Our Commitment to No Deforestation

Transcription

1 Our Commitment to No Deforestation Policy Implementation Q Soy Progress Report In Partnership with The Forest Trust 1

2 INTRODUCTION We are pleased to present the latest progress on Our Commitment to No Deforestation Policy implementation and to building traceable and transparent agricultural supply chains that protect forests worldwide. We have been working with The Forest Trust (TFT) since May of 2015 to implement this commitment. This Progress Report details our soy supply chain work from October 2015 through March During this time we have carried out the following activities: Collection and analysis of all our 2014 South America soy procurement data to study and compare volumes from different nodes in the supply chain and across major sourcing regions; TFT visits to all major ADM soy sourcing regions in South America to assess the high-level environmental and social risks associated with soy growers in each region, recognizing that ADM is not a farmer, but committed to working with farmers on these issues; Identification of current tools for monitoring land use change and other social risks using remote sensing across the major soy production regions, as well as soliciting input from subject matter experts from academia and civil society in assessing and comparing these tools; Continued progress on our current sustainability initiatives working directly with farmers on building best management practices for meeting legal requirements, protecting the environment and respecting workers rights. Summaries of the findings and progress related to each point above are provided in this report. ACTIVITIES Establish our global footprint and baseline traceability scores for soy In our first progress report we presented the results of a global assessment carried out to identify all ADM facilities where soy is sourced, stored, processed or traded, including global locations of our trading desks. Since then, we have been working with TFT to carry out a global assessment of our soy procurement footprint and assess our current ability to map our supply chains back to source. Our goal is to first determine country of origin, then port, region, silo, farmer, and, to the most practical extent in high risk regions, the specific soy farms from which our soy originates, using a mass balance approach to traceability. We chose calendar year 2014 as our baseline year for data collection. The first major step in mapping our supply chain was to gather all soybean procurement data for ADM North and South America business units for 2014 (excluding trading). This step is now complete and we are starting on the next phase which will gather and analyze trading volumes of processed soy products such as soymeal and oils. Map 1 below shows the countries and states from which ADM is sourcing. 2

3 Map 1: Countries and states in South America from which ADM is sourcing soy 1 1 This map is based on 2014 South America soybean procurement data 3

4 Figure 1 below shows the percentage of soy sourced by country of origin within South America, based on the 2014 South America procurement analysis: Figure 1: ADM South America 2014 soybean procurement volume distribution per country 7.4% 4.5% 3.4% 16.0% 68.7% BRAZIL PARAGUAY ARGENTINA URUGUAY BOLIVIA As shown in Figure 1, Brazil is our most significant provider of soy in South America followed by Paraguay and Argentina. Given Brazil s large size and significance in our supply chain as described below, TFT visited ADM operations across seven major sourcing regions in Brazil, including Mato Grosso (northern and southern region), Mato Grosso do Sul, Maranhão, Tocantins, Bahia and Pará. Using our South America procurement data for 2014, we also calculated the percentage of soy coming from different nodes of the supply chain: 4

5 Figure 2: ADM South America 2014 soybean procurement volume distribution by type of supplier 9.8% 4.4% 1.3% 13.9% 70.6% FARMER COOPERATIVE THIRD PARTY SILO BROKER OTHER COMPANIES Definitions: Farmer: Includes everything from individual smallholders up to large properties administered as companies. This category also includes Mennonite colonies in Bolivia working as individuals or unregistered collectives. Cooperative: Includes all cooperatives of farmers. We identified both primary and secondary co-ops in the supply chain (secondary co-ops are associations made up of primary co-ops). This category also includes legally registered Mennonite cooperatives in Paraguay. Third Party Silo: Includes companies that procure soybeans from different origins and sell them to ADM (commonly known as Acopios ), as well as large farmers who own their own silo and may be storing grain for neighboring farmers. Broker: Includes all companies or individuals that mediate the buying and selling of soybeans, and applies to Argentina and Uruguay. Brokers do not own the merchandise, but assure access to desired volumes by the company. Other companies: Includes ADM competitors or other companies whose business operations overlap with ADM s. As you can see from Figure 2, ADM South America procures over 70% of its soy directly from farmers, and an additional approximately 22% from cooperatives or third party silos. This shows that we already have a high level of traceability to farmer and region. We will work to go further in achieving traceability to farm-level locations, which will be important in higher risk regions. Farmlevel locations are currently gathered locally, but not yet put into our global database for easy access in each country. Data currently collected includes the identity and postal address of the farmer. We are using this information to go deeper than just the country level to estimate how our soy sourcing is distributed across states and provinces within each country in South America, as shown in Map 1. 5

