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Grande cachoeira na Chapada dos Veadeiros, em Alto Paraíso de Goiás/GO - Brasil

Cargill Pledges $30m to Fight Deforestation in Brazil’s Imperiled Cerrado Region

June 13, 2019

After being one of five grain trading houses slapped with a $29 million fine last year for engaging in activities related to illegal deforestation, Cargill is calling on competitors and colleagues alike to protect the region’s forests.

Cargill is investing $30 million to stop deforestation, according to a recent blog post from company chairman and CEO David MacLennan. The announcement comes five years after MacLennan signed the New York Declaration on Forests at the United Nations Climate Summit, pledging the agricultural products and trading house would help halt deforestation.

Forests cover nearly one-third of our planet, but the main threat facing their health and longevity is agriculture, followed by poorly planned infrastructure and illegal logging, the World Wildlife Fund reports. Not only do forests purify water and air while producing more oxygen, but they provide jobs to over 41 million people in the forestry sector.

In an effort to decrease its impact on deforestation, Cargill has adopted new policies and programs in its cocoa, palm oil, and soy production supply chains. Despite its best efforts and efforts from others in the industry, however, stakeholders to the pledge appear unlikely to hit their 2020 goal of eliminating deforestation in beef, soy, and palm oil supply chains.

This is unsurprising considering the lofty task of striking harmony between farming and forest health. In the Cerrado region of Brazil, agriculture is the primary economy for many of the residents. This makes it tempting to clearcut forest lands in order to cultivate more cropland or pastures for livestock. Last year, Cargill, as well as Bunge, was slapped with a $29 million fine for deforestation-related activities in the Cerrado.

The region’s problem is so dire that a multitude of investors and food companies have joined forces to identify or fund solutions. In August 2018, institutional investors managing over $5 trillion in assets, including giants such as Legal and General Investment Management in the UK and APG in the Netherlands, joined companies including Tesco, McDonald’s, and Walmart to sign a Statement of Support for the ‘Cerrado Manifesto.’ The statement sends a clear market signal that there is strong demand for zero-deforestation food products.

As a way to break through some of these challenges, Cargill has pointed out the importance of partnerships and multistakeholder action. The $30 million commitment will be used to find solutions to protect forests and native vegetation in Brazil. It’s also likely meant as a sign of goodwill from the company as it encourages others including competitors, customers and more, to invest in preventing deforestation.

Some companies are already quick at work innovating tools that will help slow deforestation, including Syngenta. The company has developed what it describes as more resilient crops that can handle extreme weather requiring fewer inputs. The more resilient the plant, the more abundant the harvest will be making the need to clear additional farmland less imperative.

Launched in April 2018, Global Canopy’s SCRIPT (soft commodity risk platform) aims to help South East Asian and Latin American banks analyze their soft commodity exposure and minimize the environmental and social impacts of their loan books. Developed with a number of partner organizations, SCRIPT also contains tools allowing financial institutions to benchmark their policies on deforestation against their peers and to assess how they may be exposed to deforestation risk in their investment portfolios. The tools are free to use and provide practical, customized advice on how to move towards greater sustainability.

Overall, Brazil is an active player in the agrifood tech investment space, being home to at least 338 startups innovating solutions for farmers and food producers. The country is a heavyweight in a number of commoditiesf including beef, soybeans, coffee, and sugar.

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