SOYBEAN MORATORY

Base Document

2021/2022 Soybean Moratorium Protocol

Soybean Moratorium - 14th Report, 2021/2022 Crop

Contextualization

Established in 2006, the Soy Moratorium began with the need to meet the growing demand to eliminate the conversion of forests in the Amazon biome to soy crops. The initiative stemmed from a position taken by the Brazilian Association of Vegetable Oil Industries – ABIOVE (in Portuguese, AssociaçãoBrasileiradasIndústriasdeÓleos Vegetais) and the Brazilian Association of Cereal Exporters - ANEC (in Portuguese, Associação Brasileira dos Exportadores de Cereais) in relation to growing market pressure and concern for the Brazilian reputation in the face of the issue of deforestation in the international market.

The Soy Moratorium takes place through the adoption of a supplier management mechanism which the companies (traders) signatories to the moratorium must implement. Signatories must be associated with ABIOVE and/or ANEC. This management system includes information on deforestation carried out by a specific working group, and verification of an exclusion list of suppliers involved in work analogous to slavery. To ensure compliance with the requirements, a third-party audit is carried out through the hiring of a certification body that assesses the soy supplier management system implemented in each trader, the analysis of eligibility for inclusion of this supplier, and the due controls for the purchase and sale of sustainable soy (soy within the scope of Soy Moratorium certification).

The monitoring of deforestation in the Amazon biome is carried out through the collection of satellite images comparing, through superimposition, images of the year 2008 based on the date established by the forest code with images of the current crop year. The deadline for converting forests into arable land determined by Brazilian legislation through the Forestry Code is July 22, 2008. The moratorium follows the legal date for evaluating the eligibility of productive areas that supply soy to traders.

The images of the scope areas are analysed comparing the vegetation cover variation in both. The analysis is carried out by a company called Agrosatélite, formed by professionals from the National Institute for Space Research – INPE (inPortuguese , InstitutoNacionaldePesquisasEspaciais), signatory of the Soy Moratorium, through a technical team called Grupo de Trabalho da Soja – GTS (in free translation, soy work group), a team that is related to the management of the Soy Moratorium. Next, information from the PRODES system and data made available through the Agrosatélite are analyzed, together with information obtained from the National Foundation for Indigenous Peoples – FUNAI (In Portuguese, Fundação Nacionaldos Povos Indígenas), the Ministry of the Environment, the Brazilian Institute of Geography and Statistics – IBGE (in Portuguese, Instituto Brasileiro de Geografia e Estatística) and the Instituto National Council for Colonization and Agrarian Reform –INCRA (inPortuguese,InstitutoNacionaldeColonizaçãoeReformaAgrária).

The scope of the Soy Moratorium for eligibility of traders' suppliers are private rural properties with a total area of more than 25 hectares and in municipalities with cultivated soy area greater than 5,000 hectares. That is, the sum of all farms included in the municipality must be greater than 5,000 hectares. These municipalities must be located within the legal territory of the Amazon biome. It should be noted that the areas delimited for settlement of agrarian reform, indigenous territory and nature conservation units are not monitored.

The monitored scope area corresponds to 5.85 million hectares (2021/2022 harvest) distributed in 109 municipalities. These municipalities correspond to 97.9% of the soy planted in the biome, with the remaining 2.1% distributed in another 92 municipalities. The figure below outlines the location of the monitored municipalities that meet the criteria of the Soy Moratorium.

Source: SOYBEAN MORATORY – 14TH YEAR REPORT.

Amazonia boundaries

State boundaries

Municipal boundaries Soy 2020/21

It should be noted that in situations where only part of the municipality is located in the biome, only the area within the biome was considered. municipalities partially located in the biome, only the area located within it was computed. The area outside the Amazon biome is not included in the scope. Also, according to information from the Moratorium management, the average expansion of soybeans in the biome is 324,000 hectares per year, considering the start of monitoring in the 2007/2008 harvests. Annually, ABIOVE publishes reports with integrated harvest results. The document presents the results obtained through satellite monitoring of the scope areas and makes comparisons in relation to the total deforestation informed through the PRODES system in the Amazon biome. The figure below gives an overview of land use in the territory of the biome, according to the Moratorium.

Source: SOYBEAN MORATORY – 14TH YEAR REPORT.

Deforestations

Pasture, secondary vegetation

Soy in compliance with Soy Moratorium

Others (water, non-forestry vegetation, rock outcrop, etc.)

Primary forest

Soy not compliance with Soy Moratorium

As mentioned above, the scope of the audit for the Soy Moratorium considers three essential requirements for compliance with the norm, and the signatories undertake not to commercialize, acquire and finance soy that is cultivated in deforested areas within the Amazon biome after 22 July 2008 (date defined by the Forestry Code), areas that appear on the list of areas embargoed by IBAMA for deforestation and soy suppliers included in the list of work analogous to slavery.

Verification of compliance with these requirements is carried out at the signatory companies that buy the soy, and not directly at the rural producers. Buyers establish purchase contracts with their suppliers in their management system. These contracts include clauses specifying the need to meet the requirements of the Soy Moratorium. The trader's management system must describe the organization's internal processes, including means of training its personnel, internal audits, control of product volume and productivity (productive capacity of the farm in order to reduce the risk of cross-buying), method of identification and blocking the purchase of irregular suppliers, as in the case of being included in an IBAMA list, or identifying the existence of work analogous to slavery.