6 Site Visits to Assess Environmental and Social Risks From October through December 2015, TFT visited all the South American countries where we have operations that procure soy, including crushing plants, ports and silos in Brazil, Paraguay, Argentina, Uruguay and Bolivia. The goals of the site visits were to identify environmental and social risks in our soy supply chain at a macro or regional level, better understand how the supply chain is structured in each region, and to ask people in each region to share their vision for pragmatic solutions to addressing identified risks. Note that risks identified are associated with soy growers in each region, thus these risks are relevant to any company sourcing soy from those regions, not only ADM. People interviewed included farmers, civil society groups, governmental officials, ADM staff and ADM suppliers (such as workers for brokers and cooperatives supplying soy to ADM). The map below shows the places visited, as well as areas in Brazil that were visited between August and November of Map 2: Map of Latin America regions and sites visited by TFT Brazil Bolivia Paraguay Argentina Uruguay 6

7 Findings on potential risks posed to the ADM Commitment to No DPE in our soy sourcing regions of South America: Table 1 provides a summary of the environmental and social risks identified in each sourcing country, as well as an estimate of the severity of the risk. Details on each identified risk are provided in the text below. Areas shown below without a risk designation are not applicable. Table 1: Summary of potential risks by country and biome ADM Commitments Brazil Paraguay Argentina Uruguay Bolivia Biomes Amazon Forest Low Atlantic Forest Low High Caatinga Low Cerrado High Medium Gran Chaco - Medium Medium - High Pantanal Low Pampas - - Low Low - Patagonian Steppe - - Low - - Yungas Forest - - Medium - - Conflict with Indigenous People s Land Claims Working conditions and workers rights High Medium Medium Low Low Low Low Low Low High Legality Medium Medium Medium Medium Medium Proper agrochemicals use and management Medium Medium Medium Medium Medium Underage workers Medium Medium Medium Medium Medium Protection of waterbodies and slopes Medium Medium Medium Medium Medium 7

8 Details of potential risks by country and biome Brazil Amazon Forest (Low risk with the Soy Moratorium in place) o Currently the areas near the Amazon Forest where ADM sources soy are monitored through the Soy Moratorium. Under the Soy Moratorium, there is a working committee that regularly produces lists of farmers who are found to be planting soy on areas cleared after the July 2008 cutoff date. ADM already has safeguards in place to prevent buying directly from the listed farmers. However, some small risks related to indirect buys and farmers leasing land do still exist and TFT has made some recommendations for how to reduce these even further. For more information about the Soy Moratorium, please see the Sustainability Initiatives section below. Cerrado 2 (High risk) o The Cerrado biome covers a very large area in Brazil. In the region known as MaToPiBa, which includes the northern Brazilian states of Maranhão, Piauí, Tocantins, Bahia, Pará, and Mato Grosso (northern area), soy cultivation is currently expanding. Expansion in this region presents a risk that high conservation value areas of Cerrado may be cleared. However, recent analysis 3 also show that there are other large areas of the Cerrado that are already disturbed and would be appropriate for expansion, mostly located in the states of Mato Grosso, Minas Gerais, Goias, Mato Grosso do Sul, São Paulo, Paraná and Rondônia, i.e. outside the region known as MATOPIBA (Maranhão, Tocantins, Piauí and Bahia). TFT recommends prioritizing this biome for engaging with suppliers to ensure that expansion only takes place in areas that are in compliance with the ADM no deforestation policy. Pantanal (Low risk with Mato Grosso Protocol in place) o ADM sources from regions within the Pantanal biome. In Brazil this includes the southern part of Mato Grosso and the state of Mato Grosso do Sul. The Brazilian government already has legislation in place such as the Mato Grosso State Protocol that protects important Pantanal areas. Additionally, most of the farms in this region were established long ago and there is little expansion taking place. For this reason, TFT recommends that we monitor the situation in the Pantanal, but consider it lower risk. Caatinga: (Low risk) o Current data show no ADM sourcing from Caatinga biome regions. However, the agricultural expansion frontier is just beginning to reach this important biome, and there is a risk it could appear in supply chains in the future. It should be considered an area for ongoing monitoring. 2 The Gran Chaco is only found in very small portions of Mato Grosso and Mato Grosso do Sul. The Brazilian government has designated these small portions as Cerrado and therefore, for Brazil the Cerrado biome includes small portions of the Gran Chaco. Cerrado is being cleared in northern Mato Grosso but clearance is minimal in Mato Grosso do Sul where farms were established decades earlier. 3 See: rado_biome.pdf 8

