- DTN Headline News
Cargill Faces Fire Over Amazon
Monday, September 9, 2019 9:05AM CDT

By Chris Clayton

DTN Ag Policy Editor

OMAHA (DTN) -- One of the areas feeling an impact from fires across the Amazon rainforest is the headquarters for Cargill Inc., just outside Minneapolis.

The agricultural giant -- the largest private company in the U.S. -- was already under constant criticism from a relatively new environmental group, Mighty Earth, over Amazon deforestation before the fires became global news last month. In July, Mighty Earth dubbed Cargill "the worst company in the world," accusing Cargill of making sustainability pledges while continuing to source soybeans from deforested areas of Brazil and Bolivia.

Mighty Earth, which was founded by former U.S. Rep. Henry Waxman, D-Calif., increased its pressure last week with a protest rally against Cargill at the Minneapolis Art Institute, a museum the Cargill family has helped support.

Brazil President Jair Bolsonaro has championed economic development over the environment and critics argue Bolsonaro's views have helped spur a push for clearing land by burning that sparked more Amazon fires over the summer.

"We have many people, including the big media, interested in criticizing President Bolsonaro for anything," said Ricardo Arioli Silva, a farmer in Mato Grosso who also has a radio program on agriculture in the state, told DTN in an email. "The fires in the Amazon was a great opportunity."

On Friday, the presidents of Bolivia, Colombia, Ecuador, Guyana and Suriname all signed the "Amazon Pact" to increase cooperation in the Amazon. Bolsonaro did not attend the event, but did issue a video for the event and sent Brazil's foreign minister to the conference. Some environmental groups complained the pact doesn't go far enough.

Silva was in the U.S. last week with other Brazilian farmers. He noted he heard several times that farmers were using the fires to clear more land and plant soybeans to sell to China because of the trade war. "That's ridiculous," he said.

Silva notes there are no soybeans in the Amazon rainforest, because it's too complicated to grow them there. It's too expensive to convert the land to soybean production and too far away from roads and elevators to sell the beans. There are also complications in trying to sell beans from those areas specifically because of a moratorium.

Still, agribusiness is tied to the Amazon fires. Twice during a CNN event last Wednesday on climate change, audience members asked Democratic presidential candidates what they planned to do to control agribusinesses causing Amazon fires and deforestation.

Cargill has come under increasing criticism on social media and is associated with the deforestation. Climate activist Bill McKibben tweeted last Tuesday, "Glad to see people standing up to @Cargill for their role in Amazon fires."

In an interview with DTN last month, Cargill's vice president of global sustainability for business operations and supply chain, Jill Kolling, said Cargill and other companies have been able to drastically reduce deforestation around palm oil production, but the challenges are more complex with soybeans in Brazil. And while Cargill is taking the heat, Kolling said it's really an issue for the entire soy trade operating in Brazil.

"We were saying that, when it comes to soy, the sector is not going to make that goal. It's been a much more complex problem than palm oil where the industry has made really good progress working to eliminate deforestation there," Kolling said.

RAINFOREST OR CERRADO?

Part of the challenge for the grain trade is a broadening of Amazon deforestation to include Brazil's Cerrado, the country's savannah, a large swath of which has been cleared over the past decades for farming, especially in the state of Mato Grosso. Brazil has sought to restrict further clearing of the Cerrado, but it continues.

"The progress in the Cerrado has been a little different and we don't think the solutions that worked elsewhere are going to work there," Kolling said. She added, "As conservation groups have evolved their thinking, they believe that the Cerrado area -- they will call it an upside down forest, because of the roots in the ground and the native vegetation are a really important carbon sink. The soil is sequestering carbon and it became a native vegetation sort of goal."

Mighty Earth and others want no conversion of native vegetation. Yet, while the world condemns the Amazon fires, Brazil has also become the biggest soybean and beef exporter to China. A Chinese state-owned oilseed and food company, COFCO, just last month announced it would buy 25% more soybeans from Brazil over the next five years and spend $60 million to help Brazilian farmers expand. Chinese officials have rejected ties between Amazon fires and agricultural exports to the country.

Kolling noted the environmental challenges of deforestation, whether in the rainforest or the Cerrado, are pitted against the economics of rural poor areas in Brazil.

"Some of those areas are some of the poorest areas of Brazil and they are really looking to agriculture as an economic lever, just like we did 100 years ago here," Kolling said. "That's the challenge we are facing as Brazil sees agriculture as a key to their future."

