Growing demand for soy globally is resulting in a continuous expansion of the area under cultivation in Brazil. This expansion has been identified as a major driver of deforestation, resulting in destruction of natural habitats, loss of biodiversity and greenhouse gas (GHG) emissions. Efforts such as the Amazon Soy Moratorium have significantly reduced deforestation in the Amazon, but there is evidence that it has also resulted in leakage of deforestation activities to the Cerrado. The recently launched Cerrado Manifesto aims at preventing this trend and calls for "immediate action by companies that purchase soy and meat from within the biome, as well as by investors active in these sectors".
It is estimated that expansion of agriculture into Brazilian natural habitats results in the emissions of more than 1 billion tCO2e/yr, representing 51% of the national GHG emissions. While there is growing demand for land to expand agricultural production, it is widely recognised that the expansion of agricultural production can happen without further clearing of natural vegetation. It is estimated that more than 18 million hectares of cleared land, degraded or extensive pasture land, could be made available for more lucrative and productive agricultural uses such as soy.
In spite of the market signals and demand preferences for sustainability, trade and procurement challenges still need to be overcome to create efficiencies and enable this market segment to reach the scale required to meet demand and halt current environmental impacts.
The Responsible Commodities Facility coordinates a suite of activities to promote the production and trade of responsible commodities in Brazil, starting with soy and corn. We provide competitive credit lines for producers that meet our Eligibility Criteria. Among them, we create incentives for farmers that restore unproductive cleared lands.
The Facility will also operate a blockchain Registry to record the volumes and ownership of responsible commodities, enabling its traceability from farm of origin, and an Electronic Exchange to facilitate the commercialisation of these commodities. The combination of these measures would result in the growth of a new markets segment for Responsible Commodities, meeting international demand and the objectives of the Cerrado Manifesto and the various initiatives promoting its implementation.