9 Atlantic Forest (Low risk) o This biome is highly endangered in Brazil, but also strongly protected by current laws. For this reason, it is not considered a risk with regard to deforestation for soy in Brazil. Conflicts with Indigenous People s land claims. (High risk) o This is a risk in any remote or frontier region from which ADM sources. However, land conflict with Indigenous Peoples was also found to be a high risk in the state of Mato Grosso do Sul as it relates to all commodities in the region, including soy. Paraguay Soy farming by ADM suppliers in Paraguay primarily affects the Atlantic Forest in the Alto Paraná region. Atlantic Forest (High risk) o The Atlantic Forest is heavily threatened and overlaps with the fastest growing soy expansion area in Paraguay. This is also an important sourcing region for ADM, and TFT recommends prioritizing this region for engagement and monitoring. o There is multi-stakeholder interest in protecting the remaining forest, and the Paraguay government, along with the United Nations Development Program (UNDP), have indicated their support for efforts aimed at protecting the Atlantic Forest. Gran Chaco 4 (Medium risk) o Gran Chaco conversion is driven primarily by cattle, but also partly by soy. Expansion is mostly happening in northern Paraguay where no ADM sourcing of soy is known to exist. However, given that some portions of the ADM supply chain in Paraguay are not yet traceable, further supply chain mapping would be needed to know for sure whether or not ADM is sourcing from these areas. Cerrado 5 (Medium risk) o Soy expansion areas in this biome occur in northern Paraguay, where no ADM sourcing of soy is known to exist. However, given that some portions of the ADM supply chain in Paraguay are not yet traceable, further supply chain mapping would be needed to know for sure whether or not ADM is sourcing from these areas. Conflicts with Indigenous People s land claims (Medium risk) o There is concern that some Indigenous People may be willingly leasing land to nonindigenous farmers for soy cultivation. This has raised some concerns among local stakeholder groups that indigenous lands are being converted to soy and monitoring is recommended to ensure that any soy planting on indigenous peoples lands does not contradict ADM s No DPE Commitment. Additionally, there were some reports of farmers putting up barriers that prevent indigenous peoples from accessing fishing areas. However, so far there is no evidence that this is a widespread problem. 4 Current data does not confirm any sourcing from this biome in Paraguay. However, until the remaining 20% from unknown farms is determined, it will be considered a risk. 5 Current data does not confirm any sourcing from this biome in Paraguay. However, until the remaining 20% from unknown farms is determined, it will be considered a risk. 9

10 Argentina Gran Chaco (Medium risk) o In Argentina the Gran Chaco area is commonly known as Bosque Chiquitano, and also includes the smaller Espinal and Monte biomes. There is some soy expansion taking place in northern Argentina, where ADM is sourcing negligible volumes. 6 TFT recommends more investigation into the supply chain to ensure that this important biome is protected. Yungas Forest (Medium risk) o Only small volumes are sourced from northern Argentina, where the Yungas forest is located. This is a humid forest that has been heavily impacted by agricultural expansion and is now very limited in size and highly threatened. The Yungas indigenous people who live in the northern party of the country experience conflict over land tenure. ADM has no confirmed sourcing in this region, but may source very small volumes from third parties who have not mapped their supply chain back to farm. TFT recommends further investigation into the supply chain to ensure that this important biome and the land rights of the Yungas people are protected. Patagonian Steppe (Low risk) o ADM sources trace volumes from southern Argentina (Patagonian steppe), which has high ecological risk. The agricultural expansion frontier is moving toward this important biome, but so far has not yet reached it. Ongoing monitoring is recommended to ensure that expansion does not negatively impact ADM supply chains in the future. Pampas (Low risk) o The Pampas biome is located in central and northern Argentina. In Argentina, the Pampas biome was converted to cattle grazing lands hundreds of years ago. There is very little to no new agricultural expansion taking place in this biome. For this reason, TFT considers it lower risk than Gran Chaco or Yungas forest areas. Uruguay Pampas (Low risk) o The Pampas biome covers all of Uruguay, with the exception of key wetlands in two regions that are under government protection. Most of Uruguay s grasslands were converted to cattle grazing many years ago. Uruguay also has strong environmental legislation in place to protect important natural biome areas. From an environmental perspective, expansion in the natural pampas biome due to soy farming in Uruguay can be considered low risk. 6 Current data does not confirm any sourcing from this biome in Argentina. However, until the entire supply chain is mapped to farm level, there may be some soy coming from this region via brokers or cooperatives, so it will be considered a risk in Argentina. 10

