $1,072,829 1,136,991USA 42119 $109,738 96,061Brazil 42119 $87,266 92,160Sweden 42119 $15,224 9,631Norway 42119 $13,107 4,480Czech Rep. 42119 $10,913 23,020Denmark 42119 $2,500 265

Table 5: The top trade partners that the UK imports soya meal

Partner Code Trade Value Trade Quantity

World H2-120810 $4,589,183 6,904,769Belgium H2-120810 $1,648,145 2,401,066Ireland H2-120810 $934,212 2,764,324Netherlands H2-120810 $705,410 1,097,965USA H2-120810 $649,866 73,444Canada H2-120810 $255,362 141,588Israel H2-120810 $119,956 626

2.1.5 Tables 6, 7 and 8 below show the amounts of soya beans, oil and meal that are exported by each country to the rest of the world. From this information it is clear that in 2004, the USA, Brazil and Argentina were the largest exporters of soya beans and that Brazil, the Netherlands, Germany and the USA were the largest exporters of soya oil. The largest exporters of soya meal in 2004 were the USA, Belgium, the Netherlands, Bolivia and China with a number of EU countries also being notable.



Table 6: Top partners global exports of soya beans

Reporter Partner Code Trade Value ($) Trade Quantity (kg) USA World 2222 6,692,043,829 25,602,608,322Brazil World 2222 5,394,906,541 19,247,689,010Argentina World 2222 1,740,114,212 6,519,805,267Netherlands World 2222 365,680,567 1,172,882,597Canada World 2222 294,871,023 984,269,901China World 2222 144,931,504 0Belgium World 2222 24,342,925 59,741,200Italy World 2222 13,969,551 28,518,751Ireland World 2222 6,389,285 10,861,042China, Hong Kong SAR World 2222 5,097,709 13,161,271Sweden World 2222 25,756 21,331

Table 7: Top partners global exports of soya oil

Reporter Partner Code Trade Value ($) Trade Quantity Brazil World 42119 226,338,284 394,489,571Netherlands World 42119 183,197,963 266,269,093Germany World 42119 167,226,000 240,694,888USA World 42119 127,760,033 158,907,355Belgium World 42119 47,873,322 56,802,419France World 42119 7,090,388 7,275,936Sweden World 42119 5,474,939 5,284,000Denmark World 42119 3,264,826 3,583,538Czech Rep. World 42119 1,308,868 1,653,258Norway World 42119 895,206 824,232

Table 8: Top partners global exports of soya meal

Reporter Partner Code Trade Value ($) Trade Quantity USA World H2-120810 227,860,184 797,883,181Netherlands World H2-120810 38,215,018 141,267,627Belgium World H2-120810 30,131,522 75,783,793Bolivia World H2-120810 15,376,142 56,320,807China World H2-120810 7,846,650 0Spain World H2-120810 5,667,909 21,015,237Austria World H2-120810 4,727,814 7,608,607Australia World H2-120810 4,050,375 9,445,337Germany World H2-120810 3,370,000 5,984,623Portugal World H2-120810 3,339,865 10,175,674United Kingdom World H2-120810 3,112,809 6,266,077



2.1.6 Tables 9, 10 and 11 show the proportion of soya beans, soya oil and soya meal exported from each of the main countries identified exported to the UK. The UK represents an important destination for the export of soya beans for Belgium, Ireland and Italy. Exports of soya beans to the UK as a proportion of total soya bean exports are small for China, Argentina, the Netherlands and the USA. Brazil and Canada export 4% and 3% of soya beans to the UK. Exports of soya oil to the UK from Brazil, the USA, Germany, Sweden and Denmark represent a very small component of total soya oil exports from these countries. Exports to the UK of soya oil account for 15% of France’s exports of soya oils, 7% of the Netherlands’s and 5% of Belgium’s. Exports of soya meal to the UK from Ireland and Canada represent 71% and 35% of the total exports of soya meal from these two countries (Table 11). The UK is the destination for 6% of exports from Israel and 5% of exports of soya meal from Belgium.

Table 9: The proportion of soya beans that UK imports represent

Reporter Code Exports to World ($) Exports to UK ($) UK imp as % of all exports USA 2222 6,692,043,829 $20,467,363 0.31%Brazil 2222 5,394,906,541 $146,815,906 2.72%Argentina 2222 1,740,114,212 $203,102 0.01%Netherlands 2222 365,680,567 $3,788,656 1.04%Canada 2222 294,871,023 - -China 2222 144,931,504 $400,690 0.28%Belgium 2222 24,342,925 $6,291,746 25.85%Italy 2222 13,969,551 $2,108,846 15.10%Ireland 2222 6,389,285 $6,365,134 99.62%China, Hong Kong SAR 2222 5,097,709 - -Sweden 2222 25,756 - -

Table 10: The proportion of soya oil that UK imports represent

Reporter Code Exports to World ($) Exports to UK($) UK imp as % of all exports Brazil 42119 226,338,284 $736,346 0.33%Netherlands 42119 183,197,963 $31,875,723 17.40%Germany 42119 167,226,000 $963,000 0.58%USA 42119 127,760,033 $25,863 0.02%Belgium 42119 47,873,322 $2,132,305 4.45%France 42119 7,090,388 $609,901 8.60%Sweden 42119 5,474,939 $17,716 0.32%Denmark 42119 3,264,826 - -Czech Rep. 42119 1,308,868 - -Norway 42119 895,206 $13,951 1.56%



Table 11: The proportion of soya meal that UK imports represent

2.1.7 The largest exporters of soya beans, in terms of trade value ($), to the UK are the USA, Brazil and Canada. These countries also rank highly in terms of total exports of soya beans to the world but the proportion destined to the UK is very small (although slightly elevated for Brazil). Argentina, the Netherlands and China export less to the UK than other countries in table 3 but all export relatively large amounts of soya beans to the rest of the world. Again, however the proportion exported to the UK is small. Belgium, Italy and Ireland are ranked in the middle of the table (3) for exports to the UK and similarly for exports to the world of soya beans (table 6). The proportion of exports from these countries, who it should be noted are not significant producers of soya beans, that is exported to the UK is relatively high.

2.1.8 The Netherlands, Belgium, Germany and France were the largest exporters to the UK of soya oil in 2004, in terms of trade value ($) (table 4). These countries were also relatively large exporters of soya oil to the world, though figures are less than for soya beans. The proportion of exports from these countries that goes to the UK is not insignificant, particularly for the Netherlands and France (Table 10). The proportion of soya oil exports to the UK from the other countries listed in table 4, is relatively small.

2.1.9 Ireland was the second largest exporter of soya meal to the UK in 2004 and the proportion of exports to the UK was high but Ireland does not support a significant amount of soya meal to the world. The largest exporter of soya meal to the UK, Belgium, exports a large amount of soya meal to the world and 6% of these exports are to the UK.

2.1.10 It is important however, to place exports of soya beans, soya oil and soya meal from each country in the context of their total exports in order to understand how important exports of soya products are to the economy. Tables 9, 10 and 11 below therefore show the total value of exports from each country, and tables 12, 13 and 14 show the proportion soya beans, soya oil and soya meal make up of this total.

Reporter Code Exports to World ($) Exports to UK UK imp as % of all exports USA H2-120810 227,860,184 $649,866 0.29%Netherlands H2-120810 38,215,018 $705,410 1.85%Belgium H2-120810 30,131,522 $1,648,145 5.47%Israel H2-120810 1,998,000 $119,956 6.00%Ireland H2-120810 1,316,566 $934,212 70.96%Canada H2-120810 738,989 $255,362 34.56%



Table 12: The proportion of all exports that soya beans contributes to the export partner's total exports

Reporter Partner Trade Value ($) Trade Quantity USA World 817,905,426,395 N/AChina World 593,325,448,255 N/AItaly World 353,491,959,277 N/ACanada World 316,611,848,399 N/ABelgium World 306,438,248,028 N/ANetherlands World 290,477,040,439 N/AChina, Hong Kong SAR World 265,542,808,958 N/ASweden World 123,203,653,829 N/AIreland World 104,314,264,403 N/ABrazil World 95,002,386,723 N/AArgentina World 34,314,390,907 N/A

China, Macao SAR World 2,812,054,495 N/A

Table 13: The proportion of all exports that soya oil contributes to the export partner's total exports

Reporter Partner Trade Value Trade Quantity Germany World 916,585,593,000 N/AUSA World 817,905,426,395 N/AFrance World 410,699,752,809 N/ABelgium World 306,438,248,028 N/ANetherlands World 290,477,040,439 N/ASweden World 123,203,653,829 N/ABrazil World 95,002,386,723 N/ANorway World 80,488,778,368 N/ADenmark World 74,792,641,734 N/ACzech Rep. World 65,771,534,270 N/AUnited Rep. of Tanzania World 1,465,833,532 N/A

Table 14: The proportion of all exports that soya meal contributes to the export partner’s total exports

Reporter Partner Trade Value ($) Trade Quantity USA World 817,905,426,395 N/ACanada World 316,611,848,399 N/ABelgium World 306,438,248,028 N/A

Netherlands World 290,477,040,439 N/A

Ireland World 104,314,264,403 N/AIsrael World 38,620,084,000 N/A



Table 15: The proportion of all exports that soya beans contributes to the export partner's total exports

Reporter Code Trade Value % of exports USA 2222 6,692,043,829 0.82%Brazil 2222 5,394,906,541 5.68%Argentina 2222 1,740,114,212 5.07%Netherlands 2222 365,680,567 0.13%Canada 2222 294,871,023 0.09%China 2222 144,931,504 0.02%Belgium 2222 24,342,925 0.01%Italy 2222 13,969,551 0.00%Ireland 2222 6,389,285 0.01%China, Hong Kong SAR 2222 5,097,709 0.00%Sweden 2222 25,756 0.00%

Table 16: The proportion of all exports that soya oil contributes to the export partner's total exports

Reporter Code Trade Value ($) % of exports Belgium 42119 47,873,322 0.02%Brazil 42119 226,338,284 0.24%Czech Rep. 42119 1,308,868 0.00%Denmark 42119 3,264,826 0.00%France 42119 7,090,388 0.00%Germany 42119 167,226,000 0.02%Netherlands 42119 183,197,963 0.06%Norway 42119 895,206 0.00%

Sweden 42119 5,474,939 0.00%USA 42119 127,760,033 0.02%

Table 17: The proportion of all exports that soya meal contributes to the export partner’s total exports

Reporter Code Trade Value % of exports USA H2-TOTAL 227,860,184 0.03%Netherlands H2-TOTAL 38,215,018 0.01%Belgium H2-TOTAL 30,131,522 0.01%Israel H2-TOTAL 1,998,000 0.01%Ireland H2-TOTAL 1,316,566 0.00%Canada H2-TOTAL 738,989 0.00%



2.1.11 Exports of soya beans are largely a very small proportion of each countries total exports with the exception of Argentina and Brazil. As table 12 above shows, exports of soya beans from Argentina and Brazil contribute to approximately 5% and 6% of these countries total exports. For all countries listed for both soya oil and soya meal (tables 13 and 14), the proportion that exports of these two commodities make up of the total exports from the key exporting countries to the UK, is very small.

2.1.12 The Comtrade data above show that there are very few countries for which soya beans, soya oil or soya meal represents an important component of total exports in addition to the UK being a important destination for soya beans and soya oil exports. Brazil exported approximately 4% of all soya beans exported in 2004 and soya bean exports represent 6% of all of Brazil’s exports. For all other countries even though the UK may be an important destination for exports of soya beans or oil, the export of these commodities represents only a very small component of the total exports.

2.1.13 In 2004, approximately 91,145,361ha were under soya cultivation globally. The breakdown of cultivation across the continents is in table 13. Table 18: Area harvested for soya beans

Continent Land area harvested (ha) in 2004 SOUTH AMERICA 38,948,676NORTH AMERICA 31,107,560ASIA 18,445,601EUROPE 1,396,322AFRICA 1,133,518CENTRAL AMERICA 80,684OCEANIA 33,000

Source: http://faostat.fao.org/faostat/collections?version=ext&hasbulk=0&subset=agriculture

2.1.14 The area of each of the countries identified in table 13 is shown in table 14 below. In 2004, the USA had the largest area under cultivation and Brazil, Argentina and China also had significant areas under cultivation, in comparison to the other countries. However, other countries which were identified as important exporters of soya beans to the UK such as Belgium, Italy, Ireland and the Netherlands had a relatively small area under production. This could suggest that these countries import soya beans and then re-export them to the UK. Table 19: Area under production of soya beans

SITC Rev 3 2222- Soya beans Country Area (1000 ha)Argentina 11,405Belgium 0Brazil 16,365Canada 1,024China 8,720

http://faostat.fao.org/faostat/collections?version=ext&hasbulk=0&subset=agriculture



SITC Rev 3 2222- Soya beans Country Area (1000 ha)Czech Rep. 3Denmark 0France 75Germany 1Ireland 0Italy 152Netherlands 0Norway 0Sweden 0USA 29,315Note: The land area under cultivation for soya beans (2222) is inclusive of the land area for soyabean oil. Adding them together would be double-counting.

2.1.15 As outlined in section, 1.6.17, this case study investigates production and processing in five specific countries (Brazil, Argentina, Bolivia, the USA, Canada, The Netherlands and Belgium). All five producing (i.e. excluding the Netherlands and Belgium) countries have experienced increases in the area under production since 1961. In the past decade Brazil and Argentina have experienced the most rapid increases in areas under production whereas the area under production in the US has remained constant (Figure 2).

0

2,500,000

5,000,000

7,500,000

10,000,000

12,500,000

15,000,000

17,500,000

20,000,000

22,500,000

25,000,000

27,500,000

30,000,000

32,500,000

Ye a r

United States

Canada

Argentina

Bolivia

Brazil

Figure 2: Graph to show the area of land under soya bean cultivation in selected countries

2.1.16 The rapid increases area under soya cultivation in Brazil and Argentina have largely brought about through the conversion of forest and savannah lands and the conversion of cattle pasture to soya cultivation.



National Hectares

2.1.17 The UK imports of soya beans has large national hectares values from Brazil, Canada and the USA (Table 17). The UK accounts for a small amount of national hectares for soya beans from Sweden, China, Argentina and The Netherlands.

2.1.18 The import of soya oil to the UK contributes to national hectares for the Netherlands, Belgium and France (Table 16). The remaining countries have small national hectares with the possible exception of Germany.

