South America: Uphill battle for responsible soy, as demand grows

Due to its high protein values and efficiency, soybean has become the number one source of protein for feeding cattle in Europe and China and is present as an ingredient in many everyday foods. Soy production has increased by 60% in the last 20 years and will sky-rocket in the next two decades towards 160 million hectares globally – forty times the surface of The Netherlands – as food production doubles to feed the world.

Brazil and Argentina are the world biggest soybean exporters after the United States. Exports to European and Chinese markets have transformed soybean into the new green gold, resulting in production on farms as large as 100 000 hectares in Argentina.

In 2012, due to the reduced harvest in the United States, South America’s soy price per ton reached USD 634 in September. While this boom has fueled Mercosur economies and improved livelihoods by means of income redistribution, it has also raised a lot of controversy in terms of sustainability. Some of the concerns are around deforestation and land disputes due to agricultural expansion over native forests where soybean is becoming a monoculture.

In Argentina, soy has become a national asset, although its production started not so long ago. Since cattle have huge grasslands to feed from, there was not a market for soybean until exports were allowed in 1976. Between 1970 and 2011, soybean production increased from 38 000 ha to almost 20 million ha equal to 55 M tons of beans. But all of these developments are not without challenges.

Solidaridad and The Sustainable Trade Initiative (IDH) in the Soy fast-track fund (SFTF) Program

The Program, through The Sustainable Trade Initiative (IDH) and managed by Solidaridad, is the most important soy program within REC South America, with almost 20 ongoing projects in Argentina, Brazil and Paraguay. It aims to create a meaningful social and environmental impact, thus a responsible soy value chain linked to sustainable traders or crushers in Europe. If they become “first movers” in transforming mainstream market and up-scaling responsible and certified soy production, they will help to make sustainability the new norm.

The Program focuses on achieving legal compliance and continuous sustainability improvement through good agricultural practices and management procedures using RTRS (Roundtable on Responsible Soy) standards as main benchmarks. Soy producers are free to choose continuous improvement indicators such as carbon content in the soil, use of agrochemicals and riparian vegetation status, among others.

Costs reduction, increased efficiency and long-term productivity improvement due to decreasing inputs, agrochemical use and well-documented procedures, are the main benefits of the Program, as well as the ability to adapt to new business standards.

Ultimately, once minimum conditions are reached, certification to accomplish European Union Renewable Energy Directive (EU-RED) norm requirements to commercialize biofuel into European markets can also be undertaken. The SFTF contributes up to a 40% of the total amount required for sustainability investment, while credit lines and financing discounts to become law compliant and producing more sustainably are made available too.

Benefits for producers in Argentina

The “Zona Nucleo” at the “Pampa Húmeda” (Buenos Aires, Santa Fe and Córdoba), where more than 80% of soy is produced, is a large grassland area that requires no conservation measures. Most of its producers are large-scale farmers already compliant with national laws regarding labour conditions, minimum wages and agrochemical usage. This places them in an optimal position to undertake international certification to get sustainability credentials and access premium prices.

With partner organizations, Solidaridad works on the improvement of long-term performance challenges like erosion control and pesticide management. According to recent Coronel Suárez-INTA (National Institute for Agricultural Technology) investigations, soybean filed soil loses of between 20- 30% of its organic matter (carbon stocks) due to poor rotation.

On the other hand, rational pesticide use techniques can diminish applications, waste to be processed and dismiss more toxic agrochemicals. In the Northwest area (Chaco, Salta and Tucumán), Solidaridad addresses higher conservation challenges, whereproduction is expanding into frontier areas covered by native forests and occupied by indigenous communities who practice agriculture and livestock production on a very small-scale.

The different participants in the Program

In 2012 Grupo Lucci, became the first Argentinean company and the second around the world (after Grupo Maggi from Brazil) to develop RTRS certified bio-diesel and commercialize soy under the RTRS standard. With a 3 000 tons/day milling capacity and a crushing and bio-diesel production plant in Frías, Choya district, Santiago del Estero, Viluco is now aiming to certify 133 777 new soybean tons under the SFTF program.

With the RTRS certification, the company obtained the international endorsement that promotes the use and growth of the responsible production of the oleaginous and got access to specific training programs and better technologies.Other producers participating in the SFTF in Argentina are: Los Grobos, Kiñewen, Aapresid, Kumagro and Tecnocampo, with a total area under SFTF projects of 132 000 hectares.

Muchcan be done to limit and reduce the social and environmental impact of soy cultivation while improving yields and better production. The main challenge relates to effective engagement with producers to invest in improved production towards responsible soy.