China Imports "Zero-Deforestation" Soybeans from Brazil, Signaling Shift in Global Commodity Market

A landmark shipment of 50,000 metric tons of "zero-deforestation" soybeans has arrived in China from Brazil, marking a significant step in efforts to combat deforestation linked to agricultural commodity production, according to a report by Dialogue Earth.

The soybeans, intended to be produced without any deforestation or vegetation damage, were purchased by two Chinese agricultural companies, including the country's largest agribusiness, COFCO (China Cereals, Oils and Food Corporation). The deal, which was signed last year, includes a "deforestation- and conversion-free (DCF)" clause, making it the first soybean order to be imported to China with such a sustainability commitment.

"This is a milestone [that] sends a positive market signal from China to the global commodity market," said Jack Hurd, executive director of the Tropical Forest Alliance, which facilitated the order.

This latest shipment represents a symbolic shift in China's approach to soybean sourcing. Brazil has already become the largest trading partner for Chinese soybean imports, with 71.5% of China's soybean imports coming from Brazil in the 12-month period ending April 2024, according to S&P Global data. This shift towards Brazil has been driven by factors including price competitiveness and geopolitical considerations.

The import of "zero-deforestation" soybeans is a crucial step in addressing the widespread environmental damage associated with the production of agricultural commodities like soy, beef, palm oil, paper, and pulp. Deforestation, particularly in regions like the Amazon rainforest, has been a major concern for environmentalists and conservationists.

"According to China Daily, millions of hectares of forest in Brazil have been lost since the 1970s as soybean cultivation expanded," Dialogue Earth reports.

COFCO, which pledged in 2022 to eliminate deforestation from its soy, beef, and palm oil supply chains by 2025, has faced criticism for its continued involvement in deforestation. A 2023 investigative report by Repórter Brasil found that the company's soy and palm oil supply chains still include deforestation, prompting concerns from environmental organizations.

"Global Witness, a UK-based NGO, believes banks financing COFCO should be concerned about its deforestation footprint," Dialogue Earth notes.

While the company has achieved 100% traceability of its direct soy purchases from Brazil, the import of "zero-deforestation" soybeans represents a significant step towards meeting its sustainability goals. COFCO plans to establish a "zero-deforestation" soybean supply chain in important ecological areas in Latin America by 2025 and has also announced plans to develop sustainable palm oil and coffee supply chains around the world.