Table 20: National Hectares for soya beans

Partner Code Trade Value NetWeight (kg) YF20 nha

Argentina 2222 $554,581 1,252,640 1.12 506Belgium 2222 $7,148,398 7,608,265 2.81 1,221Brazil 2222 $193,151,995 594600485 0.99 269,985Canada 2222 $9,261,719 25,122,718 0.89 12,770China 2222 $485,305 851,943 1.36 283Ireland 2222 $2,280,032 9,000,511 2.41 1,685Italy 2222 $2,975,320 6,679,397 1.45 2,073Netherlands 2222 $1,367,097 3,721,454 2.42 693Sweden 2222 $166,898 600,522 1.91 142USA 2222 $20,872,831 82,636,801 1.36 27,354

Table 21: National Hectares for soya oil

Partner Code Trade Value NetWeight (kg) YF nha Belgium 42119 $2,211,362 1,750,792 1.12 3,929Brazil 42119 $87,266 92,160 2.81 82Czech Rep. 42119 $10,913 23,020 0.99 58Denmark 42119 $2,500 265 0.89 1France 42119 $1,072,829 1,136,991 1.36 2,101Germany 42119 $1,143,213 501,110 2.41 521Netherlands 42119 $13,791,191 19,275,851 1.45 33,241Norway 42119 $13,107 4,480 2.41 5Sweden 42119 $15,224 9,631 2.41 10USA 42119 $109,738 96,061 1.45 166

Table 22: National Hectares for soya meal

Partner Code Trade Value NetWeight (kg) YF nha Belgium H2-120810 $1,648,145 2,401,066 1.12 1,183Canada H2-120810 $255,362 141,588 0.89 88Ireland H2-120810 $934,212 2,764,324 2.41 631

20 Yield Factor, specific to a country and a land type (e.g., Brazilian forest) (from National Footprint Accounts)



Israel H2-120810 $119,956 626 1.55 0Netherlands H2-120810 $705,410 1,097,965 2.42 249USA H2-120810 $649,866 73,444 1.45 28

2.1.19 Source: 0.18 oil extraction factor used to relate footprint intensity of soya to footprint intensity of soyabean oil, from GFN National Footprint Accounts.



3 POLICIES AND INITIATIVES 3.1.1 The frameworks are those political or voluntary structures that set the operational

environment for the commodity. Some of the initiatives that are identified in this section may have an indirect link to soya production and processing i.e. the initiative could be applied to soya but there is little evidence of this at present. This link will be explored as part of research for objective two, and discussion here provides a first-look at the types of existing frameworks.

Policy Framework

National Policies

3.1.2 National policies directly affect the supply chain of soya. The Brazilian government provide a range of subsidies for soya cultivation such as removing the VAT on soya bean exports and is investing heavily in the development of infrastructure. The Argentinean government actively encourages processing of soya domestically through levies on exports of soya beans and like Brazil is also investing in transport infrastructure. The EU imposes import duties on soya meal and soya oil in order to encourage domestic production and the US has a number of policies which are designed to support the domestic agriculture sector.

International Labour Organisation21

3.1.3 The International Labour Standards, Declaration on Fundamental Principles and Rights at Work and International Programme on the Elimination of Child Labour have all been ratified under the auspices of the International Labour Organisation and seek to create fair working conditions (covering a wide variety of topics).

Initiative Framework

Basel Criteria for Sustainable Soya 22

3.1.4 The Basel Criteria were initially developed in 2004 with the objective of helping work towards sustainable soya production i.e. production which does not result in the negative environmental, social and economic problems that can be associated with soya cultivation at present. The criteria have been developed from other standards and criteria e.g. ILO Convention and Eurepgap and are flexible in that they can be developed to suit local needs and can be used at all scales. The implementation of the criteria can also be carried out in stages, easing pressure on those who would not be able to meet all the requirements initially.

3.1.5 The six criteria general criteria contain a number of sub-criteria and are designed to be a communication tool both to help producers work towards best practice and for producers to be assured of sustainable production. The six criteria are:

21 International Labour Organisation accessible via: http://www.ilo.org/ 22 ProForest (2004) The Basel Criteria for Responsible Soy Production and Proforest (2004) The Basel Criteria for Responsible Soy Production: Local Interpretation for use in Brazil



• Compliance with applicable legislation;

• Technical management and production;

• Environmental management;

• Social management;

• Continuous improvement; and

• Traceability.

3.1.6 The criteria and sub-criteria23 can be used either as a framework for auditing producer activities i.e. an internal management tool or as a method for confirming the sustainable production of soya to consumers.

International Federation of Organic Agriculture Movements (IFOAM)24

3.1.7 The IFOAM organisation was established with the aim of pursuing organic agriculture across the world. The non-governmental organisation has members from different part of the organic production chain from farmers to certifiers across the world and seeks to develop communication between them. IFOAM’s Organic Guarantee System establishes a set of standards which provide a benchmark for quality organic production. Certification bodies can then apply for accreditation to these standards which demonstrates to consumers that goods have been organically certified by the IFOAM Organic Guarantee System. Standards include breeding, biodiversity and resource use criteria.

Social Accountability International (SAI)25

3.1.8 SAI is a non-governmental organisation which seeks to work towards social development through the ethical treatment of workers worldwide. The SAI standard, SA8000 has been developed as a tool which can be used to assess compliance with a high standard of working conditions. The SA8000 is based on the International Labour Organisation (ILO) convention and includes standards for health and safety, management systems, no child or forced labour, working hours and compensation.

Best Management Practices (BMPs)

3.1.9 Best Management Practice approach to soya production focuses on reducing the impacts of soya cultivation. BMPs for soya cultivation could seek to encourage rational land use, to reduce the conversion of forests and savannahs (for example through improvements to degraded land, establishment of protected areas, zoning26 etc.), reduce soil erosion, encourage rotation with other crops, reduce the impacts of

23 For a full list refer to: http://www.aidenvironment.org/soy/01_basel_criteria_for_responsible_soy_production.pdf 24 International Federation of Organic Agriculture accessible via: http://www.ifoam.org/index.html 25 Social Accountability International accessible via: http://www.sa-intl.org/ 26WWF (2006) Soybeans accessible via: http://www.panda.org/about_wwf/what_we_do/policy/agriculture_environment/commodities/soybeans/better_management_practices/zoning/index.cfm



felling, minimise the use of agrochemicals and runoff and improve working conditions for farm labourers (IIED Ch 4).

3.1.10 To date no-tillage methods and organic production have been adopted in Brazil for example but other BMP techniques have not been implemented. Initial steps to encourage development of improved techniques have been made through meetings between the large producing companies and the WWF, in addition to the establishment of the roundtable on sustainable soya.

3.1.11 Important barriers include:

• The availability of cheap land; • Inefficient implementation of regulations; • Short-term approach to cultivation; • Costs of improved labour conditions and cultivation techniques; • Lack of government support and guidance; • Lack of awareness of sustainability issues; and • Indirect linkages between producers and consumers.

Roundtable for Sustainable Soya27

3.1.12 The first agreement of the Roundtable for Sustainable Soya was signed in Foz do Iguazu in March 2005. The conference consisted of a variety of delegates from large and small soya producers, soya processors, suppliers of inputs, trade and industry representatives, investors, governmental and non-governmental organisations, indigenous people and members of the scientific community. The conference agreed:

• ‘To acknowledge that soya production brings about social, economic,

environmental and institutional benefits and problems; • To continue with the process of addressing these problems and develop

and reinforce the chain for responsible soya production; • To ensure that this is a transparent, open, multi-sectoral, participatory

and decentralized process; and • To take into account issues discussed in the working groups in all future

work’.

EurepGAP – The Global Partnership for safe and sustainable agriculture28

3.1.13 EUREPGAP is an initiative which has members from the retail and agriculture sectors and was established with the objective ‘to develop widely accepted standards and

27 WWF (2005) Roundtable on sustainable soy accessible via: http://assets.panda.org/downloads/rssacuerdofozenglish.pdf 28 EUREPGAP – The Global Partnership for safe and sustainable agriculture accessible via: http://www.eurepgap.org/Languages/English/about.html



procedures for the global certification of Good Agricultural Practices (GAP). The initiative was set up as a way to reassure consumers that agricultural production was both ‘safe and sustainable’ through a set of criteria and standards. EUREPGAP also acts as a forum for dialog between different groups and organisations in order to help create constant improvement.

Sustainable Agriculture Network29

3.1.14 The Sustainable Agriculture Network is a alliance of conservation organisations which is co-ordinated by The Rainforest Alliance (the Secretariat). The Rainforest Alliance of Certified seal of approval has been devised by the SAN to promote sustainable agriculture through linking ethical consumers with ‘responsible farmers’. The standards cover ecosystem conservation, wildlife conservation, water conservation, soil management, health and safety, labour conditions, community relations and crop management.

Minimum Criteria about soya bean cultivation in Forest Areas 30

3.1.15 The Forestry Working Group of the Brazilian Forum of NGOs and Social Movements set out a list of requirements that they considered to be the minimum criteria for soya production in forest areas. The criteria are:

• ‘Regular origin of land titles of the producer; • The area of current land property was not established putting together

areas below 200ha (if bought after 1999); • Legal declaration and maintenance of the ‘legal reserve’ (as required

under Brazilian Law to be 80% of property in the Amazon forest); • The area under cultivation was deforested before 1999; and • All labour force is legally registered’.

Environmental Management Systems Standards ISO14001

3.1.16 International Organisation for Standardisation (ISO) 14001 Environmental Management System Standards provide a means of demonstrating that an organisation has developed and implemented a system of practices to improve their environmental performance.

• Cert ID – ProTerra scheme.

3.1.17 The Coop commissioned CertID and GenericID to examine and develop criteria for establishing the sustainability of soya production31. The ProTerra scheme is based on the Basel criteria and certification lasts for one year. The ProTerra scheme has been recently introduced and the suitability of the scheme is yet to be established.

29 The Rainforest Alliance accessible via: http://www.rainforest-alliance.org/programs/agriculture/san/index.html 30 Brazilian Forum of NGOs and Social movements – Forest working group accessible via: http://www.amazonia.org.br/english/noticias/print.cfm?id=107743 31 ENDS Report (2006) Private Firm Launches soya certification scheme, ENDS May 2006



4 SUPPLY CHAIN ANALYSIS 4.1.1 The supply chain analysis of soya is divided into the different stages of production

and processing. For each stage, country specific information, for Brazil, Argentina, Bolivia, The USA, Canada, the Netherlands and Belgium is discussed where it is available. Figure 3 below provides an overview of the soya supply chain.

Figure 3: Soya supply chain overview

4.1.2 The key components of the soya supply chain are agricultural production (using a variety of systems), wholesalers, retailers, processing industry, materials suppliers and consumers. All components are affected by institutional and organisational systems32.

4.2 Production 4.2.1 Soya beans are produced in both small and large farms around the world and the

global average yield per hectare of soya beans is 2.3 tonnes, but there are strong differences between countries33. Soya’s nitrogen fixing qualities make it conducive to crop rotation, the effective use of which can reduce negative environmental

32 http://www.balancedtrade.panda.org/pdf/wwf.forupload1.doc 33 Dros, K.M. (2004) Managing the soy boom: Two scenarios of soy production expansion in South America, AIDE Environment, Commissioned by WWF Forest Conservation Initiative accessible via: http://www.aidenvironment.org/soy/06_managing_the_soy_boom.pdf



impacts related to production significantly. Soya is conducive to large scale, mechanized farming and “no till” farms have also been shown to have potential and success. Trends towards large-scale farms have been common in South America however small-scale farms are more common in Asia. Genetically modified soya (in the form of Roundup Ready Soya) has been approved by the UK government but is principally produced in the US and Argentina.

4.2.2 Farmers generally require capital in order to be able to purchase inputs such as agro-chemicals and machinery. On smaller farms national banks provide loans secured against land or machinery but on larger farms funds can be gained through the crushing company. Where the crushing company is based overseas, this enables short-term finance to be provided by international banks34.

Brazil

4.2.3 Production of soya in Brazil is mainly located in the Rio Grande do Sol, Parana and Santa Catarina states and more recently the Cerrado region including the Mato Grosso state. Figure 4 below shows the main areas of soya bean production in Brazil.

Figure 4: Intensity of soya cultivation in Brazil

Source: USDA (http://www.usda.gov/oce/waob/jawf/profiles/graphs/Brazil/BrazilSoyabeanMap.gif )

34 http://www.iied.org/SM/CR/documents/BMP_Ch4_soy.pdf#search=%22financing%20within%20the%20sector%20soy%22

http://www.usda.gov/oce/waob/jawf/profiles/graphs/Brazil/BrazilSoybeanMap.gif



4.2.4 The growth in production in Brazil has been characterised by the presence of large multinational companies and an ‘entrepreneurial approach to production’35. The largest soya producers are Andre Maggi, Camilas Cooperative and Itamarati. There are also numerous family enterprises which are often organised into cooperatives. Brazil imports a small amount of soya from Paraguay in addition to the amounts produced domestically.

Argentina

4.2.5 The main areas of soya bean production in Argentina are Cordoba, Santa Fe and Buenos Aires. As shown in Figure 5, there are also soya growing areas to the north of Argentina.

4.2.6 Production of soya in Argentina has increased significantly in recent years – almost doubling in the past six years36. Similar to Brazil, the production process is carried out both by small-scale family farmers (who are sometimes organised into cooperatives) and large scale agri-business.

35 Whyte, C. et al (Nd) Soy expansion in the Brazilian Amazon Region: A local and global social and environmental dilemma, Centre for Sustainable Development – University of Brasilia, accessible via: http://www.ambafrance.org.br/refeb/projets/article%20Chlo%E9%20Cadier.pdf 36 FAOSTAT accessible via: http://faostat.fao.org/



Figure 5: Soya bean production in Argentina37

37 Benbrook, C.M. (2005) Rust, Resistance, Run Down Soils, and Rising Costs – Problems facing Soybean Producers in Argentina, Agriculture BioTechnology InfoNet, Technical Paper Number 8, January 2005 accessible via http://www.greenpeace.org/raw/content/denmark/press/rapporter-og-dokumenter/rust-resistance-run-down-soi.pdf



Bolivia

4.2.7 The production of soya in Bolivia has followed a similar trend to Brazil and Argentina in terms of experiencing an increase in area under production. There are however two differences – first, the area under production has not increased as dramatically as these two countries and second, the yield has not significantly increased.

4.2.8 The main soya bean farmers include Patrik Din (farming 25,000ha), Sergio Marchetti (farming 24,000ha), Unisoya (farming 15,000ha), DESA (farming 15,000ha) and Hermanos Chavez (farming 12,000ha).

Canada and the USA

4.2.9 Soya bean cultivation in the USA occurs mainly in the ‘corn belt’ region, in particular in the states of Iowa, Illinois and Minnesota, and is typically cultivated in rotation with corn38.

