Tag Archives: Amazon

Amazon Rainforest: Source of Food for Vegans, Meat-Lovers

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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

Can’t Touch This! America FANG v. China BATX

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The Economist magazine has considered four measures of Chinese corporate unfairness, using data from Morgan Stanley and Bloomberg. The first is the weight of China in the foreign sales that American firms bring in. It stands at 15%; if it was in line with China’s share of world GDP, it would be 20%. This shortfall amounts to a small 1% of American firms’ global sales (both foreign and domestic). America Inc is similarly underweight in the rest of Asia, but there is much less fighting talk about South Korea or Japan.

The second test is whether there is parity in the commercial relationship. Firms based in China make sales to America almost exclusively through goods exports, which were worth $506bn last year. American companies make their sales to China both through exports and through their subsidiaries there, which together delivered about $450bn-500bn in revenue. Again, there is not much of a gap. American firms’ aggregate market share in China, of 6%, is almost double Chinese firms’ share in America, based on the sales of all listed firms.

The third yardstick is whether American firms underperform other multinationals and local firms. In some cases failure is not China-specific. Walmart has had a tough time in China, but has also struggled in Brazil and Britain. Uber sold out to a competitor in China, but has done the same in South-East Asia. American consumer and industrial blue chips are typically of a similar scale in China to their nearest rivals. Thus the sales of Boeing and Airbus, Nike and Adidas, and General Electric and Siemens are all broadly in line with each other. Where America has a comparative advantage—tech—it leads (Facebook, Amazon, Netflix, Google (FANG)). Over half of USA Inc’s sales in China are from tech firms, led by Apple, Intel and Qualcomm. Overall, American firms outperform. For the top 50 that reveal data, sales in China have risen at a compound annual rate of 12% since 2012. That is higher than local firms (9%) and European ones (5%).

The final measure is whether American firms are shut out of some sectors. This is important as China shifts towards services and as the smartphone market, a goldmine, matures. The answer is clearly “yes”. Alphabet, Facebook and Netflix are nowhere, and Wall Street firms are all but excluded from the mainland. Chinese firms, however, can make a similar complaint. The market share of all foreign firms (incuding China’s Baidu, Alibaba,Tencent and Xiaomi popularly called BATX) in Silicon Valley’s software and internet activities, and on Wall Street, is probably below 20%. America’s national-security rules, thickets of regulation, lobbying culture and political climate make it inconceivable that a Chinese firm could play a big role in the internet or in finance there.

Far-sighted bosses know their stance on China must reflect a balanced assessment, not a delusional vision of globalisation in which anything less than a triumph is considered a travesty. But their voices are being drowned out. The shift of the business establishment to hawkishness on China has probably emboldened the White House and also led the Treasury and Department of Commerce to be more combative. Most big firms are blasé about tariffs; they can pass on the cost to clients. Few export lots to China. But soon China will run out of American imports to subject to retaliatory tariffs; in a tit-for-tar war, beating up American firms’ Chinese subsidiaries is a logical next step. USA Inc’s Sino-strop would then end up enabling the opposite of what it wants.

Excerpts from Raging Against Beijing, Economist,  June 30, 2018, at 58

Policing the Amazon Jungle

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The small town of Apui sits at the new frontline of Brazil’s fight against advancing deforestation…  The home of 21,000 people in southern Amazonas state was long protected by its remote location from illegal loggers, ranchers and farmers who clear the forest.  Now those who would destroy the jungle are moving in from bordering states, following the Transamazon Highway, which is little more than a red-dirt track in this part of the rainforest.

First come the loggers, who illegally extract valued lumber sold in far-off cities. The cattle ranchers follow, burning the forest to clear land and plant green pasture that rapidly grows in the tropical heat and rain. After the pasture is worn out, soy farmers arrive, planting grain on immense tracts of land…

Roughly 7,989 square kilometres (3,085 square miles) of forest were destroyed in 2016, a 29 percent increase from the previous year and up from a low of 4,571 square kilometers in 2012, according to the PRODES satellite monitoring system.

Then there are the fires.  Apui ranked first in the country for forest fires in the first week of August 2017, according to the ministry.

