As reported by Global Forest Watch (2021), soy cultivation has led to the loss of 8.2 million hectares of forest between 2001 and 2015, highlighting its significant environmental impact in South America.
According to Feed Navigator (2024), the EUDR enforces due diligence, requiring soy importers to prove traceability and compliance, thereby encouraging transparency across the supply chain
We support EUDR compliance with tools like KoltiTrace, KoltiSkills, and KoltiVerify, helping Brazil's soy industry enhance traceability, ensure compliance, and promote sustainability.
The rapid expansion of Brazil's soy industry has accelerated deforestation, particularly in the Amazon and Cerrado regions, threatening biodiversity and contributing to climate change. In 2023, deforestation in the Cerrado increased by 44% compared to 2022, with a total of 7,852 km² of native vegetation lost—its highest level since monitoring began in 2018 (Mongabay: 2023). To respond to this environmental crisis, the European Union’s Deforestation Regulation (EUDR) enforces stricter standards on soy exports, pushing for sustainable production while preserving Brazil’s ecosystems.
To understand why soy is central to this issue, let’s explore its role in Brazil’s economy and environment. What exactly is soy, and how did it become so integral to Brazil's agricultural landscape?
What is Soy?
The soybean (Glycine max) is one of the most widely consumed sources of plant-based protein, playing a vital role in vegetarian diets worldwide (Pubs: 2023). It is consumed in various forms, such as tofu and tempeh, which are protein-rich meat alternatives, and soy milk, a popular dairy substitute. Additionally, soybeans are found in edamame, miso paste, and soy sauce, which are staples in many cuisines, as well as in textured vegetable protein (TVP), a versatile ingredient in vegetarian and vegan dishes.
Due to its extensive use in various industries, soy has also become a major economic commodity for many countries. On a global scale, Brazil stands out as the largest soybean producer, making soy a cornerstone of its agricultural economy. Given its global importance, soy has become a major economic driver for countries in Brazil (Brazilian Soy: 2023).
In 2023, Brazilian soybean exports reached a record 3,744 million bushels, according to the Foreign Trade Secretariat (Secex). Nearly 70% of the country’s soybean production was exported, with the European Union accounting for 14% of these exports in 2022, valued at $8.8 billion (Feed Navigator: 2024). This underscores the importance of soy not only as a nutritional staple but also as a critical driver of global trade and economic growth, particularly for countries like Brazil.
The Other Side of Growth: Soy Cultivation and Deforestation
While soy plays a critical role in global trade and economic growth, its cultivation has significant environmental impacts, particularly in South America. The expansion of soybean production has placed immense pressure on natural ecosystems, driving widespread deforestation. According to recent research by the World Resources Institute, between 2001 and 2015, 8.2 million hectares of forest were cleared for soy, with 7.9 million of those hectares in South America alone. (Global Forest Watch: 2021).
The process of deforestation linked to soy is often indirect. Forests are typically cleared for cattle grazing first, and soy is planted on that land years later. From 2001 to 2015, soy directly replaced 3.9 million hectares of forest in South America, with another 4 million hectares impacted after initial land clearing. This delayed conversion adds to the complexity of soy-driven deforestation. Additionally, as soy production increases, it indirectly displaces other land uses, contributing further to ecosystem degradation across the region. (Global Forest Watch: 2021).
EUDR Soy Initiative: Saving Forests, Reshaping Agriculture in Brazil
One approach to addressing this issue is through compliance with the European Union’s Deforestation Regulation (EUDR), which aims to create deforestation-free supply chains. The EUDR represents a critical step toward reducing deforestation linked to soy production in Brazil by imposing strict import regulations, enhancing traceability requirements, and shifting economic incentives toward sustainability. By aligning with existing Brazilian environmental legislation and fostering international cooperation, the EUDR can play a vital role in promoting responsible agricultural practices while preserving vital ecosystems. Here’s how the EUDR supports efforts to stop deforestation in Brazilian soy production:
1. Prohibition of Deforestation-Linked Imports
The EUDR bans the import of soy and other commodities from land deforested after a specified cut-off date, likely set at the end of 2019. This regulation pushes Brazilian producers to source soy from non-deforested areas, providing a direct economic incentive to protect forests (Feed Navigator: 2024)
The EUDR limits market access for deforestation-linked soy, shifting economic incentives towards sustainable practices. This reduces pressure on landowners to clear forests for agriculture, supporting conservation efforts (Farm Doc Daily: 2024).