Figure 6: Map showing the key soya producing areas of the USA39

38 Proforest and IIED (2004) Better management practices and agribusiness commodities : Phase II reports Commodity Guides accessible via: http://www.poptel.org.uk/iied/docs/cred/BMP_Ch4_soy.pdf 39 Source: USDA accessible via: http://www.usda.gov/oce/weather/pubs/Other/MWCACP/Graphs/USA/us_soybeans.pdf



4.2.10 The production of soya beans in the USA is predicted to remain stable despite competition from rapidly increasing production in Brazil and Argentina. The production is expected to be supported by large domestic markets for soya meal and oil, financial support and the well developed transport and infrastructure networks40. However, production costs are cheaper in Brazil and Argentina and therefore growth is not anticipated in the USA.

4.2.11 Production in Canada is focused mainly in Oregon but the total production is far less than in the USA41.

Netherlands and Belgium

4.2.12 No soya production occurs in the Netherlands or Belgium.

4.3 Trading

4.3.1 After the harvest, the soya beans are bought, collected and transported to crushing plants or processing industries. These stages in the production chain are the domain of the soya bean traders, which can vary from small, local companies to large, international conglomerates. The small, local traders usually will sell the soya beans to a crushing plant or processing industry in their own region, or to a large, international trader. The large, international traders sell the soya beans to crushing plants all over the world, in production and consumption countries. Often these crushing plants are owned by the same international trading group.

4.3.2 Soya bean trading and crushing in the four South American soya bean production countries (Brazil, Argentina, Paraguay and Bolivia) and is dominated by a limited number of large, international commodity trading companies. The four most important of these are42: Archer Daniels Midland (ADM) United States; Bunge , United States: Cargill, United States; Louis Dreyfus, France.

4.3.3 The three American trading companies mentioned also control 80% of the European soya bean crushing industry43.

4.3.4 At present China is increasing its soya production and processing capacity due to rising domestic demand, particularly for animal feed. This trend could have important impacts on the world supply and price of soya in the future.

Brazil

4.3.5 Soya bean trading in Brazil is largely controlled by a small number of international companies which operate on a large scale44. There are: Cargill (United States); Bunge (United States); Archer Daniels Midland (ADM) (United States); André et Cie (Switzerland); and Louis Dreyfus (France). Producers generally either trade directly

40 Ibid 41 Government of Canada (2006) Biobasics accessible via: http://www.biobasics.gc.ca/english/View.asp?x=749 42 Van Gelder, J. W. & Dros, J.M., (2003) Corporate actors in the South American soy production chain, Research paper for WWF Switzerland, accessible via: http://www.bothends.org/strategic/soy15.pdf 43 Ibid 44 Ibid



with these companies or will deliver to intermediate traders, who in turn, deliver to the international traders.

4.3.6 The soya bean industry in Brazil has been supported and encouraged by the national government mainly through the strong agricultural lobby. The Government provides subsidies for prices, credit and infrastructure. Investments in infrastructure have had an effective ‘multiplier effect’ whereby initial public investment attracts private investment45. Table 18, below, shows the principal destinations for soya beans from Brazil. In 2004, the main destinations for soya beans was China and the EU, in particular, the Netherlands, Germany, Spain and Italy.

Table 23: Brazil’s top trading partners for soya beans

Reporter Partner Code Trade Value Trade Quantity

Brazil World 2222 $5,394,906,541 19,247,689,010Brazil China 2222 $1,621,735,722 5,678,004,816Brazil Netherlands 2222 $952,411,754 3,569,138,453Brazil Germany 2222 $498,238,872 1,635,512,902Brazil Spain 2222 $418,310,462 1,542,158,945Brazil Italy 2222 $240,282,645 862,254,750Brazil Other Asia, nes 2222 $232,509,958 841,003,500Brazil Iran 2222 $181,500,260 627,499,875Brazil Portugal 2222 $148,937,968 523,004,937Brazil United Kingdom 2222 $146,815,906 532,093,500

Argentina

4.3.7 The companies Cargill, Bunge, Andre et Cie and Louis Dreyfus also dominate the Argentinean soya market. In addition, ConAgre (United States) and Glencore (Switzerland) are also influential in Argentina. A small fraction of soya is imported into Argentina relative to domestic production and as was evident in Brazil, producers tend to either deliver directly to the international organisation or via. Intermediaries. In 2004, the main destination for soya beans from Argentina was China. Other key destinations were Thailand, Turkey and Indonesia (see table 19).

Table 24: Argentina’s top trading partners for soya beans


Argentina World 2222 $1,740,114,212 6,519,805,267Argentina China 2222 $1,153,431,839 4,341,700,773Argentina Thailand 2222 $146,161,947 551,164,500 45 Niesten E. T. et al (2004) Commodities and Conservation: The need for greater habitat protection in the tropics, Conservation International – Centre for Applied Biodiversity Science Report, Washington DC accessible via. http://www.bothends.org/strategic/soy41-Commodities%20and%20Conservation.pdf



Argentina Turkey 2222 $75,858,384 275,065,437Argentina Indonesia 2222 $59,082,707 229,235,812Argentina Egypt 2222 $45,817,632 165,891,000Argentina Israel 2222 $31,458,197 111,661,937Argentina Malaysia 2222 $28,716,880 96,510,625Argentina Greece 2222 $26,695,367 91,889,062Argentina Chile 2222 $24,141,369 97,803,437 Argentina United Kingdom 2222 $203,102 566,875

Bolivia

4.3.8 The principal destination for soya bean exports from Brazil is to other South American countries. There has however been a shift in Bolivia from producing soya beans for export to importing soya beans for the growing crushing industry46. In 2004, the main exports of soya beans were to Peru, Argentina, Colombia, Guatemala and Chile (table 20).

Table 25: Bolivia’s top trading partners for soya beans


Bolivia World 2222 $23,083,175 89,621,956Bolivia Peru 2222 $11,580,337 43,875,667Bolivia Argentina 2222 $10,543,052 42,705,230Bolivia Colombia 2222 $781,366 2,688,500Bolivia Guatemala 2222 $165,000 300,000Bolivia Chile 2222 $13,410 52,539Bolivia Areas, nes 2222 $10 20

Canada and the USA

4.3.9 Soya bean production and trading is well established in the USA. The key markets for soya bean exports are the EU, China, Japan and Mexico. The USA exports approximately 37% of its soya bean production, the rest supporting the large internal market47. Table 21 below, shows that in 2004 the principal destinations for soya beans from the USA were China, Japan and Mexico.

4.3.10 An important centre for trading in soya beans in the USA is The Chicago Board of Trade (CBOT) which offers ‘one of the most efficient (and fluid) futures contracts in the world’ and provides quotes for soya beans, soya meal and soya oil prices for up to two years in the future.

46 Van Gelder, J. W. & Dros, J.M., (2003) Corporate actors in the South American soy production chain, Research paper for WWF Switzerland, accessible via: http://www.bothends.org/strategic/soy15.pdf 47 Proforest and IIED (2004) Better management practices and agribusiness commodities : Phase II reports Commodity Guides accessible via: http://www.poptel.org.uk/iied/docs/cred/BMP_Ch4_soy.pdf



4.3.11 Canada exports relatively little soya beans compared to South American countries and the USA. Canada exports soya beans to countries in the Pacific region which are used to make food for human consumption e.g. soy sauce48. There is no data available for the main destinations for soya beans from Canada.

Table 26: USA’s top trading partners for soya beans


USA World 2222 $6,692,043,829 25,602,608,322USA China 2222 $2,328,761,501 9,402,546,000USA Japan 2222 $1,010,560,277 3,119,593,714USA Mexico 2222 $792,133,707 3,288,480,011USA Germany 2222 $379,469,849 1,630,185,597USA Other Asia, nes 2222 $302,034,281 1,059,094,000USA Rep. of Korea 2222 $284,593,650 863,863,000USA Indonesia 2222 $264,135,466 884,381,000USA Spain 2222 $189,626,843 813,098,000USA Canada 2222 $152,096,683 508,498,039 USA United Kingdom 2222 $20,467,363 118,548,312


4.3.12 The Netherlands and Belgium are large importers of soya beans, particularly from South America. Soya beans are imported for crushing and processing49. The Netherlands and Belgium do not produce soya beans but Comtrade data (see tables 22 and 23) show that they import and export soya beans. The destinations for exports are all other countries in the EU. The Netherlands exporting predominantly to Germany and Belgium, and Belgium exporting to the Netherlands, France and the UK.

Table 27: The Netherlands’s top trading partners for soya beans


Netherlands World 2222 $365,680,567 1,172,882,597Netherlands Germany 2222 $275,934,845 896,429,000Netherlands Belgium 2222 $73,517,345 230,489,812Netherlands Portugal 2222 $3,870,774 9,005,640Netherlands United Kingdom 2222 $3,788,656 12,216,152Netherlands Ireland 2222 $2,890,327 8,915,457

48 Government of Canada (2006) Soybean Improvement accessible via: http://res2.agr.ca/CRECO/section1/soybean-soja_e.htm 49 Hirsch, D. (2001) Soy (trade) flows in the Netherlands. Inventory of trade in organic soy in the Netherlands, Report, accessible via. http://www.bothends.org/strategic/soy16.pdf



Netherlands Czech Rep. 2222 $2,052,966 5,823,679



Table 28: Belgium’s top trading partners for soya beans


Belgium World 2222 $24,342,925 59,741,200Belgium Netherlands 2222 $8,627,260 26,429,625Belgium France 2222 $7,217,454 19,753,175Belgium United Kingdom 2222 $6,291,746 9,072,679Belgium Gabon 2222 $1,080,166 1,494,000Belgium Czech Rep. 2222 $606,866 1,454,125Belgium Germany 2222 $246,795 814,062Belgium Poland 2222 $136,472 307,875Belgium Slovakia 2222 $64,073 195,570

4.4 Processing 4.4.1 Of the total world soya bean production, around 87% is crushed4. The other 13% is

used as seed, or processed for specific food uses. Products derived from non-crushed soya beans are for instance soya-sauce, tofu, and other meat and dairy substitutes.

Crushing

4.4.2 In the crushing plant, the soya beans are crushed. Crushing yields two products: soya oil and soya meal. As the oil content of the soyabean is not very high, mechanical crushing - as is used for rapeseed, sunflower seed and palm kernels - does not yield enough oil. Therefore a solvent extraction process is used, during which the oil is leached or washed from flaked oilseeds by the use of hexane. This process reduces the residual oil in the soya meal to as little as 1%. As hexane is very explosive, this process needs extensive safety measures.

4.4.3 During the crushing process around 79% of the soyabean is processed into meal. This meal is often toasted, dried and grinded. The end-product is a very protein-rich meal, with a protein-content of around 44% (when the beans are crushed together with the hulls) or around 48% (when the beans are dehulled before crushing). Soya meal is a favoured ingredient for livestock compound feed but is also used for food and non-food purposes.

4.4.4 Around 18% of the soyabean is processed into crude soya oil, which is supplied to refineries, and oleochemical plants50. After the crushing process, 3% of the soyabean input is left as waste.

4.4.5 Although the price of soya oil per tonne is higher than that of soya meal, the large meal-content of the soyabean means that around 70% of soyabean revenues is derived from soya meal. This means that the world demand for soya beans is

50 Oleochemicals are chemicals derived from biological oils or fats. They are analogous to petrochemicals which are chemicals derived from petroleum.



mainly driven by the compound feed industry (and ultimately: the meat processing industry). This contrasts with the world demand for palm oil, which is mainly driven by the food industry. Table 29: Global soyabean crushing in 2001/02 (in 1,000 MT)

Global soyabean crushing in 2001/02 (in 1,000 MT)

Country Production Share Crushing Share Surplus United States 78,669 43% 46,600 29% 32,069 Brazil 41,800 23% 23,700 15% 18,100 Argentina 30,200 16% 20,715 13% 9,485 China 15,450 8% 20,400 13% -4,950 India 5,300 3% 4,640 3% 660 Paraguay 3,150 2% 982 1% 2,234 European Union 1,233 1% 17,430 11% -16,200 Bolivia 1,150 1% 1,430 1% -231 Japan 271 0% 3,900 2% -3,629 Mexico 122 0% 4,550 3% -4,438 Taiwan 6 0% 2,380 1% -2,374 Others 6,048 3% 13,013 8% -6,965 World total 183,399 100% 159,740 100% 23,660

Brazil

4.4.6 Between the years 1995 and 2001 the domestic crushing industry in Brazil only increased by 8% which is small considering soya bean exports increased by approximately 322% 51 in the same period. Brazilian soya exports have a comparative advantage over US exports due to low costs of production, increased oil yields and now, the removal of the VAT barrier to export. The abolition of the Brazilian Value Added Tax (VAT) system for soya beans, oils and meals helped increase soya exports as exporters no longer have to pay VAT on their produce52.

4.4.7 Despite large volumes of soya beans being exported, approximately 58% of Brazilian soya beans are domestically crushed and there over 100 crushing plants in Brazil53. ADM, Bunge, Cargill and Louis Dreyfus control the larger crushing operations and together account for approximately 43% of the Brazilian crushing market.

4.4.8 Crushing is however currently more expensive in Brazil than the EU due mainly to protectionist policies, which levy tariffs on oil imports, more expensive transport costs and a greater volume of soya beans moving through the system in Brazil.

51 Van Gelder, J. W. & Dros, J.M., (2003) Corporate actors in the South American soy production chain, Research paper for WWF Switzerland, accessible via: http://www.bothends.org/strategic/soy15.pdf 52 Ibid 53 Ibid



Domestic investment in the Brazilian crushing industry and the gradual reductions in EU tariffs could lead to reduced costs of crushing in Brazil relative to the EU54.

4.4.9 Crushing soya beans produce both soya oil and soya meal. Soya oil is discussed in the next section. Approximately 171,597kg of soya meal was exported from Brazil in 2004 (Comtrade) and production in soya meal has only increased by a small amount over the past decade. Domestic consumption of soya meal has also been increasing reducing the amount of soya meal exported.

4.4.10 France, Netherlands, Belgium and UK all represent important markets for Brazilian soya meal55. The conditions favouring export of soya beans rather than soya meal as are the case at present could change should the cost of crushing in Brazil relative to the EU be reduced.

Argentina

4.4.11 Argentina crushes a greater proportion of its domestic soyabean production than Brazil. This is due to lower costs of crushing in Argentina and the higher export tax the Government levies on soya bean exports than crude or refined soya oils. The Argentinean crushing sector is characterised by around 32 companies and 51 plants.