11 Bolivia Gran Chaco (High risk) o Bolivia s lowlands are dominated by Gran Chaco, commonly referred to as Bosque Chaqueño in Bolivia. This biome is under heavy pressure from logging, cattle grazing and clearing for agriculture. Soy expansion is ongoing in this region. Engaging with farmers in this region is especially complex, and more discussions with stakeholders will be needed to build support for forest protection. Risks related to working conditions and workers rights (High risk) o There is low awareness regarding workers rights among the farming community. As such, there is a high risk that laborers could be exploited and that child labor could take place on farms. Labor conflicts are also common in factories and processing plants. Common Issues for Improvement In addition to the important risks listed by country above, TFT identified the following widespread common issues for improvement across all countries and most regions (states or provinces): Legality (Medium risk) o The legal requirements related to the environment, employment legislation and land registration in each country are complex, varied and often poorly understood by farmers. Common legal requirements include official land registration and ownership documentation, registration of employees and paying employment taxes, meeting all legal requirements related to employee documentation and working conditions, and meeting all environmental laws with regard to protection of water bodies, slopes and agrochemical use. The best way to address these risks are through programs that raise awareness about the law, and then support farmers to understand how to meet the law on their own land through farm-level assessments, action plans and monitoring. Many of the sustainability initiatives that we are currently involved in are aimed at achieving this with growers, and we will explore opportunities to broaden this work even further. Proper agrochemicals use and management;(medium risk) o Proper use of agrochemicals includes proper storage, use of the right Personal Protective Equipment (PPE) when working with agrochemicals, proper disposal and proper application on the farm. Carrying out each of these aspects correctly requires thorough training of growers and their employees handling the chemicals, as well as close monitoring that rules are being followed. Due to the added expense of proper facilities and PPE, as well as the self-discipline required to follow all the rules, TFT observed a need for improved practices on agrochemical use throughout S. America. This also includes educating farmers and pilots on laws related to the limits of aerial spraying to ensure that chemicals are not sprayed near populated areas. The PPE aspect of this topic relates to Our Commitment to Respect Human Rights and to not exploit workers. The issue of appropriate application is important to prevent conflicts with local communities and also protect important water bodies. 11

12 Underage workers (Medium risk) o TFT found that the use of underage workers, usually in the context of teenage family members helping out on the farm when they have time off from school, was somewhat common in all countries of South America. Additional work with farmers is needed to raise awareness about the laws related to the use of underage workers, and to ensure that young people are not being allowed to do hazardous work. Protection of water bodies and slopes. (Medium risk) o Protection of water bodies and slopes is important for maintenance of healthy watersheds, protection of water quality and quantity, and reduction of soil erosion. Many countries also have legal requirements with regard to buffer zones around water bodies and slopes. In all regions visited, TFT found often low understanding of the legal requirements for this, and planting up to the edge of water bodies was somewhat common. TFT also observed some farmers who were not protecting water bodies (especially springs) but were instead re-routing them underground to come out in different locations. Many of the sustainability initiatives that we are currently involved in are aimed at improving practices on this issue with growers, and we will explore opportunities to positively impact this issue.. 12

