Although historically understandable from an economic development and commercial point of view, the world can no longer afford further deforestation by agricultural expansion, with more greenhouse gas emissions and loss of biodiversity. According to the 2013 EC report on imported deforestation, cattle ranching was the single most important driver of deforestation. The global meat and dairy sector accounts for half of the food-generated greenhouse gas emissions (Methane, CO2, and NOx emissions) and occupies a huge amount of land (UN 2006; FAO 2006; Nature 2021). Methane is 25 times more potent than CO2 and these emissions need to be drastically reduced as well to reach our climate goals (link). Therefore, efforts to reduce climate change, biodiversity loss and improve human health, will fall significantly short without drastic changes in global land use, agriculture and human diets. The special report on climate change and land by the Intergovernmental Panel on Climate Change (IPCC) describes plant-based diets as a major action for mitigating and adapting to climate change ― and recommends to reduce meat consumption (link).
Nowadays, the expansion of cattle ranching associated with permanent deforestation mainly occurs in South America. The main products are beef, dairy, and leather. The majority is consumed domestically. Cattle ranching has not been the primary focus of attention of the ADP due to the perceived limited trade and relevance of Europe in the beef & leather supply chains with South America. Europe however still represents a billion euros market with influential retailers, commercial banks and high fashion brands involved (Mekon Ecology, 2020). For Europe’s main trading partners Argentina, Brazil, Paraguay and Uruguay, Europe is maybe not the largest buyer, but it is a well-paying market. And besides the commercial interest there is a reputational risk for companies, investors, and brands. Cattle (beef & leather) is now one of the focal commodities of the ADP.
Low input costs, limited labour requirements and increasing market demand make cattle ranching an attractive first economic activity after deforestation. Regions of major concernin South America are the Amazon, the Gran Chaco and the Cerrado. The location of roads and slaughterhouses are directly linked to the level of deforestation surrounding the infrastructure. Studies show that deforestation in the Amazon and Gran Chaco mainly occurred in the cattle supply zones of the slaughterhouses (Imazon 2017;USAID 2017). The Amazon rainforest spreads across nine countries and cattle ranching – often interlinked with land speculation and illegal logging – has been the largest driver of deforestation in every Amazon country, accounting for 80% of current deforestation rates. In Brazil, 94% of deforestation in the Amazon and Cerrado is actual illegal (WWF 2021), often driven by land speculation (‘grilagem’) whereby a cow is used as a means for land occupation.Deforestation alerts are not investigated (Mongabay 2022). Other issues associated with uncontrolled expansion also include Land grabbing from Indigenous Peoples and traditional communities, forced and slave labour, organised crime, and tax evasion.
Slaughterhouses buy directly from numerous ranches. But the cattle supply chain has a very long tail with many indirect, and sometimes informal/illegal, suppliers. The level of control towards indirect suppliers (farms for calving and rearing) is limited. Farms that are not fully legally compliant (with the Forest Code and other laws) can sell their cattle to slaughterhouses via the direct suppliers who are legally compliant.
Figure: the cattle supply chain (courtesyMamadova, 2020).
The cattle supply chain starts with calves that are born and raised on numerous ranches (for example, more than 390,000 ranches in the Brazilian Amazon but there is no official number (Imazon 2017). Calves are transported from breeding farms to raising farms. In the last three months before slaughtering they are brought to farms for fattening. Because cattle and calves are also raised on small farms that are often not formally registered their cattle is not officially counted (an estimated 10-20% of total – FAO). The ‘cattle supply range’ of Brazilian Amazon slaughterhouses coincide with 88% of all deforestation between 2010-2015. Imazon forecasts that 90% of all future deforestation will be in the cattle supply zones of the slaughterhouses.
Beef (and other meat products)
The EU established Hilton Quota, a tariff quota for the import of high-quality, de-boned beef. Under this quota, the EU imports (EUROSTAT and UN COMTRADE data) mainly beef (frozen or chilled) from Brazil (41% of total import), Argentina (20%), Uruguay (15%) and USA (6%).Mercosur countries (Brazil, Argentina, Uruguay and Paraguay)are the largest extra-EU supplier accounting for almost 75% of imports (app. 87% goes to ADP countries).The beef trade with the EU is subject to a 20% tariff for 67,000 tonnes or 43% tariff outside the quota. The annual out-of-quota EU imports from Mercosur in high quality fresh beef is 40,000 tonnes and 10,000 tonnes for frozen beef. Beef imports from Mercosurrepresent app. 3% of total import value from Mercosur. The combined beef export value for the Mercosur countries to the EU is app. 1.1 billion euros.
EU import of dairy products from Latin America is small (1% in 2016 of total dairy import).
Brazil, Argentina, Paraguay, and Uruguay also export hides and leather. Brazil is one of the world’s largest leather producers and exporters.Mamadova (2020) states that the Italian imports of Brazilian leather are exposed to deforestation risk at different stages of the supply chain, unless there are proper traceability systems in place till the farm level to demonstrate the opposite.
