Doubts over compliance with Brazil’s Forest Code put soy trade to EU at risk

Traders will struggle to prove that soy from the Amazon and Cerrado complies with Brazil’s Forest Code, due to the poor availability of official data. This could affect exports to the EU, which will soon require businesses to show that commodity imports comply with environmental laws in their countries of production.

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Português brasileiro
26 Sept 2023

Oxford, United Kingdom (26 September 2023) — New research released today[1] shows that in 2020, 16% of soy from the Amazon and the Cerrado was produced on farms that did not comply with Brazil’s Forest Code.[2] Most of this soy was exported to China and the EU.

A further 58% of the soy came from farms showing signs of potential breaches of the Forest Code, but whose compliance status could not be made clear with publicly available data. Together, this gives a total of 74% of production affected by some evidence of non-compliance.

Soy production in the Amazon and Cerrado: 26% likely compliant, 58% some evidence of non-compliance, 16% strong evidence of non-compliance. Overall, 74% at risk of non-compliance, 14 million hectares.

These results suggest traders will face challenges in systematically verifying legal compliance within their supply chains.

“Official data on deforestation licensing and regularisation mechanisms could help clarify whether these farms were compliant, but that data isn’t available,” said André Vasconcelos, Global Engagement Lead at Trase. “That will become a problem for buyers or regulators who want to check that their soy imports comply with all relevant laws.”

Due diligence disclosures under the EU Deforestation Regulation (EUDR) begin for large companies in December 2024, with small and medium-sized enterprises following later. In addition to requiring that imports of agricultural commodities be ‘deforestation-free’,[3] the EUDR also requires that they comply with relevant legislation in producing countries, including Brazil’s Forest Code.[4]

“Most soy from the Cerrado and Amazon, 74%, would have trouble with this legality requirement,” Vasconcelos said. “But at the same time, over 95% of the soy is deforestation-free.[5] So these problems with verification are creating a missed opportunity for Brazil’s soy sector. It’s like selling a car which is emissions-free, but which fails basic safety checks.”

Ana Paula Valdiones, Environmental Transparency Coordinator at ICV, said: “Brazil and the EU have an opportunity to collaborate to strengthen the implementation of Brazil’s Forest Code, which is crucial to the shared goal of environmental conservation.”

For further information, contact:

Jolene Tan, Trase Communications Lead at Global Canopy | | +44(0)7961657 952

Notes for Editors

[1] The research was jointly carried out and will be published by Instituto Centro de Vida (ICV) and Trase in collaboration with the Agriculture Atlas Program from Imaflora. A full report is available on the ICV and Trase websites. An embargoed copy of the executive summary is available on request.

A launch webinar took place on 26 September with presentations by André Vasconcelos (Trase), André Dias (Sema Mato Grosso) and Salima Kempenaer (Belgium’s FPS Public Health). Moderated by Jane Lino of Proforest, the webinar was bilingual (English and Portuguese) with simultaneous interpretation.

Instituto Centro de Vida (ICV) is a Brazilian civil society organization based in the state of Mato Grosso, whose mission is to build shared solutions for the sustainable use of land and natural resources. To this end, we carry out technical studies and advocacy actions, as well as working in the field in partnership with local actors.

Trase is a data-driven transparency initiative that revolutionises our understanding of the international trade and financing of agricultural commodities which drive tropical deforestation. Its unique supply chain mapping approach brings together disparate, publicly available data to connect consumer markets to deforestation and other impacts in producer countries. Trase’s free online tools and actionable intelligence enable governments, companies, financial institutions and civil society organisations to take practical steps to address deforestation. Trase is a not-for-profit partnership founded in 2015 by the Stockholm Environment Institute and Global Canopy.

[2] The Forest Code is Brazil’s main legal mechanism that regulates land use, ensures the protection of forests and other ecosystems, and guarantees monitoring of environmental compliance of rural properties. In assessing compliance with the Forest Code, the researchers identified soy farms where deforestation had taken place without the necessary licenses, as well as farms which did not have enough vegetation cover set aside for conservation as required (known in the Code as the “Legal Reserve”).

[3] Under the EUDR, this means the commodities must not be produced on land deforested after 31 December 2020.

[4] Article 3(b) of the EUDR:

[5] The study looked at soy traded in 2020, so the EUDR definition of ‘deforestation-free’ (not produced on land deforested after 31 December 2020) is inapplicable. The report defines soy traded in 2020 as ‘deforestation-free’ if it was not produced on land cleared between 2015 and 2019.

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