Are Brazilians eating the Cerrado? · Granol, Caramuru, Comigo, and IMCOPA) account for 50% of all the soy crushing capacity in Brazil. Only five companies (in green) have zero deforestation

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Soy is one of Brazil’s most important and profitable agricultural commodities, used both as a protein feed and as an energy crop. The soy industry generates income and jobs, contributing to the country’s economic growth, but soy production is also associated with negative social and environmental impacts.

More than half of Brazilian soy is grown in the Cerrado, where soy expanded by 9.5 million hectares between 2000 and 2017. Almost one third of this came from native vegetation clearance, primarily in the region known as Matopiba1.

Soy production and use in Brazil (not including storage, waste, and seeds). Source: Abiove - 2017 Harvest

Are Brazilians eating the Cerrado?

75% Soybean meal(31.5 mt)

37% Crushing(41.8 mt) 20% Soybean oil

(8.4 mt)

Soybean(Production 113.8 mt)

While attention has been given to the role of global demand in driving the expansion of Brazilian soy and the related deforestation, there has been less focus on the Brazilian domestic soy market.

Nearly 40 percent of the soy produced in Brazil is crushed domestically mainly for animal feed and for biodiesel. Some of the products are then exported (see figure below).

Overall, 30% of the soy produced in Brazil remained in the domestic market in 20162.

In Matopiba, an agriculture frontier where soy expansion has been recently linked to native vegetation clearance, a third of the 2016 soy harvest was consumed in Brazil.

In the Cerrado, we find that almost 40 percent of the soy produced in the municipalities with the highest rates of deforestation was used in the domestic market in 2016.

Key findings

46% (1Expor4.3 m

tt)s

52% Domesticmarket (16.3 mt)

15% Exports(1.3 mt)

85% Domesticmarket (7.1 mt)

60% Exports(68.2 mt)

DISCLOSURE INSIGHT ACTION

The domestic soy supply chain

Where is soy used?

Soy processingAfter harvest, soy is either stored on the farm or transported to warehouses and processing facilities owned either by cooperatives or by private grain, food and fuel companies before crushing.

Soy crushing capacity in Brazil40% of Brazil’s crushing capacity is found in the south of Brazil.

57% of crushing capacity is found in the Cerrado where recent native vegetation clearance has been linked to soy expansion.

Source: Agency of Petroleum, Natural Gas and Biofuels (ANP, 2017), Ministry of Mines and Energy (MME, 2017)

Source: IBGE, 2017 and Brazilian Association of Animal Protein (ABPBA), 2017, Brazilian Beef Exporters Association (ABIEC), 2017, Abiove (2017 Harvest), Sindirações, 2017.

Meat production

Biodiesel

4.3 billionlitres of biodiesel were produced in Brazil in 2017

95%

of biodiesel was sold on the domestic market

3.1 billionlitres of soybean oil were used for biodiesel production

tons of soy meal stayed in the domestic market16.3 million

15 million (92%) tons of soy meal wereused for animal feed in Brazil

6 billion chickens were slaughtered in Brazil

39 million cows were slaughtered in Brazil

43 million pigs were slaughtered in Brazil

53% animal feedfor chickens 24% animal feed

for pigs 12% animal feed forcattle (beef & dairy)

of chicken went to the domestic market 80% of pork went to the

domestic market 80% of beef went to thedomestic market66%

Capacity

400

10,000

20,000

30,000

36,320

Volume of soy crushed / day (tons)

Soy crushing capacity (2016) / state in Brazil (volume / day)

Source: Trase, 2018 (unpublished)

Cerrado

(7.8 mt) (3.6 mt) (1.9 mt)

Which companies operate in the domestic market?

Soy processors – crushing capacityThe top seven companies (Bunge, Cargill, ADM, Granol, Caramuru, Comigo, and IMCOPA) account for 50% of all the soy crushing capacity in Brazil.

Only five companies (in green) have zero deforestation commitments which apply to all regions in Brazil, including the Cerrado

Nearly 50% of the soy crushing capacity in the Cerrado is owned by companies without any commitments to eliminate deforestation from all their supply chains.

Source: Trase, 2018 (unpublished) based on Hinrichsen and Ary Oleofar capacity estimations.

Meat production (% sales)The meat production sector (including chicken, pork and beef) is dominated by a few companies. JBS accounts for nearly 70% of meat sales. The three top companies combined (JBS, BRF, and Marfrig) represent approximately 90% of sales.

None of these companies have made commitments to not purchase soy from deforested areas in the Cerrado.

Source: Market Research, 2016

Biodiesel producers – volume of productionThe biodiesal production market is more fragmented in comparison.

Over 70% of Brazil’s biodiesel is produced from soybean oil. The largest producers have their own soy crushing facilities.

Three companies (in green) have commitments not to purchase soy from deforested areas in the Cerrado. Their combined output represents 18% of biodiesel production in Brazil.

Source: Agency of Petroleum, Natural Gas and Biofuels (ANP), 2017

Bubble size reflects company crushing capacity

Bubble size reflects market share

Bubble size reflects production volumes

3%6%

8%

3%4% 8%

3%

3%

16%

5%

69%

4%

8%

14%

7%10%

4% 6%

7%

3%6%

4%

4%

10% 10%

3% 3%

7%

3%

Action neededCompanies supplying the domestic market must address deforestation risks by:

introducing and implementing deforestation commitments that cover all types of vegetation;

introducing systems to verify that these commitments are being implemented;

and introducing reporting systems to show that their commitments are being implemented.

The top 20 municipalities (see numbers on the map and chart below) with the highest deforestation rates in the Cerrado highlighting soy crushing facilities.

Volume of soy exported and consumed in the domestic market in 20165 in the municipalities with highest deforestation rates. Municipalities ordered by deforestation rates.

Deforestation risks linked to the domestic soy market

Analysis of the domestic market in 2016 indicates that4:

40% of the soy produced in these municipalities went to the domestic market.

A third of the soy produced in Matopiba in 2016 was consumed in Brazil.

At least four crushing facilities(in red) operate in areas of high deforestation.

1 Agrosatélite, 2018. 2 Trase.earth3 Prodes Cerrado, 20184 We used Trase data to assess the soy trade within the domestic market. To explore more see Trase.earth.5 These volumes may change for different years. See methods on Trase.earth.

Authors: André Vasconcelos, Daniel Meyer, and Helen Burley

globalcanopy.org

Uruçui (1)

São Desidério (2)

Balsas (3)

Correntina (4)

Jaborandi (5)

Cocalinho (6)

Ribeirão Cascalheira (7)

Alto Parnaíba (8)

Riachão (9)

Santa Filomena (10)

Formosa do Rio Preto (11)

Mirador (12)

Goiatins (13)

Rio Sono (14)

Pium (15)

Barreiras (16)

Santa Rita do Tocantins (17)

Campinapolis (18)

Niquelândia (19)

Baixa Grande Do Ribeiro (20)

Domestic market

Exports

0 200 400 600 800

Volume of soy (thousand tons)

Over 20% of all the native vegetation clearance in the Cerrado in 2017 was in just 20 municipalities (out of 1387 municipalities in the Cerrado)3. Sixteen of the 20 municipalities are in Matopiba.

100%

45%

0%

0%

66%

0%

23%

0%

0%

0%

47%

100%

0%

0%

77%

53%

77%

60%

57%

45%

Deforestation rate (ha)

0 - 2250

2250 - 4500

4500 - 6750

6750 - 9000

9000 - 11250

11250 - 13500

Crush facilities

Matopiba

States

1

12

13

14

15

17

18 19

20

4

2

56

7

8

11

16

3

9

10