4.4.12 Soya meal production has increased in parallel with domestic increases in crushing. The EU represents an important market for soya meal and Argentina an important competitor with Brazil. Italy, Spain, the Netherlands and Denmark are key markets for Argentinean soya meal.

Bolivia

4.4.13 Domestic crushing has increased significantly in Bolivia and the country now crushes approximately 93% of total domestic production and imports soya beans for crushing56. The six main crushing companies are: Alsa, ADM, Granos, Gravetal, Industrias de Aciete and IOL.

4.4.14 The large increases in crushing in Bolivia have meant that significant increases in soya meal production have occurred. The majority of soya meal is exported to countries within South America although informal evidence suggest exports to the EU are increasing57.

Canada and the USA

4.4.15 The USA has large capacity for crushing and approximately 92% of the oilseed crushing in the USA is of soya beans. The main crushing companies in the USA are Cargill, ADM and Bunge. While there is a well-established crushing industry in the USA, it is still vulnerable to global market shifts and increases in production in

54 Ibid 55 ibid. 56 Ibid 57 Ibid



South American countries are expected to impact on the domestic industry58. The USA has recently been surpassed by Brazil and Argentina in terms of volume of soya beans crushed. The Proforest and IIED59 report suggests that processing plants in Brazil and Argentina benefit from greater economies of scale arising from larger facilities60. In addition, the recent economic problems that have been haunting Argentina have depressed labour prices and reduced the costs of production in Argentina61.

4.4.16 Canada produces enough soya oil to meet domestic demand62 but soya meal is generally imported due to the distance of cattle farms from processing plants increasing the domestic cost of soya meal.


4.4.17 Crushing in the EU occurs in Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK. The main crushing company in Belgium is Cargill and in the Netherlands, the main companies include Cargill, Archer Daniels Midland and Bunge (parent company of Cereol). These three companies account for approximately 80% of the EU crushing industry.

4.4.18 In 2001, approximately 43% of the supply of soya meal in the EU was produced in the EU compared to 57% imported from abroad63. Soya meal production occurs in both the Netherlands and Belgium. The Netherlands exported 141,267,627kg in 2004 and Belgium exported 75,783,793kg.

4.5 Refining 4.5.1 The crude soya oil produced by a crushing plant, is further processed in a refinery.

The processing of soya oil in refineries can include refining, bleaching, deodorizing, splitting, fractioning and hydrogenating. The resulting refined types of oil can be bottled and sold directly to consumers, or they can be supplied to final processing industries in the food, animal feed and chemical sectors.

4.5.2 The oleochemical industry also is an intermediate processing industry, which uses crude soya oil as well as refined soya oil as inputs, apart from numerous other edible oils and fats. The processes performed by olechemical plants result in numerous forms of oils and fats, each with their own chemical and physical properties and each with their own applications in the food and chemical industries.

58 Proforest & IIED (2004) Better Management Practices and Agribusiness Commodities: Phase II Report: Commodities Guide, London 59 Ibid 60 Rabobank International and Sparks Inc. (2006) 2003 US food and agribusiness outlook accessible via: http://www.cema.edu.ar/~dm/oleaginosos/OILSEEDS-Rabobank-Reca.pdf 61 Rabobank International and Sparks Inc. (2006) 2003 US food and agribusiness outlook accessible via: http://www.cema.edu.ar/~dm/oleaginosos/OILSEEDS-Rabobank-Reca.pdf 62 Government of Canada (2006) Soybean Improvement accessible via: http://res2.agr.ca/CRECO/section1/soybean-soja_e.htm 63 Ibid



4.5.3 Compared to palm oil, soya bean oil in pure form is less saturated (20 vs. 50%). For use in food, soya oil needs more often hydrogenation than palm oil. This increases the processing costs of soya oil.

Brazil

4.5.4 The small increases in crushing in Brazil have meant there have been only limited increases in soya oil production. A greater proportion of soya oil is consumed domestically than is the case for soya meal and as a result exports are lower. Important export destinations are Iran and India. The EU accounts for less than 1% of Brazilian soya oil64. Soya refining factories are generally located in urban areas in Brazil65.

Argentina

4.5.5 As discussed above, the increases in crushing in Argentina have also lead to the increase of soya oil production. The majority of soya oil is exported from Argentina and key importers include Iran, India and Bangladesh, with minimal amounts exported to the EU66.

Bolivia

4.5.6 The increases in crushing experienced in Bolivia have lead to increases in soya oil production, the vast majority of which is exported to other South American countries.

Canada and the USA

4.5.7 In the US, there is a large domestic market for soya oil and unlike the EU where palm oil is also used, the food industry used soil oil to produce different food products67.

4.5.8 There is scarce information relating to the refining of soya oil in Canada.


4.5.9 The principle soya oil producing company in Belgium is Cargill. In the Netherlands, Cargill, Archer Daniel Midlands and Unimills share oil production. In the UK, Rockmor, Seven Seas, Pura Foods, Hampshire Commodities, Cargill and Karlshamns are the most important refiners.

4.6 Manufacturing

64 Ibid 65 WWF (2002) Trade-Driven soy agriculture in Brazil and impacts on sustainability, workshop report accessible via: http://assets.panda.org/downloads/wwfbrazilworkshopmarch2002.pdf 66 Ibid 67Rabobank International and Sparks Inc. (2006) 2003 US food and agribusiness outlook accessible via: http://www.cema.edu.ar/~dm/oleaginosos/OILSEEDS-Rabobank-Reca.pdf



4.6.1 Some whole soya beans are used as seed for the next year, but essentially these three intermediate products are processed in four different final processing industries: Animal Feed, Food industry, chemical industry and the cosmetics industry.

Food industry

4.6.2 The food industry uses whole soya beans to produce soy sauce, tofu, and other meat substitutes. Soya oil is mainly used for table oil, but also for products like mayonnaise, margarine, and other oil and fat containing food products, like confectioneries, pastry, snacks and coffee whitener. Soya meal is used for noodles, baby food, flour, cereals, and other products.

4.6.3 Refined soya oils are often mixed with other oils which makes tracing soya oils in many food products more complex. Table 25 below provides examples of European countries involved in the food processing industry. Table 30: European food companies

European food companies

Company Country of origin Products Cadbury United Kingdom Confectionery Campina Melkunie The Netherlands Dairy Danone France Margarine, biscuits, dairy Eulip Italy Margarine Friesland Coberco The Netherlands Dairy, baby food Hamker Germany Margarine, dressings Heinz United States Confectionery, pastry, dressings Kinder Italy Confectionery Mars United States Confectionery, ice cream Matthews United Kingdom Margarine Milka Germany Confectionery Nestlé Switzerland Confectionery, ice cream, baby food Numico The Netherlands Baby food, dairy Oetker Germany Pastry Perfetti Italy Confectionery PepsiCo United States Snacks Smilde The Netherlands Margarine, frying fat Star Italy Cooking oil Unigrá Italy Margarine Unilever UK/Netherlands Margarine, cooking oil, spreads, snacks, ice cream Van Dijk The Netherlands Margarine, frying fat, cooking oil Vandemoortele Belgium Cooking oil, margarine Source: IBID



4.6.4 Canada, while exporting relatively small amounts of soya has developed a niche in exporting soya food produce to the EU and Pacific68 regions. At present there is little readily accessible information relating to the processing of soya in the feed industry in Brazil, Argentina and Bolivia.

Animal Feed

4.6.5 A large amount of the soya meal produced and imported into the EU is processed to make animal feed. The use of soy meal for feed has advantages over other meals due to its high protein content however, the climatic conditions in the EU are such that cultivation of soya beans is unlikely to become a major feature of agricultural production69. The key compound feed producers in the EU operate in Austria, Denmark, France, Germany, Spain, Sweden, The Netherlands and the UK. The important compound feed manufacturers in the Netherlands includes Schouten, Provimi, Cebeco Handlesraad, Nutreco, Cehave Landbouwbelang and Koudijs Wouda.

4.6.6 Some of the main importers of soya beans and meal from the EU are likely to use Brazilian soya in their Animal feed. Countries include the Netherlands, Germany, Spain, France and the UK. The main countries in the EU who import Argentinean soya meal include Italy, Spain, the Netherlands and Denmark and these countries process meal to make feed.

4.6.7 The Bovine Spongiform Encephalopahty (BSE/Mad Cow Disease) outbreak and emerging markets in China have increased demand for soya meal for feed based products. The outbreak of BSE led to the ban on feeds made with animal protein which helped increase demand for soya based feed.70

4.6.8 Demand for animal feed has been increasing in Brazil in recent years. One of the key drivers of this change has been suggested to be the increased consumption of meat71.

4.6.9 Livestock production is an important industry in Argentina. Data is not however readily available for the contribution that soya makes to the feed for this industry.

4.6.10 Canada is a net importer of soya meal for animal feed72

Chemicals and cosmetic industry

4.6.11 Soya bean oil and meal are used to create a number of different chemicals and cosmetic products. The soya oil and meal are combined with other ingredients e.g. dyes, pigments to create the end products.

68 Ontario Soybean Growers (2006) accessible via: http://www.soybean.on.ca/commentary_view.php?id=156 69 SOURCE: LMC?? 70 Benbrook, C.M. (2005) Rust, Resistance, Run Down Soils, and Rising Costs – Problems facing Soybean Producers in Argentina, Agriculture BioTechnology InfoNet, Technical Paper Number 8, January 2005 accessible via http://www.greenpeace.org/raw/content/denmark/press/rapporter-og-dokumenter/rust-resistance-run-down-soi.pdf 71 WWF (2002) Trade-Driven soy agriculture in Brazil and impacts on sustainability, workshop report accessible via:http://assets.panda.org/downloads/wwfbrazilworkshopmarch2002.pdf 72Government of Canada (2006) Soybean improvement accessible via: res2.agr.ca/CRECO/section1/soybean-soja_e.htm



Transport

4.6.12 Transport of soya beans, meal and oil is by road, river and rail and exports are shipped to international markets. There are numerous movements of soya during the production process as beans are transferred to different sites for processing.



5 IMPACT ASSESSMENT 5.1.1 The impact assessment of the soya life cycle examines the impacts of production

and process on environment, social and economic factors. The uncertainties associated with the research are also highlighted in this section in order to identify areas where more research is needed. The impacts of soya production can be categorised into the flowing key areas:

• Pre-cultivation – farm establishment; • Cultivation – including crop production and harvesting; • Processing – mainly the crushing aspects; • Manufacturing – the creation of secondary commodities through the

addition of other products; and • Consumption – end use.



5.2 Pre-cultivation

Figure 7: Farm inputs and outputs

5.2.1 The main inputs into the production of soya beans are land, seeds, finance, energy and chemicals (see Figure 7 above). The key outcomes of these inputs can include biodiversity loss, soil erosion, positive and negative carbon sequestration impacts, chemical waste and the establishment of an operational farm. The following discussion will address the impacts of these inputs for the selected focus countries.

5.2.2 One of the most significant issues arising from the establishment of soya plantations in South America is the loss of native habitats, in particular tropical rainforests. This trend is having environmental, social and economic impacts.

Brazil

5.2.3 Deforestation of the Amazon (16% of the Amazon has been estimated to have been lost73) and loss of the Cerrado Savannah have been occurring in Brazil, both as a direct and indirect result of soya cultivation. Direct impacts have seen clearances of these native habitats to make way for cash crops, which are favoured by business and the government due to their generation of export revenue. The absence of government protection of much of the Cerrado and for some areas of the Amazon,

73 WWF (2003) Soy expansion: loosing forests to fields, WWF Switzerland



the suitability of the climate and topography and developments in seed technology has meant significant areas are now cultivated for soya74.

5.2.4 Indirect impacts of soya cultivation have been contributing to habitat clearance due to conversion of land from cattle ranching to soya cultivation. The demand for land for soya cultivation is such that in many cases, cattle ranchers to sell their land and use the money to set-up new cattle ranching areas in frontier regions such as mountain slopes and forests75. At present there is insufficient data available to establish the area of soya cultivation that was previously used for cattle ranching.

5.2.5 Loss of forests and the savannah have contributed to the continuing loss of biodiversity and of species valued for their medicinal, nutritional, economic or intrinsic worth. Conversion of these areas to soya crops has meant that in many areas local people have lost their rights and ways of life due to the removal of habitats that once provided shelter, food and livelihoods.

5.2.6 Deforestation and loss of species and their habitats has also been contributing to the loss of valuable ecosystem services such as regulation of the carbon, hydrological and climate cycles76. Whyte et al.(Nd)77 suggest that deforestation can lead to increased temperatures, reduced evapo-transpiration and reduced atmospheric circulation causing droughts or flash flooding. Informal reports from farmers in Rondonia in Brazil suggest that deforestation has lead to the desiccation of creeks, reduced rainfall and increased winds78.

5.2.7 In Brazil too, forest fires have become more commonplace as burning has been used to clear forest areas. In 2002, sixty percent of Brazil’s forest fires occurred in the Mato Grosso region which is one of the most important areas of soya bean production79.

5.2.8 Poor enforcement of regulations and an absence of land use planning policies in Brazil mean that conversion to soyabean cultivation occurs unhindered80. Environmental Impact Assessments for large developments are generally lacking sufficient information and do not appear to be a material consideration in the development of the soya bean industry in Brazil81.

74 Niesten E. T. et al (2004) Commodities and Conservation: The need for greater habitat protection in the tropics, Conservation International – Centre for Applied Biodiversity Science Report, Washington DC accessible via. http://www.bothends.org/strategic/soy41-Commodities%20and%20Conservation.pdf 75 Dros, K.M. (2004) Managing the soy boom: Two scenarios of soy production expansion in South America, AIDE Environment, Commissioned by WWF Forest Conservation Initiative accessible via: http://www.aidenvironment.org/soy/06_managing_the_soy_boom.pdf 76 Bickel, U & Dros, J.M., (2003) The Impacts of Soybean Cultivation on Brazilian Ecosystems, Report for the WWF Conservation Initiative, accessible via: http://www.bothends.org/strategic/soy27.pdf 77 Whyte, C. et al (Nd) Soy expansion in the Brazilian Amazon Region: A local and global social and environmental dilemma, Centre for Sustainable Development – University of Brasilia, accessible via: http://www.ambafrance.org.br/refeb/projets/article%20Chlo%E9%20Cadier.pdf 78 |Ibid 79 Ibid 80 Ibid 81 Ibid



5.2.9 The trend in farm establishment is towards large-scale mechanised farming systems. These are also having a number of impacts:

• Industrialised agriculture has lead to many farmers becoming reliant on

‘improved’ crop varieties rather than on indigenous types. This has lead to dependence on external seed suppliers and may be also causing a reduction in the genetic resources.