A third-party audit must be conducted annually to verify compliance with the Soy Moratorium. This is carried out by a certification body hired by the signatory company. The audit takes place on the quality of the management system, on the analysis of images of the supplying farms and the risk of deforestation and on-site inspections. Depending on the risk, the audit can be conducted completely remotely. The signatory company may purchase soy from intermediary suppliers. These must be covered in the scope of the audit to mitigate the risk of acquiring soy from non-compliant areas. The audit process is ultimately evaluated by the technical committee. It is your responsibility to evaluate and validate the audit process and correct potential flaws in its conduction and in the final report. If there are non-conformities, an action plan must be prepared following the criteria of the Soy Moratorium. At the end, a report should be published containing the summary of the audit findings. Information considered confidential because it is sensitive to the customer and its suppliers will be omitted.

The Soja Moratorium has a platform called Soja na Linha that publishes information on the Moratorium. Additionally, ABIOVE has recently published a report entitled Geospatial Analysis of the Expansion of Soy in the Cerrado Biome 2000-2021 with analysis data on the evolution of the soy cultivation area in this biome across the Brazilian states. The document is available for consultation through the linkhttps://abiove.org.br/publicacoes/analise-geoespacial-da-expansao-da-sojano-bioma-cerrado-2000-2021/.

The chart below illustrates compliance with the four principles used in the benchmarking analysis among sustainability standards.

Legal Compliance

The Soy Moratorium requires the soy-buying member to verify the legal constitution of the soy supplier and its intermediaries, as well as its inscription on the slave labor exclusion list. It also verifies legal compliance with regard to deforestation and legal provisions with regard to the forest code. However, it does not assess legal compliance with other requirements.

Management Of Social And Environmental Risks At Stakeholder Level

The Soy Moratorium does not establish mechanisms for socio-environmental management and relationship with stakeholders.

Good Agricultural Practices

The Soy Moratorium does not establish good agricultural practices.

Deforestation Control

Compliance with national legislation (forest code)

The Soy Moratorium follows the main Brazilian legislation for the protection of forests, the forest code as a reference for compliance. The certification scope areas are analyzed based on the cut-off date established in the legislation.

Compliance With Eu Red Ii

The Soy Moratorium has a cut-off date that does not meet EU RED II regulations. The European directive establishes the date of January 1, 2008, while the Brazilian legislation determines the deadline of July 22, 2008. Although the criteria for converting forests and areas of high biodiversity value or carbon stock are similar to national legislation, the standard is not in line with European legislation.

Considerations regarding HCV

Areas of high conservation value (HCV) are territories covered by the forestry code. All territories defined by legislation are treated equally in terms of the need for protection and the prohibition of deforestation. Territories such as native forests or other biodiversity conservation areas can be encompassed through the National System of Nature Conservation Units, the SNUC.

Definition of deforestation in the standard

The Soy Moratorium does not clearly define deforestation; however, it follows the definition of current local legislation, in particular the Forestry Code. Because it is an automated detection system, it recognizes deforested areas only over 25 ha and in municipalities with soy area greater than 5,000 ha within the Amazon biome.

Transparency Mechanism

The Soy Moratorium publishes the results of audits through a crop report containing data on deforestation carried out by soy producers in the Amazon biome, according to its own evaluation criteria. Information on signatory companies or their suppliers is not disclosed.

General Observations

The Soy Moratorium uses an intelligent system to monitor deforested areas to ensure that the products do not come from deforested areas within the Amazon biome. This deforestation considers areas deforested in accordance with national legislation. In this sense, the limit of the current Forest Code is 80% of the Legal Reserve, added to the Permanent Protection Areas when applicable. However, the legislation provides that rural properties in municipalities with up to 50% of existing deforestation may be exempt from the obligation to comply with the recovery of the Legal Reserve in 80% of the rural property. The moratorium, although it presents an indicator of 2.1% of unmonitored area, does not guarantee that rural properties with an area of less than 25 hectares do not have an impact on deforestation.

Soy expansion informed by the Moratorium management was 5.85 million hectares. This area corresponds to soy grown within the legally permitted area. It should be noted that situations where soybean areas in the municipality are less than 5,000 hectares are not monitored, and also the total areas of indigenous lands, land reform areas and areas in nature conservation units (SNUC). The survey of deforestation in these situations can contribute to deforestation in the biome, without the Soy Moratorium contributing to its control.

The Soy Moratorium contributes significantly with statistical and spatial information for the analysis of deforestation, following legal criteria. The annual publication of the crop year report includes data analysis and interpretation carried out by your GTS. There is a certain influence on the expansion of soy area, which contributes to the reduction of trade in unsustainable products.

The signatories involved in the report have a reputation for issues related to environmental preservation. They are appointed as representatives of civil society Earth Innovation Institute, Imaflora, WWF Brazil, IPAM Amazonia, Greenpeace and The Nature Conservancy. Several companies in the Brazilian agribusiness commodity sector participate in the moratorium, with a direct interest in the monitoring result. The document contributes to mitigating the reputational risk of soy agribusiness in the Amazon biome.

The Soy Moratorium does not prevent deforestation in the Amazon biome, but acts to discourage the market through trade sanctions, which reduce sales options for producers whose rural properties are not compliant. Considering that, according to the report, currently 97.5% of the soy cultivation area used complies with the legislation because it is located in open areas, that is, deforested before 2008, there is an influence on deforestation through the entry barrier to the market.

Sources For Consultation

ABIOVE: https://abiove.org.br/

ANEC:https://anec.com.br/

INPE: http://inpe.br/

PRODES: http://www.obt.inpe.br/OBT/assuntos/programas/amazonia/prodes

Soy on Track: https://www.soyontrack.org/

CCCA:https://climatecrimeanalysis.org/