13 Evaluating Monitoring Tools for the ADM Soy Supply Chain TFT and ADM are currently evaluating a number of different monitoring tools across various biomes of Latin America on two different scales: municipality and farm-level. The tools will be compared on their ability to analyze and identify: Deforestation Land use change due to soy farming Legality (ensuring that farmers are not encroaching on protected areas and are respecting laws related to buffer zones and mandated forest cover) Other social considerations such as indigenous peoples' customary lands, areas at risk for land conflict, and labor violations To compare the selected tools, we chose four municipalities across the ADM Latin America supply chain with the following attributes: They are spread across three countries where environmental and social risk linked to soy production are high: Brazil, Bolivia and Paraguay. They cover five different biomes: o Amazon rainforest o Cerrado o Pantanal o Atlantic Forest o Chaco They have different patterns in land use change over recent years. These tools will be tested in March and April of 2016 and will undergo internal TFT-ADM review as well as review by external experts from academia and NGOs. The chosen tool will be used to closely monitor deforestation and soy expansion in regions identified as high risk. We will also look for opportunities to support current sustainability initiatives, especially where farm-level maps being gathered or produced. Tools being evaluated: GRAS tool: Global Risk Assessment System (GRAS) is a tool that provides information about biodiversity, carbon stock, land use change or social issues and can be used to identify areas at risk. Global Forest Watch: A free online platform that maps out tree cover loss and other data layers (including legally protected areas, fires, etc.). AgroTools: A South American agribusiness supply chain monitoring company that specializes in identifying risk in meat and soy supply chains. AgroSatelite: Specializes in bringing geotechnology solutions to the agri-business sector. Monitors the Soy Moratorium area for the Brazilian government and has mapped soy and crop expansion in the Cerrado over the past 10 years. Additional tools may be added if they have the high potential to prove useful in allowing ADM to monitor its suppliers for compliance with our policy.. 13

14 ADM s Regional Sustainability Initiatives with Soy Farmers In our first progress report we summarized the various soy sustainability initiatives we currently have underway. As part of our commitment to No Deforestation, No Peat, No Exploitation, we are continuing to support the expansion of these initiatives and have provided a report on the progress of each one below. 1. Soy Moratorium (Brazil): We are continuing to actively monitor the names of the farmers we buy from against the list of farmers who are shown by remote sensing to be in violation of the Soy Moratorium. The agreement is implemented in Amazon Forest areas of the Brazilian states of Para, Acre, Amapá, Amazonas, Pará, Rondônia, Roraima, Tocantins, Mato Grosso and Maranhão. ADM will continue to support the Soy Moratorium until a permanent instrument is in place that is robust enough to provide assurance that the soy ADM procures are not coming from land deforested after the Soy Moratorium cutoff date of July 22, ADM Responsible Soy Standard (Brazil): ADM has hired third party experts to assess farmers practices against the ADM Responsible Soy Standard. This standard meets the benchmark set by the European Feed Manufacturers Federation (FEFAC) defining a baseline level for imported soy to the European market. 3. Produzindo Certo Program (translation: 'Doing It Right') (Brazil): Our Doing it Right Initiative (phases 1-7) has been underway since 2009 and is carried out by Alianca da Terra. The map below shows the regions where this initiative is being implemented. 14

15 Map 4: Map of farm locations taking part in the Doing It Right Program in Brazil This initiative is aimed primarily at helping farmers reach full legal compliance to environmental and employment legislation. This includes identifying areas on the farm important for protection, such as buffer zones along water bodies, and areas needing restoration as mandated by the Brazil Forest Code. It also includes meeting the legal requirements for employee living and working standards. The program provides guidance on appropriate use of Personal Protection Equipment (PPE) for workers, as well as safe storage and disposal practices for agrochemicals. The Doing it right program also supports farmers who want to work toward certification under sustainability standards such as ISCC, 2Bsvs and ADM Responsible Soy. 4. Soja Plus Soy Plus Program (Brazil): Soja Plus is a multi-stakeholder initiative involving partnership with soybean farmers and their cooperatives, associations of cereal exporters, civil society organizations, private sector companies, universities, research institutions and agricultural extension. The Soja Plus Program builds the capacity of the rural producer, free of charge, to meet the market demand for sustainable products. The program distributes brochures and promotes courses on health and safety at work, adequacy of rural buildings, the new Forest Code, field visits to benchmark farms, and visits by technicians to monitor performance indicators. It is implemented by the Brazilian Association of Vegetable Oils (ABIOVE), of which ADM is a member, in the Brazilian states of Mato Grosso, Mato Grosso do Sul, Minas Gerais and Bahia. It aims to certify farmers who meet the Soja Plus standard, but does not yet have any traceability systems in place. 15

