Recently, I came across a much publicized article in The New York Times about the impact of two of the world’s biggest grain traders, Cargill and Bunge, on deforestation trends in the agricultural frontiers of Brazil and Bolivia. Since we have entered an era of private commitments to deforestation-free supply chains, this article shows that there is still a way to go for some companies to improve their performance.

Deforestation estimates in 2016 from the Brazilian National Institute for Space Research (INPE) indicate a resurgence of deforestation in the Amazon, and deforestation hotspots identified by the Word Resources Institute suggest increasing pressure on the savanna forests in the Cerrado region, a biodiversity-rich ecosystem. Additionally, while there are no official deforestation estimates in lowlands Bolivia, it has remained at high levels, according to Terra-I. This suggests a need to examine the culprits.

Don’t miss the forest for the trees

The article mentioned above discusses a new report by the environmental campaign organization Mighty Earth that identifies deforestation in Brazil and Bolivia linked to Cargill and Bunge. Drawing on satellite imagery and supply-chain mapping information processed by the Stockholm Environment Institute, the article makes the case that new large-scale forest-clearing by Bolivian and Brazilian farmers for soybean production is associated with the demand from these two American-based food giants.

It is interesting to note that companies like Cargill and Bunge still buy soybeans originating from forestlands converted to agriculture and fail to implement due diligence procedures to verify their origin. In some cases, these purchases directly trigger soybean expansion across Brazil and Bolivia’s frontiers. Cargill and Bunge have argued, in their defense, that their role is minor, and that deforestation is a complex issue that requires all major buyers — not just them — to get involved.

While it is useful that environmental groups like Mighty Earth track how company supply chains are ‘contaminated’ by ‘dirty supply’, it would be more helpful if they could place these trends within a wider context. This would foster more practical and durable solutions, because even if these two soybean traders stopped buying soybeans from the Matopiba region in Brazil and the eastern lowlands in Bolivia, it is likely that deforestation would continue to expand in both of these regions.

In this sense, the New York Times article fails to provide an in-depth understanding of the complex dynamics shaping these two agricultural frontiers, and misleadingly mixes two very different situations. Moreover, while the article refers to deforestation trends in the Amazon, it looks mostly at the Cerrado areas, where a greater pressure associated with agricultural expansion is taking place.

To its credit, the article does highlight two important trends that have been perceived by academics yet hardly studied until now: 1) Efforts to contain deforestation in the Amazon have shifted to the Cerrado areas; and 2) Efforts to contain deforestation in the Brazilian Amazon have placed pressure on other countries, mainly in Bolivia and Paraguay’s deciduous and dry forests. In these regions, different regulations governing conversion of forests apply less rigid standards than in the Amazon.

Two main issues came to my attention while reading this article. The first is the clear limits of the soy moratorium, since it only applies to the Amazon region. The second is how easy it remains for companies to circumvent their sustainability commitments when playing around with specific national regulations that still allow for forest conversion. But what is most interesting in our current times is that companies have to now face the reality of their own commitments under the scrutiny of civil society.

The two companies blamed as culprits of deforestation argue that they have a relatively low share in total soy supply originating from the regions under scrutiny. Cargill sources 8 percent from Bolivian municipalities and Bunge sources 20 percent from Matopiba, Brazil. Thus, slowing deforestation has to go beyond the actions of just these two companies. More action should be required to revise the land-use and forest conservation regulations in the Cerrado areas.

   An aerial shot shows the contrast between forest and agricultural landscapes near Rio Branco, Acre, Brazil. CIFOR Photo/Kate Evans

Governments, not just companies, need to step up

What I found thought-provoking in this article were the views expressed by Stewart Lindsay, Bunge’s vice president for global corporate affairs: “One company alone cannot solve this issue … a positive step would be for more companies to adopt zero-deforestation commitments, apply controls to block crops grown in illegally cleared areas from entering their supply chains, report publicly on progress, and invest millions of dollars to support sustainable land-use planning efforts.”

His perspective is correct, but it falls short. It is correct in the sense that deforestation is a complex issue that cannot be solved by one single company, especially as the largest share of deforestation is not necessarily driven by soy, but from pasture expansion, which the domestic markets absorb an important portion of. Pasture is still the largest source of deforestation in both Brazil and Bolivia.

While it is important that the article highlights the pressure placed by Mennonites on forests for the production of soy sold to Cargill, much of the deforestation in lowlands Bolivia is currently related to the expansion of pasture for cattle production in the Chiquitania. This, of course, is not related to any transnational company, but to a growing national demand for beef associated with land speculation. Unfortunately, the government of Bolivia has not been able to adequately control this process.

Thus, institutional agreements between governments, industries and retailers in the domestic market have an important role to play in abating deforestation. Brazil is the poster child for this in terms of drastically reducing deforestation in the Amazon region. However, these agreements constitute a double-edged sword given the effects they can have on excluding certain suppliers like medium-scale farmers and smallholders who cannot adopt the improved production practices required by traders and end-buyers.

Something that is becoming more perverse in Brazil, and even more so in Bolivia, is that agricultural frontiers continue to expand under more complex land-use interactions. Over time, producers are facing more difficulties to keep yields and production volumes up, due to more intense and longer dry-spells caused by climate change. This is having adverse impacts on overall production, but banks and insurance systems often do not take into account climate change-related variables.

In addition, production models promoted by transnational trading companies and backed by environmental NGOs that tend to spare forests are resulting in the expansion of more intensive production systems based on large-scale and highly intensive use of chemical inputs. This is in opposition to more integrated and agro-ecological production systems that could take better advantage of the natural resources existing in the Amazon and Cerrado regions, and could better preserve them.

In conclusion, while it is important to continue discussing ways to achieve zero deforestation in supply chains with the help of traders and buyers, it is also important to look at the role of governments to provide guidance on clearer regulations and enforcement methods in ways that apply uniformly across different regions. More attention should be placed on innovative options to manage more sustainable agricultural frontiers, and to create schemes that answer the needs of all stakeholders involved.

For more information on this topic, please contact Pablo Pacheco at
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