Most of the soy produced in South America is exported, with over half going to China and the EU. These countries are heavily reliant on South American soy to meet consumer demand. This means that companies, governments and consumers in these end-user countries can put pressure on South American growers to adopt sustainable production practices.
Three quarters of the soy produced in South America is exported. Of the remaining 25% which is used domestically, most is used as animal feed, and some of the meat produced is exported (e.g. in 2017, 30% of Brazil’s chicken meat and 10% of Brazil’s pork was exported).1 This means that actors in importing countries - companies, governments and consumers – can play a critical role in shaping the market conditions for soy and driving positive environmental and social outcomes, including the prevention of further destruction of valuable forests and native vegetation.
Over half of South American soy exports go to China and the EU (see figure 1). China is the largest market, importing approximately half of South American soy (by volume) in 2018. Imports to China are forecast to increase by 34% between 2019 and 2028, driven by population and economic growth, and changing dietary habits – particularly increased consumption of meat, dairy and vegetable oils – which increases demand for soy-based animal feed. Recent trade wars between China and the US have led Chinese buyers to increase soy imports from South America, and especially Brazil, which may cause a surge in deforestation in Brazil to meet greater demand from China.2
The EU is the second largest market for South American soy: about 14% (by volume) went to the EU in 2018. Most of the soy imported to the EU from South America is used for animal feed.3 A trade agreement between the EU and Mercosur countries, signed in 2019, to reduce or eliminate import duties on many products, including soybean products,4 means that the EU is likely to continue to prioritise soy imports from South America.
China and the EU are both heavily reliant on soy imports from South America to meet consumer demand. Neither has sufficient land available to expand their own production of soy. This means that actors in these end-user countries can put pressure on South American growers to adopt sustainable production practices. Companies can use sustainable sourcing criteria and apply boycotts on deforestation-linked commodities to send strong market signals to producers to adopt sustainable production practices. Governments can legislate to mandate sourcing companies in their countries to establish and monitor zero deforestation commitments in their finance and supply chains. And consumers can modify their purchasing preferences to avoid products linked to deforestation.