• Displacement of local people has become common where small farms have been amalgamated into large-scale systems. This is further exasperated by mechanisation as fewer jobs are available to retain people on the land. This trend of displacement further leads to deforestation and encroachment into other habitats as local people seek new land to cultivate. Displacement also increases migration to urban areas as people move in search of work which places added pressure on resource stressed urban areas.

• Conversion of small farms growing a range of crops to large-scale soyabean cultivation is also having an impact on the production of crops for domestic consumption in Brazil. Some reports suggest this is leading to food shortages.

5.2.10 At present, GM soya beans are not grown in Brazil. The current non-GM policy could be seen by Brazil as a marketable advantage over its main competitors – Argentina and the USA. Argentina, to the south, does however grow a large amount of GM soya, some of which are thought to be brought across the border. According to the New Scientist, the Brazilian Government is considering legalising growth in an attempt to control this influx82.

5.2.11 The input of finance into the soya production and processing sector can a mixed blessing. On the one hand development of the sector helps contribute to economic development in Brazil but on the other hand, scarce public funds are diverted from other important sectors and activities.

Argentina

5.2.12 The economic advantages of soyabean production have led the Argentinean government to set ambitious targets for future production. The targets are expected to lead to increased soya production and therefore demand for land. However, as new areas are brought under soya cultivation, farms become located on increasingly marginal lands which are less fertile and are further from the favourable Pampas climate83. The farms then require greater amounts of inputs e.g. chemicals.

82 Branford, S. (2004) Argentina’s Bitter Harvest, New Scientist, 17th April 2004, p40-43 83 Benbrook, C.M. (2005) Rust, Resistance, Run Down Soils, and Rising Costs – Problems facing Soybean Producers in Argentina, Agriculture BioTechnology InfoNet, Technical Paper Number 8, January 2005 accessible via http://www.greenpeace.org/raw/content/denmark/press/rapporter-og-dokumenter/rust-resistance-run-down-soi.pdf



5.2.13 Increasing the area under soya cultivation also puts pressure on savannahs and forest ecosystems and deforestation, as is being experienced in Brazil, is currently also a problem in Argentina. Conversion of land for cattle ranching for soya cultivation is also occurring in Argentian and cattle ranchers are being pushed further into frontier areas.

5.2.14 The annual average loss of forest in Argentina has been estimated to be 315,361 ha between 1998 and 200484. Using forests for sustainably produced timber could create as many jobs and economic benefits as the soya farms and cattle ranches that replace them85.

5.2.15 Although there is relatively little information on the land use change that has resulted from the increases in soya cultivation in recent years, it is thought that a number of other edible crops have been converted to farm soya for export. This is reported to be leading to reduced food security in the country.

5.2.16 In Argentina, like Brazil, there is a trend of buying small farms to create large-scale, mechanised soya bean plantations which has lead to the displacement of people from their native lands.

5.2.17 Argentina grows a large amount of GM soya beans. In 2000/2001, it has been estimated that approximately 90% of the total area planted with soya beans was GM varieties86. The widespread use of Roundup Ready soya beans (GM soya beans) has lead to a number of issues including adaptation of pests to be suited to the Roundup Ready soya beans and the dependence of farmers on markets for seeds and agrochemicals. The continual use of glyphosphate herbicides (that are designed to be used with Roundup Ready soya) have also led to pest resistance, poor soil fertility and plant health. Research in the USA has shown glyphosphate herbicides have also had implications for increasing the incidences of soil-borne pathogens. The reported benefits of planting GM soya beans are reduced production costs87 however increasing reliance on agro-chemicals when pests develop resistance suggests production costs do not permanently remain low.

Bolivia

5.2.18 Approximately 1million ha of Bolivian forest has been removed as a result of soyabean cultivation 88. Uneven precipitation regimes in parts of the country have lead to the movement of agriculture into more suitable areas which have included the Chiquitano forest and Cran Chaco areas. Initially, deforestation was driven by

84 Ibid 85 Ibid 86 Chudnovsky, D. (2004) Trade, Environment and Development: The Recent Argentine Experience, Working Group on Development and Environment in the Americas, Discussion Paper No.3 accessible via http://www.eldis.org/static/DOC17312.htm 87 Ibid 88 Cochrane, T., (2005) Gas and water on the Agricultural frontier in Bolivia accessible via:http://www.civil.canterbury.ac.nz/cochrane/publications/water_Bolivia_web.pdf



small farms, forestry and cattle ranching but recent years has seen a shift to large scale soya cultivation being the main cause of forest loss89.

USA and Canada

5.2.19 The USA has not experienced the level of habitat loss that has been experienced in South American countries. This is mainly because soya cultivation occurs on land that has previously been converted to agriculture.

5.2.20 GM crops are grown in the USA but the availability of funding for research and development into the appropriate use of Roundup ready seeds and fertilisers has meant that impacts have been less severe than in Argentina90.

5.2.21 There is relatively scarce information relating to the establishment of soya farms in Canada.

Carbon sequestration

5.2.22 The impacts of the farm inputs that contribute to the establishment of soya farms have an impact on carbon sequestration. Deforestation which is common place in South American countries to make way for soya plantations reduces the carbon stored in biomass and changes the cycling rates of not only carbon, but other nutrients too. Inputs of energy and agrochemicals also affect carbon sequestration as they increase demand for fossil fuels.

Assumptions and uncertainties

5.2.23 The main body of research that has been carried out to date has focussed on habitat conversion as a result of increasing the area under soya cultivation. A wealth of information is available on the issues relating to habitat conversion which has mainly been produced by Non-Governmental Organisation (NGOs).

89 Dros, K.M. (2004) Managing the soy boom: Two scenarios of soy production expansion in South America, AIDE Environment, Commissioned by WWF Forest Conservation Initiative accessible via: http://www.aidenvironment.org/soy/06_managing_the_soy_boom.pdf 90



5.3 Cultivation

Figure 8: Soya production and harvesting

5.3.1 The impacts of soya production include water and soil pollution, soil erosion, biodiversity loss, positive and negative carbon sequestration impacts and the production of soya. These impacts are explored in more detail on a country-specific basis.

5.3.2 A positive effect that arises from soya cultivation is that soya plants are legumes and therefore are able to fix-nitrogen using their roots. Cultivation of soya plants can therefore help contribute to increased soil fertility and therefore potentially reduce the need for fertilisers. The realisation of this positive impact will however depend on the farming practices employed.

Brazil

5.3.3 In Brazil, as in many of the soya producing South American countries, the impacts from soya production include: soil erosion, intensive use of chemicals, marginalisation of smallholders, changing patterns of land ownership and infringements of labour rights91.

91 Proforest (2004) The BASEL criteria for responsible soy production, accessible via: http://www.aidenvironment.org/soy/01_basel_criteria_for_responsible_soy_production.pdf



5.3.4 Approximately 500 million tonnes of soil are lost per year due to soil erosion92. Erosion of topsoil removes sediments, residues of agrochemicals which are fixed to clay particles in the soil and organic matter. The impacts of this are two fold. Farmers experience an economic loss as nutrients are lost and soils therefore require greater amounts of fertiliser inputs. Second, water can become polluted as a result of pesticide residue contamination. Erosion is exasperated by soya plants generally providing insufficient soil coverage to protect from wind and rain and by machinery which damages the soil structure causing compaction, which further increases surface run-off and erosion.

5.3.5 No tillage farming is increasingly being practiced as a method to reduce soil erosion. This method has beneficial impacts on reducing soil erosion but requires increased application of agro-chemicals93.

5.3.6 Soya cultivation in Brazil relies heavily on chemical inputs mainly in the form of herbicides, insecticides and fertilisers. The impacts of agro-chemical use include pollution of water and soils and risks to human health. Agro-chemicals can have indirect effects in particular on aquatic ecosystems as run-off from fields reaches rivers and water bodies leading to bioaccumulation94 and eutrophication95.

5.3.7 The heavy use of agrochemicals pose threats for ecosystem and human health. Application by aircraft has particularly negative impacts as chemicals cover far wider areas than is necessary. Pesticide and fertiliser packaging waste production is also high as result of heavy use. In Mato Grosso, approximately 43 million tonnes are collected per year. 96.

5.3.8 Over time the organic content of the soil is reduced compared to when the land was covered by indigenous ecosystems. Reduced organic matter content can lead to reduced yields, reduced water holding capacity and to reduced fertility and structure of the soil.

5.3.9 Plantation of soya crops in large-scale monoculture systems where rotation is not practiced also increases the risk of disease97, reduced biodiversity and soil quality is depleted as nutrients are not replaced by rotation with other crops, further increasing the demand for chemical inputs.

5.3.10 Soya plantations can be rotated with maize, wheat and oats but the high water demands of maize and wheat however mean that in many cases rotation with oats

92 WWF Sweden (2002) Soybean: Where is it from and what are its uses, A report for WWF Sweden accessible via. http://www.bothends.org/strategic/soy17.pdf 93 Mattsson B. et al. (1999) Agricultural Land use in life cycle assessment (LCA): Case studies of three vegetable oil crops, Journal of Cleaner production, 8, p283 –292 94 Agro-chemicals refers to any chemicals that are used to improve an agricultural crop 95 Eutrophication occurs where the nutrient levels in a water body become elevated which stimulates productivity and algal growth. Algal blooms can have negative impacts on aquatic life as light and oxygen availability are reduced. 96 Bickel, U & Dros, J.M., (2003) The Impacts of Soybean Cultivation on Brazilian Ecosystems, Report for the WWF Conservation Initiative, accessible via: http://www.bothends.org/strategic/soy27.pdf 97 Whyte, C. et al (Nd) Soy expansion in the Brazilian Amazon Region: A local and global social and environmental dilemma, Centre for Sustainable Development – University of Brasilia, accessible via: http://www.ambafrance.org.br/refeb/projets/article%20Chlo%E9%20Cadier.pdf



or no rotation is practiced. This trend has implications on the use of chemicals as more are required where no rotations are used.

5.3.11 In the Amazon region, large-scale mechanised systems of production have lead to the exclusion of producers where smaller farm holdings have been amalgamated to create large farms98. It has been estimated that in the Amazon region there is approximately 1 job per 100ha.

5.3.12 The large farms have generally poor working conditions when compared to the International Labour Organisation Standards. Workers removing roots after clear cutting are paid $1.70 per day99. Slavery has been indicated in some instances particularly in Paiui. Scarce public funding in Humaita is directed towards larger farms and as a result smaller farms receive little in public support. Small farmers also tend to experience difficulty in gaining credit for example for lime and nutrients to apply to soils.

5.3.13 On a larger economic scale, soya bean focussed economies such as in the Mato Grosso state often mean that the local economy lacks diversity and is therefore more at risk from fluctuations in markets for soya100.

Argentina

5.3.14 The impacts of soya production in Argentina appear to share many similarities with Brazil. As in Brazil, soya cultivation has lead to the loss of jobs as small farms are amalgamated into large farms. The dominance of large land holdings has concentrated economic and political power and has cause disputes over land tenure and land titles. Reports of violence due to local people attempting to resist expansion of soya cultivation into forest that previously provided their homes and livelihoods101.

5.3.15 High levels of herbicide use have also been reported across Argentina as a result of using GM soya bean varieties102. Unchecked use of herbicides has lead to increased pest resistance and altered soil-microbiology.

5.3.16 In Argentina, no-tillage systems of farming have been increasingly favoured and have been an important consideration in the increase in areas under production103.

98 Ibid 99 Bickel, U & Dros, J.M., (2003) The Impacts of Soybean Cultivation on Brazilian Ecosystems, Report for the WWF Conservation Initiative, accessible via: http://www.bothends.org/strategic/soy27.pdf 100 Whyte, C. et al (Nd) Soy expansion in the Brazilian Amazon Region: A local and global social and environmental dilemma, Centre for Sustainable Development – University of Brasilia, accessible via: http://www.ambafrance.org.br/refeb/projets/article%20Chlo%E9%20Cadier.pdf 101 Benbrook, C.M. (2005) Rust, Resistance, Run Down Soils, and Rising Costs – Problems facing Soybean Producers in Argentina, Agriculture BioTechnology InfoNet, Technical Paper Number 8, January 2005 accessible via http://www.greenpeace.org/raw/content/denmark/press/rapporter-og-dokumenter/rust-resistance-run-down-soi.pdf 102 Branford, S. (2004) Argentina’s Bitter Harvest, New Scientist, 17th April 2004, p40-43 103 Chudnovsky, D. (2004) Trade, Environment and Development: The Recent Argentine Experience, Working Group on Development and Environment in the Americas, Discussion Paper No.3 accessible via http://www.eldis.org/static/DOC17312.htm



No-tillage systems have advantages such as reduced need for machinery, more efficient use of labour and reduced disturbance to the soil and soil erosion. No-tillage systems however often result in increased dependence and use of herbicides and increased soil compaction. No-tillage systems can also be harder to farm efficiently e.g. through rough surfaces.

Bolivia

5.3.17 Expansion of soyabean farms in Bolivia is occurring in the east of the country in the Santa Cruz state, where soils are already degraded and compacted104. In addition, as soya cultivation becomes unfeasible on degraded soils, farms are abandoned to be replaced by cattle ranching which puts additional pressure on the soils and leads to the expansion of soya cultivation into new areas105. This is causing increased pressure on biodiversity and soil quality.

5.3.18 Recently soyabean production has increased around the San Matias Pantantal area106 (Figure 9). Potential impacts on aquatic and terrestrial ecology could arise from agrochemical use and changes to the hydrological regime but this will depend on the farming practices that are adopted. The Pantanal region in Bolivia is also threatened by infrastructure development to help transport soya beans more rapidly to markets107.

104 Dros, K.M. (2004) Managing the soy boom: Two scenarios of soy production expansion in South America, AIDE Environment, Commissioned by WWF Forest Conservation Initiative accessible via: http://www.aidenvironment.org/soy/06_managing_the_soy_boom.pdfhttp://www.panda.org/about_wwf/what_we_do/policy/agriculture_environment/commodities/soybeans/environmental_impacts/water_contamination/index.cfm 105 Source: http://www.grain.org/seedling/?id=421 106 Aguirre, C., (2000) Wetlands in Bolivia, Wetlands Research Institute accessible via: http://www.pantanal.org/aguirre.htm 107 WWF (2006) Bolivia policy officer accessible via: http://www.wwf-species.org/about_wwf/where_we_work/latin_america_and_caribbean/where/bolivia/index.cfm?uProjectID=BO0865



Figure 9: Map of the San Matias Pantanal area108

5.3.19 Production of soya beans in Bolivia is seen to have beneficial economic impacts as, unlike the hydrocarbon industry, the sector creates jobs and value is added along the production chain. However, AIDE Environment, has found that development of production for export has lead to an uneven distribution of income109

USA

5.3.20 Soil erosion in the USA due to soyabean cultivation has decreased according to a study carried out in 1996110 but soyabean cultivation continues to caused contamination of water and soils due to agrochemical use. The Environment Protection Agency provided data to show that agriculture is the key source of problems for surface water quality. Data provided by the National Agricultural Statistics Service of the USA Department for Agriculture has shown that chemical

108 http://www.fobomade.org.bo/pantanal_bolivia/mapas/sanmatias.JPG 109 A similar trend to Paraguay 110 WWF (2006) Soybeans accessible via: http://www.panda.org/about_wwf/what_we_do/policy/agriculture_environment/commodities/soybeans/environmental_impacts/water_contamination/index.cfm



use, particularly glyphosate has increased dramatically e.g. glyphosate use has increased from 6.3 million pounds to 41.8 million pounds between 1995 and 2000111.

