IDH: SOY - Strategic gap analysis for responsible soy production

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Strategic gap Analysis for Responsible Soy Production The study “Soy Strategic Gap Analysis” identifies and analyses the obstacles preventing the adoption of better socio-environmental and agricultural practices in soy production in Brazil and Argentina in accordance with the RTRS criteria. With this objective ICONE, with support and sponsorship provided by the IDH (Dutch Sustainable Trade Initiative) and IFC (International Finance Corporation), undertook field interviews with soybean growers as well as some public agencies and NGOs in the states of Mato Grosso, Paraná, and expansion areas in Brazil and in the Nucleo Zone and Northern provinces in Argentina. Also, in-depth interviews were carried out with traders and private associations. Regional workshops were held in the cities of Sao Paulo, Ponta Grossa, Sorriso and Buenos Aires in order to assess the results of the interviews, to add new data and to validate the conclusions.

Overview Over the past ten years Brazil and Argentina (the world’s second and third largest soybean producers and exporters) increased production by 82% and 72% respectively. This increase was due to: 1) productivity gains, and 2) expansion of the planted area. Even with the increasing importance of China in soybean trade, the European Union is still a large player in soy beans, meal and oil imports. The EU has, over the years, increased its demands for these imported products to comply with sustainability criteria. This made it vital to conduct an analysis with a view to understand obstacles that shall be overcame in order to allow the Brazilian and Argentine soy industry to comply with the new requirements in Europe and other markets.

Objectives of the study • Identify and analyze the gaps and challenges of growers, traders/crushing industries, and other indirect stakeholders (private associations, NGOs, public agencies) to comply with RTRS criteria. • To identify main stakeholders, synergies and cooperation models with a view to boosting appropriate socio-environmental practices regarding soy production in Brazil and Argentina. • Recommend strategies for investing in support programs that will facilitate producers and traders to engage in responsible soy production.


Certification

Responsible labor conditions

Relationship with the community

Environmental responsibility

Good agricultural practices

* States of Maranhao, Piaui, Tocantins and Bahia.

Results are presented according to the 6 topics covered by the questionnaires used in the interviews


Results and conclusions The main bottlenecks detected in the process for bringing soy production into line with sustainability criteria were: • Farmers’ awareness of the certification process: lack of information about the existence of certification programs, including related criteria and adaptation costs. • Lack of definition regarding counterpart benefits for producers fulfilling the required sustainability criteria. • Promoting the inclusion of small and medium producers: they are less prepared to comply with certain criteria and require specific arrangements to stimulate them to adopt responsible practices. • Inefficiency of government agencies making the process of regularization slow and ­costly for producers. • Knowledge of the national legislation: producers are aware of the main existing legislations, but that does not mean that they know exactly what they require, how they apply and how to comply with them.

Recommendations for encouraging responsible soy production in Brazil and Argentina 1. To identify the needs of each region: initiatives need to be adopted at national and ­regional level, taking account the diversity of producers, farms and production methods. Different regions have different institutional conditions that may or may not help the adoption of responsible practices. 2. To create partnerships, especially at a local level: more dialogue between locally-involved stakeholders is needed, such as producer associations, cooperatives, NGOs, banks, ­agricultural supplies industries and local public bodies. Cases of successful partnerships aimed at improving production standards based on incentives to produce sustainable soy were identified among these parties. 3. To disseminate information: the objectives as well as the costs and benefits of the ­certification schemes and/or the adoption of improved farm management programs must be made very clear to soy producers and other stakeholders. Professional training and qualification are fundamental and need to be encouraged. 4. To invest in the required adjustments: it is suggested that investments should be made in infrastructure to enable producers to comply with labor law, health and safety-at-work legislation and the overall certification requirements – especially in Brazil, where there are specific rules on the matter (NR 31).


5. To provide producer incentives: properties undergoing adjustment must be categorized, based on a certification grading system. Progress made by producers towards adjustment to the sustainability criteria needs to be acknowledged, even when only partial progress has been made to satisfy the various stages of the process. Incentives in the shape of premiums and commercial benefits should be offered to producers as a way of encouraging them to adhere to the certification process, linking marketing strategies to the responsible soy market. 6. To engage producers’ representatives in the certification scheme: there is more resistance to support certification schemes at the leadership level than at the farmer level. Leaders tend to be more conservative and more sensitive to political issues while farmers are more concerned about practical consequences of engaging in certification schemes. It is fundamental to engage leaders, making them part of the process rather than requiring them only to validate taken decisions.

Looking to the future Further studies are needed as follows: 1. The need for further deeper studies on the costs and the benefits of adjustment to certification systems. In this case, it is necessary to consider the auditing costs, given that it is not always possible to rely on the supervision by public governments. These studies are important in order to assess whether the system is able to spread sustainable practices in soy production. 2. An analysis of how soy producers adapt to Brazil’s new Forest Code at present being modified. Non-compliance with the legislation has been identified as the main environmental constraint. 3. An examination of labor and health compliance criteria in Argentina, in view of the extensive outsourcing of labor in that country. The results of this study are being used by IDH and IFC to guide their soy production support programs. IDH already launched the “Soy Fast Track Fund” – more information will soon be available through their website (http://www.duurzamehandel.com/en/home) and through the RTRS website. Download the complete document on: www.iconebrasil.org.br undertaken BY

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Instituto de Estudos do Comércio e Negociações Internacionais

Instituto de Estudos do Comércio e Negociações Internacionais

Institute for International Trade Negotiations

Institute for International Trade Negotiations

Instituto de Estudos do


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