2.Due Diligence Requirements
The EUDR requires companies importing soy to the EU to prove traceability and compliance by ensuring their products do not come from deforested areas. This encourages transparency and accountability among producers and traders in Brazil. (Feed Navigator: 2024)
3. Focus on High-Risk Areas
The EUDR’s risk assessment system targets regions with high deforestation risk. By focusing efforts on these areas, Brazil can better allocate resources and strengthen monitoring to ensure compliance with sustainable practices (Sei: 2022 & Farm Doc Daily: 2024).
4. Economic Incentives for Sustainable Practices
The EUDR limits market access for deforestation-linked soy, shifting economic incentives towards sustainable practices. This reduces pressure on landowners to clear forests for agriculture, supporting conservation efforts (Farm Doc Daily: 2024).
What impact will EU deforestation law have on Brazilian soy trade with EU?
Brazil’s soy industry is heavily reliant on international markets, with the European Union (EU) being one of the largest importers. In recent years, the EU has become a key destination for Brazilian soy, driven by high demand for soy-based products used in animal feed, biofuels, and various food products. This dependency is underscored by recent data in 2023, Brazilian agribusiness exports reached a record $166.55 billion, with the soy complex ranking as the top agricultural export at 40.4% of the total value. The EU alone accounted for 14% of these soy exports, primarily in the form of soybean meal (Valor Internation: 2024).
However, the European Union's Deforestation Regulation (EUDR) has sparked mixed reactions from Brazilian stakeholders. A recent article in Feed Navigator highlighted an interview with André Lima, Brazil’s secretary for controlling deforestation, discussing the implications of the European Union’s Deforestation Regulation (EUDR). He acknowledged that the EUDR could support Brazil’s zero-deforestation goals by removing economic pressure to deforest and incentivizing compliance with environmental legislation. Yet, he also highlighted concerns that the regulation might interfere with Brazil’s sovereignty, placing additional burdens on producers without proper consultation. This dual perspective reflects the tension between environmental standards and economic dependency (Fod Navigator: 2024) Compliance with the EUDR has become a strategic necessity for Brazil, as failing to meet EU standards could lead to significant revenue losses and destabilize the country’s soy industry.
How We Support EUDR Compliance for Brazil’s Soy Industry
To address the challenges posed by the European Union’s Deforestation Regulation (EUDR), it is essential to strike a balance between meeting stringent environmental standards and maintaining the economic stability of Brazil’s soy industry. As André Lima, Brazil’s secretary for controlling deforestation, highlighted, the EUDR offers an opportunity to reduce deforestation through economic incentives and compliance with environmental legislation. However, concerns remain about the additional burdens it places on producers and the potential impact on Brazil’s sovereignty.
Recognizing these complexities, our organization has developed a suite of digital solutions, KoltiTrace, KoltiSkills, and KoltiVerify—that empower producers, processors, and suppliers to achieve compliance, enhance traceability, and operate more sustainably in the global marketplace. Here’s how each solution contributes to overcoming the industry's challenges and aligning with EUDR regulations:
KoltiTrace: Ensuring Full Traceability in Soy Production in Brazil
KoltiTrace is our advanced traceability platform designed to help stakeholders in Brazil’s soybean supply chain meet the stringent requirements of the EUDR. By tracking products from seed to table, KoltiTrace ensures that soybeans are sourced from deforestation-free areas and comply with sustainability standards. This powerful tool provides: Supply Chain Mapping & Risk Assessment KoltiTrace allows for comprehensive mapping of the entire soybean supply chain, from smallholder producers to large processors. This ensures that every stage complies with sustainability standards like the EUDR. With geolocation tracking and historical land-use data, KoltiTrace verifies that soy is sourced from deforestation-free areas, helping producers meet regulatory requirements while promoting transparency and accountability. Real-Time Data and Transparency Through real-time data capture, KoltiTrace offers complete visibility into farming practices, enabling stakeholders to make informed decisions that align with EUDR standards. The platform supports detailed reporting on environmental impact, land use, and legal compliance, ensuring that producers can demonstrate full transparency across their operations and verify that their soy production meets deforestation-free requirements.