5.3.21 No-tillage methods have been increasingly favoured and GM crops can be planted closer together than conventional crops. Reports suggest that this has helped conserve soil moisture in times of drought (due to shading), reduce soil erosion and potentially helped sequester CO2 in the soil112.

5.3.22 Use of Roundup Ready soya in the US has had similar effects to Argentina. Initially crops required fewer applications of chemicals but subsequently requirements increased. The US differs from Argentina however as research and guidance was provided to examine the impacts of Roundup Ready soya beans and glyphosate and to encourage sustainable cultivation practices e.g. Soyabean management and the land: A best management practices handbook for growers.

Carbon Sequestration

5.3.23 The trend to large-scale mechanised systems of soya bean production which is evident across South America and has long been established in the USA and Canada have implications for the carbon cycle. The use of machinery and pesticides demand for fossil fuels both for their production but also during their use i.e. fuel for machinery.


5.3.24 There is scarce data to show the extent of large-scale mechanised production in comparison to small scale systems of production. The majority of information is qualitative and selected from NGO sources and other less reliable sources e.g. marketing material.

5.4 Trading

5.4.1 The impacts of trading soya beans are largely economic and transport related. Market trends have an important impact on production and processing activities which has an impact on the impacts associated with the various stages in the life cycle. In Argentina, for example, market forces are largely controlling trends in soya bean cultivation113. Trading soya beans impacts on the environment through the associated transport generation as beans are transported to markets and processing facilities.

111 WWF (2006) accessible via: http://www.panda.org/about_wwf/what_we_do/policy/agriculture_environment/commodities/soybeans/environmental_impacts/water_contamination/index.cfm 112 Phillip Robinson et al 2000 cited by Nill et al 2005). Source: http://www.asa-europe.org/pdf/sustainable.pdf NB: This document has been produced for marketing purposes, its robustness should not therefore be assumed. 113 Branford, S. (2004) Argentina’s Bitter Harvest, New Scientist, 17th April 2004, p40-43



5.5 Processing Figure 10: Processing inputs and outputs

5.5.1 The crushing process, whether mechanical or with the use of hexane (as a solvent), requires energy, machinery, chemicals, soya beans and water.

5.5.2 The main impacts of crushing are water and air pollution. Seed processing produces both non-hazardous and hazardous solid wastes in addition to water and air pollutants114. The impacts are however less significant, particularly in terms of the environment and social issues than the pre-cultivation and cultivation of soya. The following discussion identifies impacts but policy focus is recommended to be on the earlier stages of the production chain.

Hexane

5.5.3 Hexane is produced by refining crude oil and is highly volatile and its use in soya bean crushing is increasingly favoured due to the efficiency of oil extraction which results. The Hexane used in soya bean crushing is recycled after it has been separated from the soya oil, and used to separate oil from other soya beans.

114 IFC 1998b, World Bank Group 1999 cited in http://www.amazonia.org.br/arquivos/110991.doc



5.5.4 The main pathway through which hexane can affect the environment is through the air, which occurs as a result of the rapid evaporation of the substance from the soil and its low solubility in water. It can also be easily absorbed by the fatty tissues in aquatic organisms.

5.5.5 The impacts of hexane on human health depend on the nature of exposure. Exposure to high concentrations can cause a sense of euphoria, nausea and headaches while chronic exposure can cause muscular weakness.

Brazil

5.5.6 Soya crushing plants in Brazil use native vegetation as fuel despite alternative being available115. Fuel is used to heat the soya drying kilns.

5.5.7 In the Paiui region in Brazil, Bunge have recently built a new mill using Siemens Technology. The demand for fuel wood is approximately 400 stacked m3 per day which is initially to be sourced from the Cerrado. Once the Cerrado sources have run out, Bunge will be using small-scale contractors to create eucalyptus plantations. Eucalyptus plantations tend to exert a large pressure on water resources and will tie contractors into eucalyptus production for the medium to long-term (due to the growing time of eucalyptus) (WWF Impacts in Brazil). The local population have not benefited from the mill as the majority of jobs have been given to skilled workers from outside the region.

Argentina

5.5.8 There is insufficient information about the impacts of crushing in Argentina. Impacts can be assumed to include air pollution and water pollution.

Bolivia

5.5.9 Bolivia has a rapidly expanding crushing industry. There is however at present scarce information about the impacts this is having. The impacts can be expected to be similar to Brazil.

USA

5.5.10 There is insufficient information about the impacts of crushing in the USA and Canada. It can be assumed that the impacts of crushing could include air pollution and water pollution.

Refining

5.5.11 Refining processes involve mixing soya oils with alkaline water in order to remove the free fatty acids. These are removed by centrifugation. The refining process therefore requires energy and alkaline water. Energy demands have implications for use of fossil fuels. The disposal of water has potential implications for water quality but there

115 Aide Environment (2005)Factsheet – Soy production in South America accessible via: http://www.aidenvironment.org/soy/03_factsheet_soy_aug05.pdf



is little information available to quantify this risk. The refining process also produces a number of pollutants116 e.g. through bleaching, deodorisation and hydrogenation.

5.5.12 Bleaching is carried out using clays or ‘fulller’s earth’ (hydrated aluminium silicate) which are usually mixed with hydrochloric or sulphuric acid117.

5.5.13 The deodorisation process involves heating the oil to approximately 220 to 2600C and steam is bubbled through in order to remove odours and vapours in addition to any remaining contaminants e.g. pesticides. Deodorisation therefore requires heat and water which could have impacts on water use in an area and on fossil fuel consumption. In countries such as Brazil, fuels are derived from woods which further increase deforestation.

5.5.14 Hydrogenation is not strictly speaking a refining process but is carried out to improve the stability and flavour of the oil. The process involves bubbling hydrogen through the oil with a nickel catalyst also used.

5.6 Manufacturing

GMOs and food

5.6.1 The use of Roundup Ready soya beans in Argentina has been associated with reduced protein and amino-acid contents than soyabean produced from countries such as Brazil, China, the US and India118. While the USA also uses Roundup Ready soya, the area planted with Roundup Ready beans is 23% lower than in Argentina119. The impacts of GM soya produce in food is contentious and is focussed around health and safety issues.

5.6.2 The impacts of manufacturing of soya derived products involves combination with other chemicals and products and are therefore less easily attributable to soya. In the main, impacts arise from energy use, water use and pollution to air and water.


5.6.3 There is limited research available at present which examines the impacts of refining and manufacturing of soya.

5.7 Transport

Brazil

116 Stickler, C., et al (2004) An evaluation of IFC financing of Groupo Andre Maggi in the soybean sector: environmental and social impact considerations accessible via: http://www.amazonia.org.br/arquivos/110991.doc 117 Soyfoods centre accessible via: http://www.thesoydaily.com/SFC/historySC49.asp 118 Benbrook, C.M. (2005) Rust, Resistance, Run Down Soils, and Rising Costs – Problems facing Soybean Producers in Argentina, Agriculture BioTechnology InfoNet, Technical Paper Number 8, January 2005 accessible via http://www.greenpeace.org/raw/content/denmark/press/rapporter-og-dokumenter/rust-resistance-run-down-soi.pdf 119 Ibid



5.7.1 In Brazil, waterways are often the easiest way to reach areas in the Amazon and as a result deforestation occurs along these waterways. Gallery forests are an important ecosystem which run along many waterways and the use of rivers for transportation of soya beans has increased pressure on these forests. Furthermore, pressures to develop road and rail infrastructure to reduce the costs of transporting soya have caused destruction and fragmentation in forest and savannah areas.

5.7.2 Ports in Brazil are generally old and inefficient120. Redevelopment of ports could help work towards reductions in motor vehicle use due to the closer proximity to farms. However, factors such as increasing yield or expansion of farms as a result of the benefits of the port could complicate the effect on transport.

5.7.3 Cargill have constructed a $20 million port terminal in Santarem to export soya beans, increasing access to soyabean farms in the north to world markets. Displacement of fishing communities in the area has occurred and local people have lost their livelihoods as a result.

5.7.4 The improvements continually being made to reduce the costs of transporting soya beans from farms to ports have had additional benefits for logging industry and other the cultivation of other crops. This has placed additional pressure on land near roads and it is thought that approximately 3/4 of deforestation in the Amazon has occurred within 50km of major paved highways121.

5.7.5 The expansion of the infrastructure network and the rapid increases in soya bean production also increase the number and frequency of vehicle trips as soya is transported from farms to be exported or processed further. The infrastructure network in Brazil has been supported by government policy in recent years in order to increase the speed and efficiency of transporting soya (amongst other goods) to markets. There are positive effects of investment in infrastructure such as the improvement and upgrading of roads and railways.

5.7.6 As noted above, development of infrastructure has typically been at the expense of neighbouring ecosystems such as virgin forest which are either removed directly to make way for the roads or are cleared as a result of farms and industry wanting to be in close proximity to roads.

Argentina

5.7.7 In Argentina, it has been estimated that approximately 82% of soya production is transported by road and the distances to be travelled to reach the ports are generally shorter than is the case in Brazil122. The impacts of road haulage are generally to increase noise and pollution due to truck movements. The transport networks in Argentina, like Brazil, are being upgraded and redeveloped which is mainly to improve the efficiency of transport of agricultural and other products.

5.7.8 Dredging of the Parana River and development of inland river systems, including those in Bolivia, are recent examples of projects that have been undertaken in

120 V-Brazil accessible via: http://www.v-brazil.com/business/transportation.html 121Weuthritch, B (2000) Conservation Biology: Combined Insults Spell trouble for rainforests, Science, vol 289p35-27accessible via. http://www.sciencemag.org/cgi/content/full/289/5476/35 122 Brazilian Association of Vegetable Oil Manufactures cited on http://www.v-brazil.com/business/transportation.html



Argentina123. The benefits of such projects are generally the reduced prices of soya exports and therefore more competitive price on the markets. However, dredging and other transport works have implications on the environment particularly on aquatic and riverine ecosystems.

USA and Canada

5.7.9 Transport infrastructure in the USA and Canada are on the whole, well developed and efficient and as a result the costs of transporting soya in the US are less than in Brazil124. The impacts of transport are therefore mainly the emissions from vehicles associated with each stage of the process.


5.7.10 Transport infrastructure in the Netherlands and Belgium are on the whole, well developed and efficient. The impacts of transport are therefore mainly the emissions from vehicles associated with each stage of the process.

123 Proforest & IIED (2004) Better Management Practices and Agribusiness Commodities: Phase II Report: Commodities Guide, London accessible via: http://www.ams.usda.gov/tmd/summit/ch4h.pdf 124 www.econ.iastate.edu/faculty/wisner/BRAZILslides03.ppt


Scott Wilson Ltd December 2006 54

6 SUMMARY

6.1 The soya supply chain 6.1.1 The soya supply chain can be divided into: farm establishment, soya cultivation,

trading, processing (i.e. crushing), refining and manufacturing. The global pattern of soya cultivation has been experiencing change over the past decade with South American countries dramatically expanding farm establishment and cultivation. The USA is one of the largest producers of soya but is facing increased competition from Brazil, and to a lesser degree Argentina. Brazilian soya policy has favoured export of soya beans rather than processing within Brazil whereas the Argentinean experience has seen increased processing. Bolivia and Paraguay have similarly experienced increases in cultivation and production although Bolivia mainly exports soya beans, and increasingly soya meal and oil to other countries within South America.

6.1.2 Brazil, Argentina and Paraguay are important exporters of soya beans, soya meal and soya oil to the EU and the Netherlands and Belgium are key importers of these products. Soya crushing and refining also occurs in the EU which is largely a result of protectionist policies leading to increased prices on processed soya imports. In Brazil, poor transport networks also increase the costs associated with soya processing. Reductions in EU barriers could however lead to reduced cost of South American exports. In recent years, China has also been rapidly increasing its soya cultivation and processing capacity largely due to internal demand. All producers are vulnerable to market flux and increased demand for soya products was experienced as a result of the BSE crisis in the 1980s/1990s.

6.2 Impacts of soya production and processing on biodiversity and landscape

6.2.1 The trend towards increased soya cultivation has been characterised by largely negative impacts on biodiversity. The nitrogen-fixing capability of soya plants has positive impacts on the nutrient availability of soils and therefore on soil-microrganisms and biodiversity. However, the current methods of production and initial land take to establish the farms have had significant negative implications for biodiversity.

6.2.2 The establishment of soya farms has in recent years led to the large-scale conversion of land for soya cultivation e.g. in South America. This conversion of land has lead to deforestation and removal of other important habitats e.g. Cerrado in Brazil. In addition, development of infrastructure to meet the needs of expanding soya production has also put pressure on forests and ecosystems through removal and fragmentation. This has not been the case however in the USA where much of the soya that is cultivated is on previously developed land.

6.2.3 Cultivation of soya is also having impacts on biodiversity. The application of pesticides and the monoculture system which is generally practiced have had important implications for the number and type of species that can be supported on and near farms. Run-off from fields which contains pesticides has further



implications when it reaches water bodies and can threaten aquatic ecosystems. The favoured practice of no-till methods e.g. the USA and Argentina, have beneficial impacts on soil erosion but lead to increase use of agro-chemicals, potentially exasperating impacts of pollution on biodiversity.

6.2.4 In South America, the trend towards large scale mechanised farming, infrastructure development and establishment of soya processing plants has led to changes in the landscape away from small scale farming.

6.3 Impacts of soya production and processing on climate change

6.3.1 The main impacts on climate change from soya production and processing are related to transportation, use of machinery and farm inputs and on deforestation.

6.3.2 In South America, soya is generally transported by road to ports to be exported. Rail freight is also used but in countries such as Brazil, the network is poor and unreliable. Importers also use road and rail as the main means of transporting soya goods from ports to processing plants and consumers. Transport by road has implications on carbon dioxide emissions and the increase in production of soya beans globally is likely to have caused increased emissions.

