In the first four months of 2020 an estimated 1,202 square km (464 square miles) were cleared in the Brazilian Amazon, 55% more than during the same period in 2019, which was the worst year in a decade…Less attention has been paid to the role of big firms like JBS and Cargill, global intermediaries for beef and soya, the commodities that drive deforestation. The companies do not chop down trees themselves. Rather, they are middlemen in complex supply chains that deal in soya and beef produced on deforested land. The process begins when speculators, who tend to operate outside the law, buy or seize land, sell the timber, graze cattle on it for several years and then sell it to a soya farmer. Land in the Amazon is five to ten times more valuable once it is deforested, says Daniel Nepstad, an ecologist. Not chopping down trees would have a large opportunity cost. In 2009 Mr Nepstad estimated that cost (in terms of forgone beef and soy output) would be $275bn over 30 years, about 16% of that year’s GDP.
Under pressure from public opinion, the big firms have made attempts to control the problem. In 2009, a damning report from Greenpeace led JBS, Marfrig and Minerva, meat giants which together handle two-thirds of Brazil’s exports, to pledge to stop buying from suppliers that deforest illegally. (The forest code allows owners to clear 20% of their land.) JBS, which sources from an area in the Amazon larger than Germany, says it has blocked 9,000 suppliers, using satellites to detect clearing.
The problem is especially acute in ranching, which accounts for roughly 80% of deforestation in the Amazon, nearly all of it illegal. “Cows move around,” explains Paulo Pianez of Marfrig. Every fattening farm the big meatpackers buy from has, on average, 23 of its own suppliers. Current monitoring doesn’t cover ranchers who breed and graze cattle, so it misses 85-90% of deforestation. Rogue fattening farms can also “launder” cattle by moving them to lawful farms—perhaps their own—right before selling them. A new Greenpeace report alleges that through this mechanism JBS, Marfrig and Minerva ended up selling beef from farms that deforested a protected Amazon reserve on the border between Brazil and Bolivia. They said they had not known about any illegality.
One reason that soya giants seem more serious than meat producers about reducing deforestation a network of investors concerned about sustainability, is that most soya is exported. The EU is the second-top destination after China. But companies struggle to get people to pay more for a “hidden commodity”… But few people will pay extra for chicken made with sustainable soya, which explains why just 2-3% is certified deforestation-free. ….Four-fifths of Brazilian beef, by contrast, is eaten in Brazil. Exports go mostly to China, Russia and the Middle East, where feeding people is a higher priority than saving trees. Investors, for their part, see beef firms as unsexy businesses with thin margins…
According to soya growers, multinational firms failed to raise $250m to launch a fund for compensating farmers who retain woodland. “They demand, demand, demand, but don’t offer anything in return,” complains Ricardo Arioli….
Reducing deforestation will require consensus on tricky issues like the fate of tens of thousands of poor settlers on public lands in the Amazon, where half of deforestation takes place….
Excerpts from The AmazonL Of Chainshaws and Supply Chains, Economist, JUne 13, 2020