Brazil-China Soybean Trade - The Nature Conservancy

ForewordTable of ContentsForeword..................................................................................................................................2Executive Summary.............................................................................................................4Part 1: An Overview of the Brazil-China Soybean Trade............................5The global soybean market..............................................................................................5The Brazil-China soybean trade: evolution and characteristics.........................9Brazilian soybean production and exports...............................................................10China soy consumption and imports..........................................................................15China and the global soybean market.......................................................................17This publication, also available in Portuguese, examines the export trade in soybeans between Brazil andChina, giving an overview of how it has evolved, projecting out likely developments over the next decade,and drawing out the implications for conservation. We hope it will be of interest to a range of people andorganizations: policymakers and regulators, trade associations and farmers, environmental and campaigngroups, private sector companies – in short, anybody with an interest, direct or indirect, in this importanttopic.The soy trade, contrary to popular belief, has never been a significant driver of deforestation in the Amazon,and its environmental impacts there have been successfully contained since 2006 and the implementation ofthe Amazon soy moratorium, a model of collaboration between the private sector and environmental groups.The moratorium shows that it is possible for producers, companies, banks and environmental groups toidentify and resolve a problem of mutual concern through effective monitoring and agreements uniting themajor players across the market.Part 2: Projections of the Brazil-China Soybean Trade to 2020...........19Introduction..........................................................................................................................19Business as usual...............................................................................................................20Better than business as usual.......................................................................................22Worse than business as usual.......................................................................................24Part 3: Strategic Implications for Conservation............................................26Converting pasture to cropland can meet all demand projections.................26Limits to certification as a strategy for the soy market.......................................29Alternative approaches to greening commodity markets..................................29Appendix: Exporters of Brazilian Soy and Importers in China..............33Yet the past is not always a reliable guide to the future. This report also shows that demand from China forBrazilian soybeans has expanded, is expanding, and will expand. Much of that demand has been and will bemet from the state of Mato Grosso, an agricultural powerhouse that also contains large areas of intact andhighly biodiverse forests and grasslands. It is important to ensure, in containing the environmental impactsof soy in the Amazon, that pressure for habitat conversion is not simply displaced to the Cerrado. It isencouraging to see that under all the scenarios projected in this report, expansion in demand from China forsoy in Mato Grosso over the next decade can easily be met through converting pasture to cropland.The Brazil-China soy trade is an example of the sort of problem environmental organizations will facemore and more often in a globalizing, multi-polar world – a destination market that, at least at present,is unconcerned about environmental footprints and indifferent to certification. Given the importance ofcommodity markets as drivers of deforestation, it is imperative to come up with strategies for greening theway they work in situations where the standard environmental strategies for markets – certification andprice premiums to producers – will not work. We hope the ideas presented in the final section will be usefulnot just to those concerned with soybeans, but with all the other commodities – beef, sugar and ethanol,cotton, corn – currently transforming landscapes and livelihoods across the tropical world.2We recognize and are grateful for the support from the United States Agency of International Developmentthat made the production of this report possible.David ClearyDirector of Sustainable Harvests – Latin AmericaThe Nature Conservancy“This study/report/audio/visual/other information/media product is made possible by the generous supportof the American people through the United States Agency for International Development (USAID).The contents are the responsibility of The Nature Conservancy and do not necessarily reflect the views ofUSAID or the United States Government.”3