6.3.3 Additional increases in carbon dioxide emissions are expected from the expanding use of machinery and pesticides in soya production. Both machinery and pesticides require the use of fossil fuels in their production and machinery requires fuel to run. The processing of soya also requires inputs of energy and therefore fossil fuel use. This can be in the form of gas and electricity or as is often the case in Brazil, of wood.

6.3.4 The conversion of land for soya cultivation, particularly the loss of forests, has potentially important implications on climate change. Fire is commonly used to clear forests which increases the carbon dioxide emitted into the atmosphere. The loss of forests also means potentially less carbon is converted to oxygen through photosynthesis.

6.4 Impacts of soya production and processing on pollution and water use

6.4.1 As mentioned above, pesticide use is common in soya production. The use of GM soya beans e.g. in the US and Argentina, has also been found to increase the requirements for agro-chemicals in the long-term as pests become adapted to the GM crops. Increased use of pesticides and fertilisers has impacts on biodiversity and water quality in addition to soil fertility and structure. The impacts of pesticide and fertiliser use on human health is a particular concern and in Brazil alone, the WWF estimated that in 1993, 300000 people were poisoned by agro-chemicals.

6.4.2 Processing of soya beans requires water and chemical inputs. The typical impacts are likely to increase water use and can lead to increased water pollution (through effluent). The impacts associated with processing soya beans are however eclipsed



by the increased significance of impacts associated with farm establishment and soya bean cultivation.

6.5 Impacts of soya production and processing on socio-economics

6.5.1 On a country level, soya bean cultivation and processing provides an important source of revenue and for South American countries for economic development through export revenue. Processing soya beans domestically creates added value and employment.

6.5.2 However, in South America, on local scale, the impacts have been quite different. Displacement of local people has been evident where farms are grouped to create large farms and where mechanised systems of production are used, fewer employees are required. The dominance of large companies in the soya sector has also meant that local people have often not experienced the benefits. Conversion of small farms is also thought to have resulted in fewer crops being grown for domestic consumption as cash-crops are cultivated instead.

6.6 Policy and initiatives framework 6.6.1 Government policy has important implications for cultivation and processing of soya.

For example the removal of VAT on Brazilian soya bean exports and the investment in infrastructure has encouraged the production and export of soya beans from Brazil. In Argentina however, the Government levies a tax on soya bean exports which encourages the processing of soya within Argentina. EU policy which levies tariffs of imports of soya meal and oil also encourages domestic processing, although reductions in these tariffs are expected. The US government also has a number of agricultural support policies in place to support domestic consumption and production125.

6.6.2 A number of initiatives that have been established to increase the sustainability of soya bean production and processing. Some, like the Basel Convention on Sustainable Soya production and the Roundtable on Sustainable Soya relate specifically to soya production whereas others e.g. xx are more generic and less specific to soya.

6.7 Robustness 6.7.1 The majority of the information that was available for this case study has been

qualitative in nature. The use of Wikipaedia while informative, should be treated with caution. Sources have been biased towards Non Governmental Organisation research and in particular the WWF. There have been a number of reports commissioned relating to soya production and processing which include photographic evidence and do not appear to contradict one another. However, this

125 International Food Policy Research Institute (2003) US Agricultural Policy: The 2002 Farm Bill and WTO Doha round proposal accessible via: http://www.ifpri.org/divs/tmd/dp/papers/tmdp109.pdf



cannot make up for primary research which this case study presently lacks. It has been possible to draw out broad themes for the impacts of soya production and processing but it is crucial to be aware of the differences, which are sometimes subtle, that exist between and within each country of focus.



APPENDIX I – LITERATURE REVIEW

Search terms used:

Soya

Soya beans

Soya oil

Environmental Impacts soya production

Environmental Impacts soya cultivation

Social impacts of soya production

Social impacts of soya cultivation

Economic impacts of soya production

Economic impacts of soya cultivation

Impacts soya production Brazil

Impacts soya production Argentina

Impacts soya production Bolivia

Impacts soya production USA

Impacts soya production Canada

Environmental impacts crushing soya

Social impacts crushing soya

Economic impacts crushing soya

Environmental impacts processing soya

Social impacts processing soya

Economic impacts processing soya

Environmental/social/economic impacts processing soya

Brazil/Argentina/Bolivia/USA/Canada

Environmental/social/economic impacts crushing soya Brazil/Argentina/Bolivia/USA/Canada

Impacts of refining soya

Impacts of animal feed soya

Impacts of food soya

Soya initiatives

Soya policies

Sustainable soya



APPENDIX II – ASSESSMENT FRAMEWORKS



Commodity: Soya: Brazil Risk Factor Subject Elements Commentary

Magnitude Likelihood of occurrence

National Government agricultural policy 1.1 Policy Framework International International Labour Organisation National Forestry Working Group – Minimum criteria for soya bean

cultivation in forest areas 1.2 Initiative Framework

International • Basel Criteria for Sustainable Soya • International Federation of Organic Agriculture

Movements (IFOAM) • Social Accountability International (SAI) • Best Management Practices • Roundtable for Sustainable Soya • EurepGap • Sustainable Agriculture Network • Environment Management Systems Standards 14001

Compilation of the UK’s demand for commodity and sources of production

Brazil was the largest exporter of soya beans to the UK in 2004, exporting 594,600,485kg to the UK. Brazil exports less soya oil to the UK than soya beans and ranked 6th largest exporter to the UK in 2004, in terms of trade value. Brazil is one of the largest exporters of soya beans to the world, being second only to the USA. Brazil exported 19,246,689,010kg in 2004. Brazil is one of the largest exporters of soya oil in 2004, exporting 394,489,571kg. Approximately 4% of Brazilian soya bean exports are destined for the UK but only 0.4% of Brazilian soya oil is exported to the UK. Exports of soya beans makes up 6% of all of Brazil’s exports but soya oil only contributes 0.24% of total exports.

2.0 Supply and demand statistics and trends

Analysis of future market trends Production of soya beans is likely to increase due to favourable government policy, increased global demands for feed, food, oils and potentially also for biofuels.



3.0 Supply chain structure a. Institutional structure Basic structure (nodes and

networks) • Production characterised by large-scale producers e.g.

Andre Maggi, Itamarti, and small-scale farmers (sometimes organised into enterprises).

• Trading largely controlled by international companies e.g. Cargill, Bunge, ADM etc. Beans are either traded directly or through intermediaries.

• Strong agricultural lobby and government support • Crushing is largely controlled by large companies e.g.

ADM, Bunge, Cargill etc. which account for approximately 43% of crushing market

• Refining factories tend to be in urban areas but refining has not increased dramatically.

4.0 Production Stage Sector Quantitative Qualitative Magnitude Likelihood of occurrence

Biodiversity • 60% of forest fires in Brazil were in the Mato Grosso region where there is large scale soya bean production

• 16% of the whole Amazon forest has been lost (due to a number of causes)

• Cerrado and Amazon forest destruction

• Cerrado and Amazon fragmentation due to associated infrastructure development

• Burning to clear also impacts on biodiversity

High magnitude – high number and variety of species per unit area in the Amazon.

High likelihood – due to encouragement by the government to extend soya cultivation areas and due to high demand for soya. Factors which may reduce likelihood could be reduced global demand and therefore prices and reduction in government investment due to external factors

Water Use Not Known (NK) NK NK NK Water Quality NK NK NK NK

a) Farm establishment

Air quality NK NK NK NK



Climate Change NK • Reduced forest cover and changed vegetation cover likely to change storage of carbon and rate of conversion to oxygen by plants.

Potentially high if scale of deforestation is high but magnitude is not known

NK

Poverty (labour, vulnerability)

NK • Displacement of local people as land is converted to large-scale soya plantations

• Conflict over land ownership rights

Medium – displacement and conflicts are high in magnitude but development of sector is generates income and foreign exchange revenue which could help development of Brazil

Unknown likelihood but reports suggest numerous incidences of displacement and conflict over tenure which suggest the likelihood could be high. Poor governance especially with respect to land ownership rights also increases the likelihood. Generation of foreign exchange could be affected by global demand and prices for soya therefore the likelihood is unclear.



Environmental Health • 55 million tonnes of soil is estimated to be lost due to erosion in Brazil (not for soya production alone)126

• Soil erosion is common as a result of the loss of forests and savannah

• GM soya has to date been banned in Brazil. Some is through to be illegally brought across the border from Argentina.

• Expansion of cultivation into marginal areas such as on mountain slopes could exacerbate erosion

High – the implications of GM use for the application of pesticides is high as is soil erosion particularly in the Cerrado regions.

Unclear – the data for these impacts is generally dated and it is therefore unclear about the likelihood of impacts.

Biodiversity NK • Monocultures reduce biodiversity

• Production can reduce the soil nutrients as rotations are not practiced this reduces the soil biodiversity

NK – biodiversity implications are likely to be less than the initial land clearance but impacts of pesticide use and monocultures could have an important effect.

NK

Water Use NK • Demand increased due to cultivation

NK NK

b) Cultivation*

Water Quality NK • Use of agro-chemicals has implications for water quality due to runoff. No-till methods can increase application of chemicals.

Unclear but some reports suggest it could be high due to high levels of pesticide use and problems of overspray

NK

126 WWF (2003) Soy expansion: loosing forests to fields, WWF Switzerland



Air quality NK NK NK NK Climate Change NK • Use of machinery, equipment

and chemicals all involve emissions of carbon dioxide in production and transportation.

NK NK


• In 1993, an estimated 300,000 people were poisoned in Brazil as a result of pesticide use (the actual level is likely to have changed now due to developments in applications and technologies)

• Poor working conditions • Conflict over land ownership

rights • Use of agrochemicals has

implications for human health • Reduced employment due to

mechanisation

NK – potentially high due to high agricultural use and the low employment levels

NK – potentially high due to poor governance

Environmental Health NK • Soil erosion leading to nutrient loss. No-tillage methods reduce erosion.

• Soil pollution and altered nutrient levels and structure due to application of chemicals and mechanisation of farming.

NK – potentially high as reports suggest erosion and pollution can be high. Magnitude could be reduced with improved management practices

NK – reports suggest that erosion and pollution are common problems therefore likelihood likely to be high.



Biodiversity • Demand for fuel wood is c. 400 stacked m3 per day

• Native vegetation e.g. timber is often used for fuel in crushing plants, further increasing pressure on biodiversity in these areas

Medium – some companies e.g. Cargill plan to plant eucalyptus to use as fuel once local fuel wood is used up. Short term magnitude is likely to be high due to loss of biodiversity as high species numbers and varieties in forests esp. the Amazon

NK

Water Use NK NK NK NK Water Quality NK • Effluents from plants can lead

to water pollution NK NK

Air quality NK • Emissions of chemicals and carbon dioxide can be associated with crushing

NK NK

Climate Change NK • Transportation of soya beans to crushing plants increases carbon dioxide emissions

NK NK


NK • Labour conditions can be poor with low wages and jobs either for technical experts or low skilled workers.

NK NK

c) Processing*

Environmental Health NK NK NK NK



Biodiversity • Approximately ¾ of the Amazon deforestation occurs within 50km of major paved highways

• Destruction of gallery forests reported in Brazil in order to gain access to waterways

• Construction of highways encourages establishment of farms in close proximity pressurising local forests

High – high number and variety of species means loss of forest for transport will have a large impact

High – planned infrastructure programmes likely to increase development of transport and therefore pressure on forests

Water Use NK NK NK NK Water Quality NK NK NK NK Air quality NK • Emissions from transport NK NK Climate Change NK • Transport of soya beans etc.

by road increases carbon dioxide emissions, particularly due to the poor infrastructure increasing journey times.

NK NK


NK • Development of a port by Cargill in Santarem to ship soya has lead to the displacement of local people inc. fishermen

Medium – often more local scale incidences but should not be discounted

NK

d) Transportation*

Environmental Health NK NK NK NK Biodiversity NK NK NK NK Water Use NK • Use in plants and in

production of other products NK NK

Water Quality NK • Effluents from plants can lead to reduced water quality

NK NK

Air quality NK • Emissions from factories including carbon dioxide and chemicals

NK NK

Climate Change NK NK NK NK Poverty (labour, vulnerability)

NK NK NK NK

e) Refining and Manufacturing*




Commodity: Soya: Argentina

Risk Factor Subject Elements Commentary Magnitude Likelihood of

occurrence National Government agricultural policy 1.1 Policy Framework International International Labour Organisation National 1.2 Initiative Framework International • Basel Criteria for Sustainable Soya

• International Federation of Organic Agriculture Movements (IFOAM)

• Social Accountability International (SAI) • Best Management Practices • Roundtable for Sustainable Soya • EurepGap • Sustainable Agriculture Network • Environment Management Systems Standards 14001


In 2004, Argentina exported 1,252,640kg of soya beans to the UK which had a trade value of $554,581. The UK did not import a significant quantity of soya oil from Argentina. Argentina was the third largest soya bean exporter in 2004, exporting 6,519,805,267kg worth $1,740,114,212. There is no data for exports of soya oil from Argentina which suggests either a data problem or that there were no exports of this commodity in 2004. Soya beans exported to the UK represented 0.03% of all exports of soya beans from Argentina. Exports of soya beans make up 5% of all of Argentina’s exports.


Analysis of future market trends Favourable government policy e.g. transport expansion suggest production and processing will continue. High global demand likely to remain stable. Increases in production in China and India plus others could increase supply and potentially lower market prices. Demand for biofuels will also potentially encourage increased demand.




networks) • Main areas of production are the regions of Cordoba, Santa

Fe and Buenos Aires. Increases in production in recent years carried out by both large scale agri-business and small scale farmers. Government encouragement for increased production.

• Cargill, Bunge, Andre et Cie, Con Agre and Louis Dreyful control soya market.

• Larger crushing sector than Brazil. Crushing encouraged by government.

• Soya oil production has increased and is mainly exported.

4.0 Production Stage Sector Quantitative Qualitative

Biodiversity NK • Expansion in area under production leading to expansion into marginal areas which require greater chemical inputs

• Conversion of forests and savannah reduces biodiversity

NK NK

Water Use NK NK NK` NK Water Quality NK NK NK NK



Climate Change NK • Reduced forest cover and changed vegetation cover likely to change storage of carbon and rate of conversion to oxygen by plants.

NK NK




NK • Reduced food security as crops are converted from food crops for domestic consumption to cash crops for export.