In 2018, the main countries the EUimported beef and veal from were Brazil (41%), Argentina (20%), Uruguay (15%) and USA (6%).China, Vietnam, Italy and the USA are the most important importers of South American leather. Italy imported 60% of the leather exported from Paraguay ((NWF, 2019; Earthsight, 2020). Brazilian tannery-exporters include JBS, Vancouros, Minerva, Fuga Couros, Durlicouros and Viposa. The facilities are located in the Amazon and Cerrado. The main export product is traditional wet-blue leather.Around 90% of Brazilian leather exports to Italy is in wet-blue (HS4104 semi-processed) stage.Italy also buys 83% of Brazil’s ‘wet white’ leather export (a specific category of chrome-free processed leather) and 91% comes from the port of Belem in Para. In Italy, tanned leather is mostly used by the footwear industry (38%) followed by leather goods (27%), upholstery furniture (14% and the car industry (15%) (link).
Sustainability and deforestation commitments and initiatives
According toTrase.earth(based on customs data) JBS, Marfrig, Minerva and Mataboi Alimentos are the main companies exporting beef to Europe from Brazil. In 2009, JBS, Marfrig and Minerva committed to zero deforestation, no invasion of indigenous lands and no slavery (link). These commitments were not met.According to Forest Trends (Supply Change, 2020), there are now globally 484 large companies with cattle exposure and only 12% (56) have sustainability commitments. Over half of them are located in Europe (31).On 29 October 2019, 251 investors representing app. US$ 17.7 trillion in assets voiced their concerns on deforestation and forest fires in the Amazon.
In each producer country there are important national initiatives, national tracking systems and cattle-related commitments. TheGlobal RoundtableforSustainable Beef(GRSB) is aglobal, multi-stakeholder initiative (established in 2012.Regarding deforestation it is committed to legal compliance. In each producer country there are national platforms that relate to the Global Roundtable for Responsible Beef (GRSB).There are many national initiatives to enhance traceability and sustainability of the cattle supply chain (besides many projects), for example:
- Argentina’s formal traceability system: SGS (Sistema de Gestión Sanitaria) + DTe (Documento para el Transito de Animales)
- Brazil’s formal Tracking Service of Bovines and Bubalus (SISBOV)
- Paraguay’s formal traceability system: Sistema Informatico de Gestion de Oficinas Regionales (SIGOR)
- Uruguay’s formal traceability system: Animal Identification and Registration System (SIRA)
- Terms of Adjustment of Conduct (TAC) with Federal Public Prosecutor’s Offices in Brazil (link)
- Beef-on-Track Brazil (link)
- Cerrado protocol Brazil (link)
- Selo Verde, State of Pará, Brazil (link)
- PECSA (Sustainable Cattle Ranching in the Amazon) in the State of Mato Grosso (link)
- Paraguay’s voluntary initiative Traceability System of Paraguay (SITRAP)
- Global Roundtable for Sustainable Beef (GRSB)
- Argentina’Mesa Argentina de Carne Sustentable )MACS, part of the GRSB)
- Brazil’s multi-stakeholder Grupo de Trabalho de Pecuária Sustentavel (GTPS)
- Paraguay’s Mesa Paraguaya de Carne Sostenible initiative (MPCS, part of GRSB)
- Consumer Goods Forum, Forest Positive Coalition, Beef Sector Roadmap (link)
- Chinese Sustainable Meat Declarationby China Meat Association (CMA) and 64 Chinese company members
- Leather Working Group(link)
- Sustainable Leather Foundation (link)
Engagement by ADP raised awareness on the relevance of cattle ranching (beef, leather). Full traceability – with the inclusion of direct and indirect suppliers – is a crucial but complex element of achieving deforestation-free, sustainable production. Without traceability and transparency, a company cannot assure the supply chain is deforestation-free and sustainable.
One of the main ADP actions was strongly supporting the inclusion of beef & leather in the proposal for EU regulation on deforestation (press release,pdf) including a requirement for geolocation and full traceability. EU member states of the ADP also asked for the inclusion of Indigenous Peoples and human rights standards in the EU proposal.
The ADP and Support Unit are or have been engaged in a dialogue with major supply chain actors on beef and leather since 2020, such as the main meatpackers (JBS, Marfrig, Minerva), the Forest Positive Coalition of the Consumer Goods Forum (Beef Sector Roadmap), financial actors, retailers, sub-national governments, civil society organisations and sustainability initiatives. Via individual ADP members specific projects and initiatives relevant for the cattle chain are supported. In-country, cattle initiatives need to be supported and brought together to enhance relevance and impact. In May 2022, a technical seminar was organized in Brazil with Brazilian stakeholders followed by the ADP Multi-Stakeholder Meeting in June 2022. This engagement will continue.
Especially in the context of cattle ranching, illegal deforestation and land grabbing, local law enforcement is very important. Engagement on these issues with sub-national governments building on sub-national traceability and compliance systems could be supportive to meet the market requirements on deforestation, sustainability, and human rights.