French poultry player LDC sends ‘clear signal’ to soy traders, Brazil’s Marfrig gets green loan to decouple beef from deforestation
It has just announced that it will now ask its suppliers for detailed traceability and the exclusion of soy cultivated on deforested or converted land after January 1, 2020 in Brazil’s Cerrado region.
The LDC Group is also urging the French government to speed up the implementation of a mechanism for managing deforestation risks linked to soy imports.
The company pledge is a good first step but it is not sufficient, explains Klervi Le Guenic, campaigner at French NGO, Canopée.
“The LDC Group's commitment is a very clear signal for soy traders, but it must be followed by actions. LDC must suspend commercial relations with traders if they continue to be complicit with deforestation. We will be watching the company very closely as it is subject to France’s due diligence law and hence has the legal obligation to prevent and mitigate any risk associated with deforestation in its supply chain."
As part of its work through France’s Duralim sustainability platform, LDC has been campaigning for greater feed sustainability.
The group has also been actively working towards a reduction in the amount of soybean meal it uses in poultry diets and supporting the development of alternative protein sources such as rapeseed and sunflower meal, along with bean and pea varieties. It also looks to increasingly source ingredients such as soy locally, whether in France or in Europe.
Decoupling beef from deforestation in Brazil
Separately today, impact fund, &Green, has announced an investment in Marfrig, the Brazilian multinational corporation and one of the biggest animal protein producers worldwide, to expand the reach of cattle tracking in the Amazon and Cerrado, particularly in relation to its indirect suppliers, and decouple its products from deforestation.
Cattle ranching is perceived as one of the sectors with the greatest impact on Brazilian forest loss.
The Brazilian cattle industry is dominated by a handful of meat processing companies. JBS, Marfrig, and Minerva have the highest slaughtering capacity among a large number of meatpackers. The industry is characterized by heightened and continued pressure from investors, policymakers, and civil society over its role in driving deforestation, forest fires, and human rights abuses in the Brazilian Amazon, noted a report from Chain Reaction Research (CRR) in December 2020.
CRR found Marfrig, as well as JBS and Minerva, are more exposed to deforestation risks in their indirect supply chains than in their direct supply chains.
Marfrig said the US$30m 10-year sustainability-linked loan facility it signed with Stichting and green.fund (&Green) triggers the implementation of an environmental and social action plan.
The initiative is the result of coordinated efforts between &Green’s investment advisor, SAIL Ventures, Marfrig and IDH - The Sustainable Trade Initiative; the plan calls for engagement with indirect suppliers, traceability, and the mitigation of deforestation risks in the Amazon and Cerrado.
Gustavo Oubinha, SAIL Ventures investment director for Brazil, commented on the robust nature of this lending facility: “We have put in place a realistic plan, against which we can hold the company accountable, and we have established a transparent mechanism to report successes and learnings to all stakeholders.”
Marfrig will expand its deforestation monitoring system to include indirect suppliers, often located in more remote areas that are vulnerable to deforestation – an ambition that has not been realized in Brazil at any meaningful scale to date. The beef producer said indirect suppliers and, specifically, smallholder ranchers will benefit from Marfrig’s facilitation of access to financing and technical assistance in order to enable them to meet its policies.
“With this transaction, Marfrig is sending a progressive market signal to the rest of the industry especially in a time where deforestation is on the rise. The inclusion of indirect suppliers in the fight against illegal deforestation and wholesale transformation of the sector is critical in convincing and enabling farmers to transition to sustainable cattle practices and environmental protection,” said Daan Wensing, IDH CEO.
“Eliminating deforestation throughout the supply chain, in the Amazon as well as in the Cerrado, is a key challenge in the cattle sector in order to protect important forest areas in Mato Grosso and beyond,” said Nanno Kleiterp, chairman of &Green’s board of directors. “&Green is supporting Marfrig in this challenge, with an innovative funding mechanism that can serve as a blueprint for investors to help major companies sustainably transform their supply chains and contribute to global forest protection efforts.”
