Our contribution to funding for soy farmers in the Cerrado
6 December 2019
Tesco has announced a contribution of £10 million over five years to a new funding initiative being set up to provide the necessary financial incentives for soy farmers in the Cerrado region of Brazil. This new funding aims to support farmers to produce soy only on existing agricultural land and protect critically important forests and native vegetation.
About the Cerrado
The Cerrado is a unique ecosystem – the world’s most biodiverse dry forest. It is home to over 5% of global biodiversity and a store of nearly 13.7 billion tonnes of carbon. The Cerrado spans an area of two million square km (200 million hectares). This is eight times the size of the UK. It is half the size of the Amazon but has double its rate of deforestation. The majority of Brazilian soy comes from the Cerrado – with the Brazilian Amazon representing only a small part of Brazil’s overall soy production.
In order to protect its forests, Brazil has put in place the Forest Code – a leading example of regulation that aims to balance forest protection with economic development. Under the Forest Code, farmers in the Cerrado are legally required to conserve 20-35% of their forests and native vegetation.
I travelled to the Cerrado myself in 2018 and saw first-hand the scale of soy production in this important region. I heard from soy farmers about the opportunity to expand soy production in the Cerrado - on existing agricultural land. There is over 20 million hectares of existing agricultural land (the size of the UK) suitable for soy expansion.
Tesco Zero Deforestation Soy Transition Plan
Soy is a key ingredient used in animal feed in our supply chain. However, it can be a driver of deforestation and biodiversity loss in South America.
Tesco is committed to zero-net deforestation in our sourcing of soy. In 2017, we became a leading signatory of an industry statement supporting the Cerrado Manifesto which was published by Brazilian civil society organisations (see all 150 signatories of the Statement of Support for the Manifesto). Signatories, including Tesco, committed to work in partnership with local stakeholders and other international supporters to help halt deforestation in the Cerrado and promote soy expansion only on existing agricultural land.
In 2018, we published our UK Zero Deforestation Soy Transition Plan, to achieve our zero deforestation commitment. This includes our ambition to source soy from verified zero deforestation sourcing areas. These are entire production regions where there is an effective approach that ensures zero deforestation in agricultural production. One example is the production of soy in the Brazilian Amazon.
Since 2017, Tesco and other signatories of the Statement of Support have been engaging with soy supply chain experts to model the most effective means to conserve the Cerrado and help establish it as a verified zero deforestation area. The most effective incentive identified is through direct financial payments to soy farmers. Soy farmers have indicated their support for such financial incentives for Cerrado conservation (see below quotes).
About the Funding for Soy Farmers in the Cerrado initiative
Providing financial incentives can be effective in supporting soy farmers in the Cerrado to go beyond regulatory requirements and protect critically important native vegetation, whilst expanding soy production only on existing agricultural land. Initial forecasts and modelling indicate that approximately US$250 million in funding would be needed over a five-year period to achieve these outcomes.
The funding will require the collaboration of international partners and local Brazilian soy industry experts. International partners will contribute to the funding, whilst Brazilian stakeholders will lead the design of a fair and effective mechanism to ensure the funding achieves the desired outcomes.
Tesco’s contribution to the Funding for Soy Farmers in the Cerrado initiative
Brazil is our most significant sourcing country for the soy used as animal feed in our supply chain. In line with our UK Zero Deforestation Soy Transition Plan, we aim to support the creation of verified zero deforestation soy sourcing areas. We view the Funding for Soy Farmers in the Cerrado initiative as potentially transformational. To help achieve this goal, Tesco is contributing £2 million per year for the next five years.
We are pleased that the animal nutrition business, Nutreco, and Grieg Seafood are today also announcing their contribution to the funding for soy farmers in the Cerrado. This demonstrates a growing recognition across the soy value chain, of the need for a collaborative approach to addressing deforestation and the need for regional or jurisdictional approaches. We hope that other companies that buy or use soy, as well as foundations and governments, will join us.
Together, we can halt forest loss and safeguard the Brazilian Cerrado for future generations, and in turn improve the sustainability of many of the products our customers enjoy.
Read quotes of support from soy farmers in the Cerrado:
Paulo Rickly, Soy Farmer Cerrado (Maranhão)
“We — producers of soybeans and other grains in the Brazilian Cerrado region — are aware of the need to preserve the biome not only because of its great biodiversity, but also because the Cerrado is where the springs of the main watersheds in South America are born. The Cerrado´s vegetation is a "sponge" that absorbs rainwater and feeds the groundwater and aquifers that will give rise to rivers.
“In addition to other factors such as evapotranspiration, regulation of temperature gradients, wind barriers, among others, so this idea of payments for environmental services comes at a good time, as it will certainly help to keep most of these areas preserved.”
Cesare, Soy Farmer Cerrado (Maranhão)
“The movement for the preservation of the environment observed in Brazil should not only be an external pressure event, it is important to use tools such as payments for environmental services as an incentive. These payments express the worldwide commitment of all those involved in the food production chain to embrace sustainability.
The applicability of tools like financial mechanisms are mandatory to achieve preservation and maintenance of the environment.”
Gabriel Couto, Soy Farmer Cerrado (Maranhão)
“Preserving forests is one of the biggest challenges for developing countries like Brazil. We are aware of the importance of native vegetation to maintaining rainfall regimes, as forests control climate through evapotranspiration. Brazil's role in favor of the Amazon has been closely watched internationally and the country's reputation for agriculture will depend on maintaining high levels of production in an environmentally sustainable manner.
Thus, payments are a direct way to curb deforestation. For the farmer who is not yet aware of the global importance of forests, this incentive would give him a direct economic reason to contribute to the preservation of his reserves.”
Luiz Pradella, Soy Farmer Cerrado (Bahia)
“Payment for Environmental Services is recognition of the very few individuals that contribute to the good of all. We must socialize the benefit and the cost as well. Environmental services are for the planet, so the service provider (farmer) should be rewarded for it.”
Benildo Telles, Soy Farmer Cerrado (Mato Grosso)
“I believe it is possible to produce sustainably while preserving forests and soil, but receiving payments for environmental services is critical to that.”
Gisela Introvini, Soy Farmer Cerrado (Maranhão)
“In the region of Maranhão and Piauí, we (producers) use RTRS certification and believe that payment for environmental services is a great tool for valuing those who get high production results through the technologies and systems that make it possible to produce in the same space: meat, soy and corn—and still contribute to carbon storage."
Deomar, Soy Farmer Cerrado (Mato Grosso)
“Brazilian agriculture in the Cerrado regions carries very large burdens in relation to the maintenance of reserves. The farmer bears this cost for the benefit of the whole community, which receives benefits not only from the food production, but also from all the environmental services generated.
There is an urgent need for society to be aware of this issue and understand that such a burden should be shared amongst all, given the social benefits that preserving the environment brings.”