• Displacement of people from native land as soya cultivation expands

NK – reports suggest magnitude could be high as impacts are largely felt by the poorest members of society

NK


Biodiversity NK • Use of GM soya beans is widespread and has implications on biodiversity e.g. pest resistance

Unclear but likely to be high as high levels of pesticide use could have implications for areas of high biodiversity e.g. forests. Lack of diversity of crops could have impacts on genetic variation

NK/High – application of pesticides is high

Water Use NK • Demand for watering NK NK Water Quality NK • Increased pesticide use that has

been shown to accompany GM soya use has increased incidences of water pollution

Unclear but likely to be high as use is high

Unclear but likely to be high as use is high

b) Cultivation*




Climate Change NK • Mechanisation and use of agro-chemicals increases emissions of carbon dioxide due to production and transportation..


NK • The trend towards amalgamation of small farms into large farms can lead to a loss of jobs

• Disputes over land ownership and uneven wealth distribution

• Violence over ownership rights.

Environmental Health NK • Increased pesticide use due to GM soya growth can lead to reduced soil microbiology

• No-till systems reduce soil erosion however also increase need for pesticides.

Biodiversity ? Water Use Water Quality • Effluents from plants can lead to

water pollution Air quality • Emissions of chemicals and

carbon dioxide can be associated with crushing

Climate Change • Transportation of soya beans to crushing plants increases carbon dioxide emissions


?

c) Processing*

Environmental Health

Biodiversity

• Upgrading of road network may lead to threats to biodiversity

• Dredging of the Parana River could have impacts on aquatic life

d) Transportation*

Water Use



Water Quality • Dredging of the Parana River to aid transportation could have implications on water quality

Air quality • Emissions from transport Climate Change • Transport of soya beans etc. by

road increases carbon dioxide emissions, particularly due to the poor infrastructure increasing journey times.


Environmental Health

Biodiversity Water Use • Use in plants and in production of

other products Water Quality • Effluents from plants can lead to

reduced water quality Air quality • Emissions from factories

including carbon dioxide and chemicals

Climate Change Poverty (labour, vulnerability)

?


Environmental Health ?



Commodity: Soya: Bolivia






There is no data available in the Comtrade database for exports of soya beans or soya oil from Bolivia in 2004. This suggests either discrepancies in reporting or that Bolivia did not export soya beans or oil to the UK in 2004.


Analysis of future market trends Government encouragement for increased processing should keep processing high and may even lead to increased processing. Exports to countries other than those in South America could potentially increase in the future.




networks) • Increased area under production in recent years without similar increase in yield or as rapid an increase as in Brazil and Argentina. The main farmers are Patrik Din, Sergio Marchetti, Unisoya, DESA and Hermanos Chavez

• Increased crushing in Bolivia instead of exporting soya beans. Main destination for exports are to other South American countries.

• The key crushing companies are Alsa, ADM, Granos, Gravetal, Industrias de Aciete and IOL


Biodiversity • Approximately 1million ha of Bolivian forest has been removed for soyabean cultivation

• Conversion of forests for soya cultivation

Water Use NK NK NK NK Water Quality NK NK NK NK


Climate Change • Reduced forest cover and changed vegetation cover likely to change storage of carbon and rate of conversion to oxygen by plants.


NK NK NK NK





Biodiversity

• As soya farms can no longer be used due to poor soil quality, cultivation expands into new areas which places added pressure on ecosystems and forests.

• Increased cultivation in the San Matias Pantanal area could affect the aquatic and terrestrial ecology of this sensitive area.

Water Use • Demand for watering Water Quality • Development of cultivation in the

San Matias Pantanal area could affect the water quality of the Pantanal e.g. due to pesticide use.

Air quality NK NK NK NK Climate Change NK NK NK NK Poverty (labour, vulnerability)

• Creation of jobs • Uneven distribution of income

b) Cultivation*

Environmental Health • Already degraded and compacted soils are being further pressurised by soya cultivation e.g. in Santa Cruz state

• As cultivation becomes unfeasible farms are abandoned and replaced by cattle ranching, further degrading the soil

Biodiversity NK NK NK NK Water Use NK NK NK NK

c) Processing*

Water Quality • Effluents from plants can lead to water pollution



Air quality • Emissions of chemicals and carbon dioxide can be associated with crushing



NK NK NK NK

Environmental Health NK NK NK NK Biodiversity

• Expanding road network could

threaten sensitive ecosystems such as the San Matias Pantanal

Water Use NK NK NK NK Water Quality NK NK NK NK Air quality • Increased emissions from

transport as production expands

Climate Change • Increased carbon dioxide emissions due to numerous movements during production process.


NK NK NK NK

d) Transportation*

Environmental Health NK NK NK NK Biodiversity NK NK NK

NK

Water Use NK NK NK NK Water Quality NK • Potential for contamination with

effluents from processing

Air quality • Potential for contamination with chemicals used in the process


Climate Change • Emissions of carbon dioxide associated with heating processes




NK NK NK NK




Commodity: Soya: USA and Canada







The USA exported 82,636,801 kg of soya beans to the UK in 2004 and Canada exported 25,122,718kg. The USA was the third largest exporter of soya beans to the UK and Canada was the forth. There is no data on the exports of soya oil from the USA or Canada which suggests exports to the UK are insignificant. In 2004, Canada exported 984,269,901kg and the USA exported 25,602,608,322kg of soya beans. The USA exported 158,907,355kg of soya oil. Exports of soya beans from the USA and Canada to the UK represents 0.31% and 3.14% of all exports of soya beans respectively. Exports of soya oil to the UK consists of 0.09% of the USA's exports of soya oil. The export of soya beans accounts for 0.82% of all of the USA’s exports and 0.09% of Canada’s. Soya oil exports make up 0,02% of the USA’s total exports.



Analysis of future market trends Large domestic demand is likely to keep production and processing stable. The USA is likely to be overtaken by Brazil and Argentina and possibly others due to rapid increases in these countries production and processing capacity.


networks) • Cultivation in the USA mainly occurs in the states of Iowa,

Illinois and Minnesota and is typically rotated with corn. • Large domestic markets for soya meal and oil in the USA. • The USA and Canada have well developed transport

networks • Production in Canada is less than the USA and is focussed

in Oregon. • Well developed markets for soya e.g. the Chicago Board of

Trade • Canada exports few soya beans compared to the USA and

mainly exports to Pacific countries for use in food. • Crushing is mainly carried out by Cargill, ADM and Bunge in

the USA • Canadian soya oil production meets domestic demand but

soya meal is imported to meet demand • Soya oil is refined in the USA to meet a large demand e.g.

from food manufacturers


Biodiversity NK • Cultivation is generally on areas that had previously been agriculture therefore habitat is not generally lost.

• GM cultivation could have potential impacts on biodiversity


Water Use NK NK NK NK



Water Quality NK NK NK NK


Climate Change NK NK NK NK


NK NK NK NK


Biodiversity NK • Use of GM soya beans is widespread and has implications on biodiversity e.g. pest resistance

Water Use NK • Demand for watering • No-tilling methods and planting

close together is thought to help conserve soil moisture

Water Quality NK • Increased pesticide use that has been shown to accompany GM soya use has increased incidences of water pollution

Air quality NK NK NK NK Climate Change NK • Mechanisation and use of agro-

chemicals increases emissions of carbon dioxide due to production and transportation..

b) Cultivation*


NK NK NK NK



Environmental Health • Increased pesticide use due to GM soya growth can lead to reduced soil microbiology

• No-till systems reduce soil erosion however also increase need for pesticides.

Biodiversity NK NK NK NK Water Use NK NK NK NK Water Quality • Effluents from plants can lead to

water pollution

Air quality • Emissions of chemicals and carbon dioxide can be associated with crushing



NK NK NK NK

c) Processing*

Environmental Health NK NK NK NK Biodiversity NK

NK NK NK

Water Use NK NK NK NK Water Quality NK NK NK NK Air quality • Emissions from transport Climate Change • Transport of soya beans etc. by



NK NK NK NK

d) Transportation*




Biodiversity NK NK NK

NK

Water Use NK • Use in plants and in production of other products

Water Quality NK • Effluents from plants can lead to reduced water quality

Air quality NK • Emissions from factories including carbon dioxide and chemicals

Climate Change NK • Carbon dioxide emissions due to heating and power


NK NK NK NK





Commodity: Soya: The Netherlands and Belgium







In 2004, the Netherlands exported 3,721,454kg of soya beans to the UK of $1,367,097 trade value. Belgium exported 7,608,265kg in the same year, to the UK. In 2004, the Netherlands and Belgium were the largest and second largest exporters of soya oil to the UK, respectively. Exports of soya beans from the Netherlands were 1,172,882,597kg and Belgium were 59,741,200kg. Exports of soya oil from the Netherlands in 2004 were 266,269,093kg and from Belgium were 56,802,419kg. The UK was the destination for 30% of Belgium’s exports of soya beans and 0.37% of the Netherlands’s. For soya oil, Belgium exported 5% of all soya oil to the UK and the Netherlands 8%. Exports of soya beans and soya oil from Belgium make up 0.01% and 0.02% of the total exports respectively. Similarly, exports of soya beans and soya oil from the Netherlands makes up 0.13% and 0.06% respectively.



Analysis of future market trends Trends are unclear but processing of soya beans is likely to remain important and exports remain high due to high global demand. Biofuels development could also lead to high demand.

3.0 Supply chain structure Basic structure (nodes and networks)

• Soya beans are not cultivated in the Netherlands or Belgium • The Netherlands and Belgium are important importers of

soya beans, particularly from South America. • Crushing and processing occur in the Netherlands and

Belgium. The key companies in the crushing industry in Belgium is Cargill and in the Netherlands, also ADM and Bunge.

a. Institutional structure

Timeline 4.0 Production Stage Sector Quantitative Qualitative

Biodiversity NA NA NA NA Water Use NA NA NA NA Water Quality NA NA NA NA Air quality NA NA NA NA Climate Change NA NA NA NA


NA NA NA NA


Environmental Health NA NA NA NA

Biodiversity NA NA Water Use NA NA Water Quality NA NA Air quality NA NA

b) Cultivation*

Climate Change NA NA

NA NA




NA NA

Environmental Health NA NA

Biodiversity NK NK NK NK Water Use NK NK NK NK Water Quality NK • Effluents from plants can lead to

water pollution

Air quality NK • Emissions of chemicals and carbon dioxide can be associated with crushing

Climate Change NK • Transportation of soya beans to crushing plants increases carbon dioxide emissions


NK NK NK NK

c) Processing*

Environmental Health NK NK NK NK Biodiversity NK

NK NK NK

Water Use NK NK NK NK Water Quality NK NK NK NK Air quality NK • Emissions from transport Climate Change NK • Transport of soya beans etc. by



Nk NK NK NK

d) Transportation*

Environmental Health NK NK NK NK Biodiversity NK NK NK

NK e) Refining and Manufacturing*

Water Use ? • Use in plants and in production of other products



Water Quality ? • Effluents from plants can lead to reduced water quality

Air quality ? • Emissions from factories including carbon dioxide and chemicals

Climate Change NK NK NK NK Poverty (labour, vulnerability)

NK NK NK NK




i For all countries listed in FAO data available via: FAO STAT accessible via http://faostat.fao.org/site/336/default.aspx (accessed 06/09/06) ii Source of data: http://unstats.un.org/unsd/comtrade/ce/ceSnapshot.aspx?gt=ss&cc=2222&px=S3&y=2004(accessed 06/09/06) iii Van Gelder, J. W. & Dros, J.M., (2003) Corporate actors in the South American soy production chain, Research paper for WWF Switzerland, accessible via: http://www.bothends.org/strategic/soy15.pdf (accessed 06/09/06) iv Ibid v Brookes (2001) cited by Hard, D.L., (2003) Innovative developments in the production and delivery of alternative protein sources accessible via: http://www.fao.org/docrep/007/y5019e/y5019e08.htm (accessed 06/09/06) vi Ibid vii WWF (2003) Soy expansion: loosing forests to fields, WWF Switzerland viii Source of all data in para 1.1.7 is FAO Stat accessible via: http://faostat.fao.org (accessed 06/09/06) ix WWF (2004) Soya boom: Doom or boom for South America’s forests and savannahs accessible via: http://www.wwf.org.uk/news/scotland/n_0000001332.asp (accessed 06/09/06) x Bickel, U & Dros, J.M., (2003) The Impacts of Soybean Cultivation on Brazilian Ecosystems, Report for the WWF Conservation Initiative, accessible via: http://www.bothends.org/strategic/soy27.pdf (accessed 06/09/06) xi Whyte, C. et al (Nd) Soy expansion in the Brazilian Amazon Region: A local and global social and environmental dilemma, Centre for Sustainable Development – University of Brasilia, accessible via: http://www.ambafrance.org.br/refeb/projets/article%20Chlo%E9%20Cadier.pdf (accessed 06/09/06) xii Niesten E. T. et al (2004) Commodities and Conservation: The need for greater habitat protection in the tropics, Conservation International – Centre for Applied Biodiversity Science Report, Washington DC accessible via. http://www.bothends.org/strategic/soy41-Commodities%20and%20Conservation.pdf (accessed 06/09/06) xiii Whyte, C. et al (Nd) Soy expansion in the Brazilian Amazon Region: A local and global social and environmental dilemma, Centre for Sustainable Development – University of Brasilia, accessible via: http://www.ambafrance.org.br/refeb/projets/article%20Chlo%E9%20Cadier.pdf (accessed 06/09/06) xiv WWF Sweden (2002) Soybean: Where is it from and what are its uses, A report for WWF Sweden accessible via. http://www.bothends.org/strategic/soy17.pdf (accessed 06/09/06) xv Whyte, C. et al (Nd) Soy expansion in the Brazilian Amazon Region: A local and global social and environmental dilemma, Centre for Sustainable Development – University of Brasilia, accessible via: http://www.ambafrance.org.br/refeb/projets/article%20Chlo%E9%20Cadier.pdf (accessed 06/09/06) xvi Branford, S. (2004) Argentina’s Bitter Harvest, New Scientist, 17th April 2004, p40-43 xvii Weuthritch, B (2000) Conservation Biology: Combined Insults Spell trouble for rainforests, Science, vol 289p35-27accessible via. http://www.sciencemag.org/cgi/content/full/289/5476/35 (accessed 06/09/06) xviii Proforest (2004) The BASEL criteria for responsible soy production, accessible via: http://www.aidenvironment.org/soy/01_basel_criteria_for_responsible_soy_production.pdf (accessed 06/09/06) xix Ibid xx AIDEnvironment (2005) Factsheet: Soy Production in South America accessible via: http://www.aidenvironment.org/soy/03_factsheet_soy_aug05.pdf#search=%22south%20america%20soy%22 (accessed 06/09/06)

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