At their best the environmental agents can slow but not stop the destruction. They raid illegal logging camps, levy large fines that are rarely collected and confiscate chainsaws to temporarily impede the cutting.  Costa acknowledges that the roughly 1,300 environmental field agents who police a jungle area the size of western Europe have a difficult task, at the very least.

Excerpt from Brazil’s agents of the Amazon fighting loggers, fires to stop deforestation, Reuters, Aug. 20, 2017

Reversing Deforestation in the Amazon

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Brazilian policymakers can take some of the credit for a dramatic slowdown in the deforestation rate in the Brazilian Amazon, say experts – but that’s not the whole story.  In November Brazil (2012) announced deforestation rates in the Amazon declined 27 percent from August 2011 to July 2012, reaching the lowest rates ever recorded for the fourth consecutive year.  According to Brazil’s National Institute for Space Research (INPE), 4656 square kilometres of Amazon rainforest were cleared over the twelve months, compared with 27,772 square kilometres in 2004.

Brazil’s government says this represents a 76 percent reduction since 2004 – coming close to the country’s commitment to reduce deforestation in the Amazon region 80 percent by 2020.  It has attributed the dramatic results to a package of policies known as PPCDAm (The Action Plan for Prevention and Control of Legal Amazon Deforestation) that were first implemented in 2004.

PPCDAm comprises more than 200 initiatives across 14 ministries that together aim to reduce deforestation in the Amazon…Over the last decade, the country has established new protected areas, indigenous lands and sustainable use areas covering 709,000 square kilometres.  This has decreased both deforestation and the incidence of fires – and crucially, more of them than previously are located near particularly threatened areas, making them more effective.We know every day where deforestation is going on in the Amazon…from detection to having people in the field stopping illegal loggers takes just five days….Brazil’s space agency, remote sensing centre, and law enforcement agencies collaborate to detect and precisely locate deforestation and forest degradation, and to apprehend perpetrators.  From detection to having people in the field stopping illegal loggers takes just five days….  Last year [Brazil]  confiscated 110 chainsaws, nine bulldozers, and 329 trucks…

Jorge Hargrave – who  worked with Wunder on the UNEP report (pdf) – and colleagues assessed the effectiveness of the PPPDAm policies.  They found that these policies were responsible for curbing deforestation – and that the command-and-control policies, particularly the issuance of environmental fines, had the most impact.  The government’s decision to focus on 36 specific municipalities where deforestation was most intense was also very effective, they found, as was the cross sector coordination and high-level political support for the program.

However, Hargrave also cautioned against over-confidence about the recent encouraging results. “It’s not clear that if the government changes or the policy changes, deforestation can’t go up again,” he said.  “In addition, the lack of land tenure security in the region was consistently identified as a key problem and the biggest bottleneck to further progress.”

In another recent study, Clarissa Costalonga e Gandour and colleagues from the Climate Policy Initiative showed that environmental policies are important – but are only part of the deforestation-reduction story.  The study found that agricultural prices – particularly meat and soybeans – had a significant impact on deforestation as well…The study makes special mention of a 2008 policy that made rural credit for agricultural activities in the Amazon conditional on proof of compliance with environmental regulations – with exceptions for smallholders.

Excerpts, KATE EVANS, How much credit can Brazil take for slowing Amazon deforestation – and how low can it go?, CIFOR, Jan. 15, 2013

Right to Participate: Indigenous Peoples of Peru

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Peru’s official human rights ombudsman, Defender of the People Eduardo Vega, is set to convene the first the first “prior consultation” with Amazonian indigenous peoples on oil development in their territory, under terms of a new law passed earlier this year setting terms for the process. The consultation concerns a planned new round of oil contracts planned for Bloc 1AB, currently held by Argentine firm Pluspetrol, in the watersheds of the Pastaza, Corrientes and Tigre rivers in the northeast of Loreto region. The Regional Organisation of Indigenous Peoples of the East (ORPIO), with an office in the city of Iquitos, it to represent the impacted indigenous peoples. Vega pledged the process would be carried out “with the utmost clarity so that rights of the indigenous peoples will be respected and the same process can serve for other consultations that will subsequently be carried out.”  But after years of conflict over resource extraction in the region and accusations of broken promises by the government, many indigenous residents remain skeptical about the process.

Peru: first “prior consultations” on Amazon oil development, WW4 Report, Sept. 15, 2012