KoltiSkills: Empowering Producers with Knowledge and Support
KoltiSkills provides a range of extension services designed to help smallholder producers, processors, and supply chain actors meet regulatory requirements, including the EUDR. Through this service, we offer Training and Capacity Building We offer hands-on training for producers and supply chain actors to adopt sustainable practices and meet deforestation-free standards. This includes education on good agricultural practices (GAP), land legality, and supply chain management, ensuring stakeholders stay compliant with regulations such as the EUDR. Business Support and Certification Preparation KoltiSkills helps producers navigate complex certification processes, including obtaining deforestation-free certifications. By offering tailored support, we ensure that smallholder producers and suppliers can meet stringent requirements and gain access to high-demand markets, such as the EU, which require compliance with regulations like the EUDR.
KoltiVerify: Enhancing Data Verification and Compliance
KoltiVerify is our innovative data verification platform that simplifies the process of proving compliance with sustainability regulations. The platform ensures that the soy supply chain meets deforestation-free and traceability requirements under regulations like the EUDR by offering:
Automated Data Verification
KoltiVerify integrates seamlessly with enterprise resource planning (ERP) systems to verify supplier and processor data in real-time. This ensures that all stakeholders can confidently present accurate, compliant information when navigating regulatory requirements, such as those under the EUDR.
Risk Mitigation and Compliance Reporting
KoltiVerify produces comprehensive compliance reports, including risk assessments for deforestation, land legality, and human rights. By analyzing geolocation, land use, and environmental data, the platform identifies potential risks, allowing businesses to address issues proactively before they escalate. This forward-looking approach ensures that suppliers stay fully compliant with evolving sustainability regulations, such as the EUDR.
As sustainability regulations continue to evolve, the soybean industry faces mounting challenges in proving compliance and maintaining market access. Our integrated solutions—KoltiTrace, KoltiSkills, and KoltiVerify—offer end-to-end support, ensuring that stakeholders can navigate complex regulations, enhance traceability, and adopt sustainable practices. By partnering with us, businesses can thrive in a regulatory environment while contributing to a more sustainable future for agriculture.
Talk to our expert today to discover how we can empower your business to meet sustainability goals, achieve compliance, and remain competitive in the global market. Let's work together to drive sustainable growth in your supply chain.
Resources
American Chemical Society. (2023). Sustainability in food production: A focus on soybean cultivation. ACS Food Science & Technology. Retrieved November 20, 2024, from https://pubs.acs.org/doi/10.1021/acsfoodscitech.2c00380
Feed Navigator. (2024). What impact will EUDR have on Brazilian soy trade with EU? Retrieved November 20, 2024, from https://www.feednavigator.com/Article/2024/07/15/What-impact-will-EUDR-have-on-Brazilian-soy-trade-with-EU
Plant Based Data. (n.d.). The eco story of soy. Retrieved from https://www.plantbaseddata.org/post/the-eco-story-of-soy
Land Innovation Fund. (n.d.). Soy in Brazil: From a crop restricted to temperate climates to a savanna in the Cerrado. Retrieved from https://www.landinnovation.fund/en/news/soy-in-brazil#:~:text=From%20a%20crop%20restricted%20to%20temperate%20climates%20to,biome%20the%20largest%20grain%20producer%20in%20the%20country.
Global Forest Watch. (2021). Soy production and forests in South America. Retrieved from https://www.globalforestwatch.org/blog/insights/soy-production-forests-south-america/
Miller, A. (2024). What impact will EUDR have on Brazilian soy trade with EU? FeedNavigator. Retrieved from https://www.feednavigator.com/Article/2024/07/15/What-impact-will-EUDR-have-on-Brazilian-soy-trade-with-EU
Stockholm Environment Institute (SEI). (n.d.). Connecting exports of Brazilian soy to deforestation. Retrieved from https://www.sei.org/features/connecting-exports-of-brazilian-soy-to-deforestation/
Zulauf, C., Swanson, K., Schnitkey, G., & Coppess, J. (2024, July). How the EU deforestation rule will affect agriculture in Brazil. farmdoc daily. Retrieved from https://farmdocdaily.illinois.edu/2024/07/how-the-eu-deforestation-rule-will-affect-agriculture-in-brazil.html
Valor International. (2024). Soy chain races to adapt to European regulation. Retrieved from https://valorinternational.globo.com/agribusiness/news/2024/06/05/soy-chain-races-to-adapt-to-european-regulation.ghtml
Shorthand. (2023). Brazilian soybeans: A commodity chain analysis. Retrieved November 25, 2024, from https://brazilian-soybean-cca.shorthandstories.com/brazilian-soybeans-a-commodity-chain-analysis/
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