Cargill's action plan came as the company sent a letter to Brazilian soy producers that it would not sign on a new soy moratorium in the Cerrado. Cargill, Bunge, ADM and others have been part of a pact to avoid soy production in the Amazon, but Cargill came out in June telling farmers it would not join a similar ban in the Cerrado. Cargill executives also met multiple times with leaders from Mighty Earth, but were unable to reach any agreement on deforestation and sustainability issues.

"We agree on the importance of protecting the environment and protecting native lands in key areas," Kolling said. "We absolutely agree on that. It's the how that we really disagree on. We believe we need to consider that economic piece for the farmer and for the rural communities of Brazil, in addition to looking at the environment. And that's part of sustainability and what makes it challenging."

Kolling added, "We really view it as a balance of environmental, economic and social. Sometimes if you are somebody who is really passionate about a single issue, you forget about the other side of it and unintended consequences that can happen."

Instead of joining a ban on Cerrado development, Cargill released a soy action plan that includes listing the Matopiba region in the Cerrado as a high-priority area for risk assessments and restricted sourcing. Among other actions in the plan are suspensions for suppliers who violate protected areas or appear on government lists regarding forced labor practices. "We recognize that as a leading company in food and agriculture, we must use our influence to help enact change. We take this role seriously," Cargill stated.

As part of its soy action plan, Cargill committed $30 million in June to a fund to protect the rainforest and Cerrado, but at the same time, Cargill acknowledged the company and the larger food industry as a whole, would not meet a goal to end deforestation in the soy industry by 2020.

"Some Brazilian farmers from Matopiba are mad at them also, just because they announced a $30 million budget to promote sustainable production," Silva said.

Cargill, Bunge and three Brazilian companies were fined in May 2018 a combined total of $6.5 million following an investigation dubbed "Operation Soy Sauce" by the Brazil Institute for the Environment and Renewable Natural Resource, which charged the companies with buying soy grown on land in the Matopiba region of Brazil without deforestation licenses. Matopiba is made up of four Brazilian states and the undeveloped areas are largely Cerrado.

ADM and Bunge have issued statements about the Amazon fires, stating they do not source commodities from deforested areas and are using satellite images to enforce that. ADM told DTN it has joined a ban on Cerrado development.

DRY SUMMER OR DEFORESTATION?

A study released by the Amazon Environmental Research Institute (IPAM) in August blamed deforestation, not drought, as the main driver for the summer fires, which now top more than 90,000 across the Amazon. IPAM stated moisture levels in the Amazon were higher this year than in the past three years, but fires for 2019 are higher than any of the last four years across the Amazon. In its recommendations, IPAM stated, "Considering that deforestation is a direct driver of forest fires, the fight against illegal deforestation must be intensified, and producers must be supported to adopt better practices and quit using fire to prepare the land."

Click on this link to view the study: https://ipam.org.br/…

Using numbers from the IPAM study, Brazil's Vegetable Oil Industry Association -- ABIOVE --pushed back on the argument that soy production was a driver for the fires and current deforestation in the Amazon. ABIOVE released a report showing the 10 areas with the most fires over the first six months of the year only accounting for about 30,000 hectares (74,000 acres) of planted beans. Brazil planted 36 million hectares (nearly 89 million acres) of soybeans last year.

Yet, Reuters reported 17,000 hectares (42,000 acres) of soybeans grew in one area hit hard by fires, Novo Progresso in Para state, where an investigation is taking place over fires started intentionally on lands along a major farm highway in the country, BR-163. Allegations claim as many as 70 people coordinated "fire day" on the social media platform WhatsApp to burn off more land for development.

Click on this link to view the investigation:

https://www1.folha.uol.com.br/…

PAY FOR DEFORESTED SOY

While groups clamor for agriculture to do more to help reduce deforestation, there are questions about broad commitments. Consumers, for instance, are not making major demands of companies on their soy purchases.

"We don't see consumers across the world saying, 'I am willing to pay for deforestation-free soy.' Some people are, but that's not mainstream," Kolling said.

Commercially certified deforestation-free soy is available today, but that leads to higher costs because of the segregated supply chain and getting farmers certified for such a program.

"We have these commercial options available today and we would like to see demand for those products grow. Because that sends a signal to the farmers too that this is what consumers want," Kolling said.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(BAS/CZ)


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