4th Road ShowBrazilian Soy Sustainability

Fábio Trigueirinho

Secretary ABIOVE

Brazilian Vegetable Oil Industries Association

ABIOVE, the Brazilian Vegetable Oil Industries Association, has 13 members companies who are responsible for approximately 60 percent of Brazil's soybean processing and exporting volume.

Brazil is responsible for some 32 percent of the world's soybean production, with 113,8 million tonnes in the 2017 crop.

The soybean complex is one of the main items in the country's Trade Balance. In 2016 exports reached US$ 26 billion.

Soybean production brings social development to rural areas.

Europe is a major buyer of Brazilian soy protein (+13 million ton in 2016).

ABOUT ABIOVE

5.3%

6.8%

9.4%

11.4%

13.9%

14.6%

15.6%

17.0%

25.1%

66.3%

INDIA

ARGENTINA

CANADA

RUSSIA

UNITED STATES

AUSTRALIA

EAST ASIA & PACIFIC

CHINA

EUROPEAN UNION

BRAZIL

GLOBAL PRESERVATION

Source: THE WORLD BANK - TERRESTRIAL PROTECTED AREAS - 2014

Brazil is a step ahead in environmental sustainability !

AMAZON BIOME VEGETATION

- 420 million hectares (49% of Brazil)

- preserved native vegetation - 82%

CERRADO BIOME VEGETATION

- 204 million hectares (24% of Brazil)

- preserved native vegetation: 50%

Densely Wooded

CerradoDirty Cerrado

(Shrubby)

Rocky CerradoVereda Cerrado

(Open Areas)

Riparian

Forests

Typical Cerrado

ALERT INSPECTION

LEGAL

DEFORESTATION

ILLEGAL

DEFORESTATION

DEFORESTATION

FARM IS

EMBARGOED

FINE

R$500/kg

purchased

THE FARM AND THE RURAL

PRODUCER ARE INCLUDED IN

IBAMA’S LIST OF EMBARGOED

AREAS IN BRAZIL

PUBLIC GOVERNANCE

LAW ENFORCEMENT

IMPROVEMENT IN BRAZIL’S ENVIRONMENTAL GOVERNANCE

Governance Factors 2006 2017

Deforestation rate – Amazon Biome 14,286 km² 6.624 km²

Environmental legislationProvisional Measure

Lack of legal security

Forest Code

Federal Law No. 12651/2012

Compliance with legislation Low High (CAR Registration)

Penalties for illegal deforestationWarnings and fines with

low collectionsEmbargoes of farms and high fines

Monitoring of environmental crimes Start-up of satellite useUse of satellite images in real time with

high definition

Field inspections IBAMA techniciansInspections integrated with Federal

Police, and Environment State bodies

Requirements for purchasing agricultural

productsNo requirements IBAMA’s Embargoed Areas List

Source: http://www.obt.inpe.br/prodes/prodes_1988_2014.htm

CERRADO SHARP FALL IN CONVERSION

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2001-2002 2003-2004 2005-2006 2007-2008 2009-2010 2014-2015

Conversion of Native Vegetation to other uses

1) SOY MORATORIUM

Signed: July 24, 2006

Commitment: Signatories will not trade

soybeans produced in areas of the

Amazon Biome deforested after July

2008.

Soybeans are responsible for 1,0% of

Amazone Biome deforestation.

Monitoring 98% of the soybeans grown in the Amazon Biome since 2006

STATE2016

(ha)

MATO GROSSO 28,280

RONDÔNIA 1,358

PARÁ 7,479

RORAIMA AND AMAPÁ 38

TOTAL 37,155

SOY MORATORIUM – MONITORING

In the 2016 crop soybeans have been identified on 37,155 hectares of deforestation

since 2008.

These 37,155 hectares in non-conformity with the Soy Moratorium correspond to

1 % of the bioma deforestation.

Source: INPE, 2014

MORATORIUM - PUBLIC RECOGNITION

“The Soy Moratorium and negotiations with the meat sector are programmes that could

serve as models for other countries”. Kumi Naidoo, Greenpeace Global Executive Director

“The soy industry is setting the example for respecting the forest and the consumers”.

Paulo Adário, Greenpeace Diretor

“We have delivered extraordinary results”. Frederico Machado, WWF Brasil - GTS member

The European Soy Customer Group - AHOLD, ASDA, Carrefour, Co-operative, Kraft, Marks &

Spencer, McDonald’s, Nutreco, Ritter-Sport, Sainsbury’s, Waitrose and Wal-Mart - “applauds

another year of positive progress by the Soy Task Force”.

• Monitoring soybean in the Amazon Biome - transparency

• Contribution to sensibilize farmers to sustainability issues and Government toimprove environmental governance.

SOY MORATORIUM - 10 YEAR RESULTS

2) SOJA PLUS PROGRAM

EnvironmentalLabour

Legal Compliance

Legal certainties and

market guarantees

for the rural

producer!

