First Steps Towards Responsible Soy Sourcing Guidelines for China

19 June 2018

At the 2018 RTRS Conference in France, Solidaridad presented progress made by the Sustainable Soy Trade Platform towards developing the first Responsible Soy Sourcing Guidelines for Chinese players to import deforestation-free soy from South America.

China's Key Role in The Global Soy Supply Chain

China accounts for almost 70% of global soy trade volume, whereas Brazil, Argentina and Paraguay account for 60% of China’s soy imports; mainly for livestock feed. Due to the size of trade between both regions, China holds a key role in contributing towards reducing and eventually eliminating deforestation from the global soy supply chain, especially in South America.

A clear definition of sustainability is missing in China’s soy sector and, with this in mind, Solidaridad shared the findings from the First Consultation Meeting of the Technical Advisory Group during a side event at the Roundtable for Responsible Soy (RTRS) conference.

Solidaridad expects this to be a starting point to align industry, government, finance and academic stakeholders working on sustainable soy in China. This also included the Sustainable Soy Trade Platform (SSTP) partners Paulson Institute, WWF, Earth Innovation Institute and Carbon Disclosure Project (CDP).

Dr. Lin Tan, Executive President of Hopefull Group, one of the biggest grain and oil processor in China says:

“Price is still a big concern for Chinese players and so far sustainability, has not been very important. Over the past few years, the Sustainable Soy Trade Platform has helped to develop awareness about deforestation. The next steps are developing guidelines to show Chinese companies how they can start sourcing in a responsible way.”

The China Responsible Soy Sourcing Guidelines

Solidaridad has developed a work plan, together with specialists Mr. Liu Denggao and Dr. Lin Tan, to draft the China Responsible Soy Sourcing Guidelines. The exercise will start by researching and analyzing mechanisms for verifying responsible soy sourcing based on environmental, social and economic principles and criteria. It will also showcase best practices from international, country, organization and company perspectives.

A Guide to Support Responsible Sourcing Strategies

This process will facilitate the development of a shared definition of 'responsible soy' for the Chinese soy industry. The final compilation of guidelines and the related toolkit will serve as reference for Chinese soy supply chain actors such as importers, processors, crushers, feed companies, and end-users, as well as policy-makers, practitioners and the financial sector. The guidelines will support them to make informed decisions, develop responsible sourcing strategies and implement plans with time-bound and measurable key performance indicators.

Isabel Nepstad, Soy Programme Manager, Solidaridad China says:

“The guideline development is a process to get Chinese stakeholders involved and ultimately have ownership of the process to start implementing responsible sourcing. SSTP serves as the bridge between the Chinese players and the different global initiatives, but at the same time, recognizes and adapts the guidelines and ultimate actions to the Chinese context.”

Tracking the Sustainable Soy Link Between China & South America

Since 2017, Solidaridad South America and Solidaridad China have extensively collaborated across different initiatives to create market uptake in China for deforestation-free soy and beef from South America:

1) The Sustainable Soy Trade Platform (SSTP) organized a China Soy Delegation trip to the Netherlands to get a deeper understanding of sustainability practices in Europe, and two study tours to South America. The first study tour to South America, with participation from Cargill, the Brazilian Association of Vegetable Oil Industries (ABIOVE) and the Brazilian Roundtable of Sustainable Livestock (GTPS) representatives, brought Chinese pork company executives to Brazil, to stress the importance of creating sustainable soy and corn supply chains. These are the main crops for the pig and poultry feed industries. The second exchange visit was held in Argentina, where Chinese participants were able to see the impacts of soy production in the Chaco forest. They also engaged  with regional stakeholders from Argentina, Bolivia, Brazil and Paraguay. Lichen Zhang, Vice President of Jiusan Group said:

“Last year we traveled to Argentina and witnessed deforestation, with trees getting knocked down before our eyes. We recognize that deforestation and environmental degradation related tsoy production is a serious issue, and requires a global solution. China, as the largest importer, has an important role to play jointly with the producing countries and other demand regions to achieve a sustainable soy supply chain.”

2) Solidaridad is also an implementing partner for the “Collaboration for Forests and Agriculture (CFA) Initiative”, which is focused on generating a zero-deforestation demand signal from Chinese soy market actors. As part of this, Solidaridad mapped the soy commercial chain in Brazil, and identified the main modalities of soybean trading observed in the market. It was found that both the Southern and Northern ports in Brazil export soy from the Amazon. The study also showed that soybean commercialization between two traders, or between a trader and a financier / supplier of agricultural inputs (who holds the soybeans physically due to barter operations with producers) is very common. These two factors make it difficult to effectively trace soybeans through the supply chain. The study also identified the three main companies in the country that are funded by Chinese capital. Moving forward, Solidaridad will continue to examine the dynamics of the soy market between other South American countries and China and identify opportunities for improvements along their supply chain.

3) Solidaridad has joined a third initiative led by the Earth Innovation Institute called “Building Bridges Between Local Policies, REDD+ and Sustainable Supply Chain Initiatives” with funding from the Norwegian Agency for Development Cooperation (Norad). It focuses on decreasing Chinese markets’ consumption of soy, livestock and palm oil originating in deforested areas from South America and Southeast Asia.

A Holistic Strategy to Mitigate Deforestation

Through these initiatives, Solidaridad aims to mitigate deforestation. Amongst several of its strategic approaches, this is achieved by increasing transparency within the soy value chain and improving access to information. This is vital to improving the purchasing strategies of companies and to increase awareness of the impact of soy production and consumption on originating and supplying regions. Alex Ehrenhaus, Solidaridad’s International Program Coordinator for Soy says:

“We are working towards helping key stakeholders increase the efficiency with which they process information, by catalyzing improvements within their internal management systems linked to soy and deforestation control. We also help connect stakeholder needs by increasing availability and accessibility of this information.'

Did you know:

  • The Sustainable Soy Trade Platform (SSTP) was launched in 2015 by the Paulson Institute, Solidaridad, The Nature Conservancy and World Wildlife Fund For Nature (WWF) at the Dutch Embassy in Beijing as part of a two-year project funded by the Gordon and Betty Moore Foundation to advance the responsible production and procurement of soy in the Chinese market.

  • The Collaboration for Forests and Agriculture (CFA) initiative is part of the larger “Forests and Agricultural Markets Initiative”, a collaboration among the Gordon and Betty Moore Foundation and other partners designed to eliminate the loss and degradation of tropical and sub-tropical ecosystems that results from the production of globally traded agricultural commodities, by ensuring that key commodities (beef and soy) are sourced only from deforestation free areas.  

  • COFCO, China’s leading international agribusiness company,  has been engaging both with the SSTP and also Solidaridad’s projects in Paraguay to increase their uptake of sustainably produced soy. This follows COFCO’s chairman announcing the company's commitment to eliminate deforestation from its supply chains at Davos.

Learn more about Solidaridad's soy programme here.

 

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