16 In interviews with TFT, farmers participating in Soja Plus reported that their impression of the program was very positive, although they struggle to fund all the infrastructure investments necessary to meet the standards. To date the program has engaged nearly 5,000 farmers covering many different companies' supply chains. 5. The Nature Conservancy (TNC) Partnership (Brazil): ADM is supporting TNC s work to help the municipality of Correntina, Bahia develop maps of all the land owners in this municipality and meet the requirements of the Rural Environmental Registry, or CAR (Cadastro Ambiental Rural). The CAR is an important legal tool in Brazil that can ensure that farmers are meeting the requirements of the Brazil Forest Code. It is also an important tool for monitoring land use change over time. We are pleased to report that currently TNC has mapped 494 farms representing 67% of the total area of the municipality of Correntina and accounting for more than 1 million hectares. Originally the aim was to map 50% of the properties but we are now considering mapping 100% of the properties. It is important to note that this initiative is taking place in a municipality within the important Cerrado biome area, some of which requires protection. This area is also undergoing soy expansion, so we hope that mapping the CAR will help redirect soy expansion to appropriate areas that are in compliance with ADM s No DPE Commitment. Map 4: Correntina Municipality, Bahia showing farm-level maps developed as of February

17 6. Sustentagro (Paraguay): ADM, in association with IDH and Solidaridad, launched the Sustentagro project in The project is aimed at building links between producers, local governments and communities living in important soy producing regions of Paraguay. The program supports producers to adopt sustainable production practices, reducing the impact on the environment and focusing on safer working conditions for workers and communities. Sustentagro began working in early 2016 in the municipalities of Guayaibi (San Pedro department), Curuguaty, La Paloma and Nueva Esperanza (Canindeyu department), San Alberto (Alto Paraná department) and J. Eulogio Estigarribia (Caaguazu Department). Those municipalities are a located in the Atlantic Forest biome, where soy production in Paraguay is concentrated. The first phase of the program consisted of developing tools to carry out a diagnosis of soy production practices in the region, and guidelines for sustainability practices. At the same time, we began to work with municipalities to raise awareness about sustainable landscapes and appropriate areas for soy production. Engagement of municipalities and assessment of growers started in February Within each municipality we plan to work with suitable communities, with the goal to: create opportunities for dialogue. Identify opportunities for synergy between players. Address environmental issues and promote community growth. Activities planned with communities include: Training on the actions promoted by the project and good environmental practices; Social and environmental projects developed based on participatory rural appraisals; Monitoring visits as follow up to work already carried out 7. Sustainability certifications (Brazil and Paraguay): ADM continues to support farmers in Paraguay and Brazil to reach and maintain their ISCC and/or 2BSvs certification updated figures show that ADM bought from 41 farmers in Paraguay who were certified to one of the two standards. 17

18 CONCLUSION We now have a broad overview of the environmental and social risks that exist in our supply chain for each country in South America. Together with TFT, we have identified where risks posed to High Carbon Stock Forests and High Conservation Value Areas as well as exploitation risks exist across our South American soy supply chain at the regional level. The job of mapping these areas in more detail is ongoing and is one of the main objectives of our work on piloting appropriate remote sensing monitoring tools. Our next challenge is to develop a robust action plan to address these risks in each region. This will include initially focusing on priority landscapes where soy may be driving land use change, and where ADM is an important customer. We recognize that these are very complex, multi-dimensional challenges which are not solved quickly, and will require cooperation between farmers, buying companies, governments and civil society to develop innovative, regionally-appropriate solutions. We will continue to call for and support the development of new solutions. Over 2016 we will continue to test the current tools that exist for monitoring land use change (especially deforestation and natural biome destruction) across our sourcing regions, with the hope of identifying tools that can give us accurate information across our supply chain. We know that we will not solve these issues on our own, and cooperation with the broader industry in the regions where we source will be necessary. For this reason, we are open to working with others in each region who share our values and goals. We will develop strategies for how to increase the reach and impact of our sustainability initiatives, and look for customers who share these values to help us build responsible soy supply chains that meet Our commitment to no deforestation, no peat and no exploitation. We will report on progress quarterly to our many stakeholders and we welcome feedback and comments from our interested readers at responsbility@adm.com 18