Brazilian legislation is the most demanding

Complying with it is as hard as a certification

SUSTAINABILITY PROGRAMS - ABIOVE

Soja Plus: MT, MS, MG e BA: 7.15 million ton.

State FarmsSoy area

(thousand ha)

Soy production

(thousand ton)

MT 875 1,700 5,100

MS 410 340 1,020

BA 180 515 1,545

MG 63 80 240

Brazil 1,122 2,635 7,905

CERRADO BIOME - GENERAL

CHARACTERISTICS

FOREST

FORMATIONS

SAVANNAH

FORMATIONS

PASTORAL

FORMATIONS

Riparian

ForestsGallery

Forests

Dry Forests Dense

Forests

Dense

Cerrado

Typical

Cerrado

Sparse

Cerrado

Cerrado

Park

Palm

Grove

Vereda

Cerrado

Rocky

Field

Scrub-

land

Meadow

FOREST

FORMATIONS

SAVANNAH

FORMATIONS

PASTORAL

FORMATIONS

PHYTOPHYSIOGNOMIES OF THE CERRADO BIOME

Rocky

Cerrado

3) CERRADO BIOME ROAD MAP

• Challenge: To reconcile food production with protection of biodiversity

• Cerrado policy assumptions:

- Universal application to the soy market (all players)

- Participation and consent by rural producers

- Simple system, workable and not burdensome

- Inclusion of other production chains

- Economic incentives for conservation of the forests

- Preservation of high-value areas (river basin headwaters, landscapes)

1. Mapping of soy acreage.

2. Development of studies on the Cerrado’s socio-economic characteristics.

3. Supporting rural producer registration with SICAR (National System for Rural

Environmental Registration).

4. Use of CAR (Rural Environmental Registration) as a purchase criterion.

5. Supporting the states in their analysis and validation of CAR

CERRADO TASK FORCE – PRIORITY DISCUSSIONS

6. Supporting rural producers regarding regulations, implementation and

monitoring of PRA (Environmental Regularization Program)

7. Supporting the Biome’s Ecologic-Economic Zoning

8. Development of a Go/No-Go Zone tool

9. Supporting compensation and economic incentives for producers who cease to

deforest, producing only in areas already cleared.

10. Articulation with other production sectors: input industries, financial sector,

meat chain, charcoal plants, state governments, social movements, associations

and employer associations

CERRADO TASK FORCE – PRIORITY DISCUSSIONS

Minimum value for the Cerrado Biome

R$ 200.00

Source: http://biofilica.com.br/boletins/2017_08/boletim_2017_08.html

AMAZON CERRADOATLANTIC

FORESTCAATINGA

Sale (R$/ha)

from 550 to 2,000

Sale (R$/ha)

from 1,550 to 15,000

Sale (R$/ha)

from 2,800 to 10,000

Sale (R$/ha)

from 400 to 1,800

Lease (R$/ha/yr)

from 130 to 210

Lease (R$/ha/yr)

from 200 to 300

Lease (R$/ha/yr)

from 150 to 280

Lease (R$/ha/yr)

from 200 to 428

CERRADO - COMPENSATION OF LEGAL RESERVES

Source: Agroanalysis, October 2017

(agribusiness magazine published by Fundação Getúlio Vargas)

Items Unit 2016/17 2017/18***

Operational cost* R$/ha 2,972.85 2,662.21

Average yield* Bags/ha 55.39 54.12

Sales Price** R$ 59.52 57.13

Revenues R$ 3,296.81 3,091.76

Profits R$/ha 323.96 429.55

*IMEA (Institute of Agricultural & Livestock Economy in Mato Grosso State)

**Scot Consultoria

*** Estimate

Average profit

for soy

R$ 323.96

Soy Production (Rondonópolis/Mato Grosso State)

CERRADO BIOME - ECONOMIC RETURNS FOR SOY

• Land inventories in the Cerrado Biome with high suitability

for soy expansion comprise 15.5 million hectares (59,846

square miles) of native vegetation. Producers could waive

their rights to convert this area to agriculture through

payment for environmental services

Source: http://biomas.agrosatelite.com.br/img/Analise_geoespacial_da_dinamica_das_culturas_anuais_no_bioma_Cerrado_2000a2014.pdf

Cerrado Fund (15.5 million hectares)

Compensation of Areas

(R$ 200.00)

Soy Production

(R$ 323.96)

R$3.1 billion R$5.02 billion

€886 million €1.43 billion

CERRADO FUND - PAYMENTS TO PRODUCERS FOR

ENVIRONMENTAL SERVICES

• The economic complementarity of Brazil and Europe should be

taken advantage of, to their mutual benefit.

• Conformity with the Brazil Forest Code means reconcile food

production with environmental conservation.

• Soja Plus Program is an important vehicle to support the full

implementation of the Forest Code and labor rules.

• We invite European Consumers to come to Brazil, as well as

sponsor Soja Plus Program (Shared reponsibilities)

CONCLUSIONS: