This means that soy lags far behind other commodities where levels of certified production are much higher. For example, 50 percent of non-farmed whitefish is now certified, 16 percent of coffee and 14 percent of global palm oil production.1
The KPMG paper is published in collaboration with the Sustainable Trade Initiative (IDH), WWF, FMO (the Netherlands Development Finance Company) and the International Finance Corporation (IFC). It is timed to coincide with the 8th International Conference on Responsible Soy (RT8) taking place in Beijing on May 28 and 29, 2013.
A Roadmap to Responsible Soy, part of KPMG’s Sustainable Insight series, identifies the barriers preventing growth in certified responsible soy production and presents an action plan to overcome them. The four key barriers are:
- Weak market demand for certified soy
- Variable availability of certified soy
- Fragmentation of the certification landscape
- The cost of certification for soy farmers.
Co-author of the paper, Jerwin Tholen of KPMG in the Netherlands, says:
“Soy production is soaring driven by population growth and increasing wealth in the developing world. But as production grows so do the industry’s environmental and social impacts. The very low level of certified soy in the supply chain at the moment presents a risk to large-scale users of soy especially food producers and retailers. Global NGO and activist campaigns have targeted palm oil in recent years, but attention is also being paid to soy.
“Addressing the barriers to responsible soy production is not a job for soy producers alone. It needs a collaborative approach across the supply chain from producers and end-users, traders and processors, investors and certification bodies, and governments and consumers.”
Key actions recommended in the paper include:
- Increased commitment to certification by end users of soy including major food and retail brands
- Greater collaboration between the many and various certification schemes to align their assessment criteria and processes, and improve mutual recognition
- Financial support from soy processors to assist farmers in funding the up-front costs of certification
- Greater demand from banks for certification as a pre-condition to providing finance to companies in the soy supply chain
- More financial incentives for certification to be provided by governments, for example through their tax systems.
Analysis by KPMG has shown that there is a convincing business case for many soy farmers in the key producer countries of Argentina and Brazil to invest in certifying their production.
The KPMG study, commissioned by IDH and co-funded by WWF, FMO and IFC, found that the average payback period for soy producers’ investment in certification is only 3 years and, for larger, better prepared farmers, can be as little as 1 year.
Says Jerwin Tholen of KPMG: “Given that end-user companies such as manufacturers of food, animal feed and biofuel, arguably face the greatest risks from slow progress towards certification, KPMG recommends that these companies should evaluate the issues and potential impacts, and develop a response strategy and plan of action.”
A roadmap to responsible soy also includes a framework of actions to assist companies in developing an effective response strategy.
For more information and to download a copy of A Roadmap to Responsible Soy, please visit www.kpmg.com/soy.
Joost Oorthuizen, Executive Director of IDH, says: “This report shows that the market for responsible soy is possible, but also has several flaws that need to be addressed to produce the intended results: halt large scale deforestation, implement responsible agro-management and positive impact surrounding communities. We think that certification that works in combination with an integrated landscape approach focusing on meaningful impact, involving all stakeholders, in vulnerable areas in South America, will improve the production and market for responsible soy and deliver large scale positive social and environmental impact”.
Cassio Moreira, WWF International Soy Lead and Head of Agriculture Programme at WWF Brazil, says: “This important study shows that there is a clear business case for producers to implement RTRS certification. However, the economics are undermined if more supply enters the market without an acceleration of demand. So far, too few buyers of soy have made commitments to certified responsible soy and fewer still have started purchasing it. This exposes users of soy to significant risks in terms of illegality, deforestation, human rights abuses, and other critical issues. WWF calls on manufacturers, feed companies and retailers to do their part and immediately start buying responsible soy such as RTRS-certified. Only then will more producers be willing to commit to the process of farm improvement and certification and help ensure that valuable forests, savannahs and grasslands in South America remain protected.”
Desmond Fortes, Senior Sustainability Analyst at FMO, says: “This study demonstrates that credible soy certification can make business sense to producers. The report also highlights that the path to responsible soy production involves an array of players in the soy sector and not just soy producers. The roadmap, one outcome of the study, is extremely helpful in identifying clear steps that these sector players must take in order to ensure a greater supply of certified soy in the market.”
Soy Key Facts
- Soy is one of the world’s most valuable food crops, yielding more protein per hectare than almost any other crop.2
- Currently about 70 percent of soy produced is used in animal feed. 3
- Brazil and Argentina account for nearly half of global soybean production.4
- 10 million hectares of new land for soy production were added in Brazil between 2000 and 2010 (an area roughly equal to the size of South Korea), a growth of 73 percent;
- 8 million hectares were added in Argentina, a growth of 75 percent.5 It is estimated that up to half of this area may have been newly deforested.
About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
The Sustainable Trade Initiative (IDH) accelerates and up-scales sustainable trade by building impact oriented coalitions of front running multinationals, civil society organizations, governments and other stakeholders. Through convening public and private interests, strengths and knowledge, IDH programs help create shared value for all partners. This will help make sustainability the new norm and will deliver impact on the Millennium Development Goals 1 (poverty reduction), 7 (safeguarding the environment) and 8 (fair and transparent trade).
The World Wide Fund for Nature/World Wildlife Fund (WWF) is the world’s leading environmental organization, with more than 1,300 projects operating in over 100 countries. WWF’s vision is to build a future in which people live in harmony with nature. The WWF Markets Transformation Initiative seeks to shift markets of high impact food, fiber, and biofuels commodities toward sustainable production through its more than 50 commodity experts working around the globe, transformative work with industry, engagements with more than a dozen leading global financial institutions, and involvement with multiple industry roundtables. Together with large retailers, manufacturers, traders and investors, commodities can be produced more efficiently and responsibly, achieving significant environmental results for the planet’s most critical ecosystems.
FMO (the Netherlands Development Finance Company) is the Dutch development bank. FMO supports sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. FMO believes a strong private sector leads to economic and social development, mpowering people to employ their skills and improve their quality of life. FMO focuses on three sectors that have high development impact: financial institutions; energy; and agribusiness, food and water. With an investment portfolio of €6.3 billion, FMO is one of the largest European bilateral private sector development banks.
IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector. It helps developing countries achieve sustainable growth by financing investment, providing advisory services to businesses and governments, and mobilizing capital in the international financial markets. In fiscal 2011, amid economic uncertainty across the globe, IFC helped its clients create jobs, strengthen environmental performance, and contribute to their local communities—all while driving our investments to an all-time high of nearly US$19 billion.
About RT8 (The 8th International Conference on Responsible Soy)
The Round Table on Responsible Soy Association (RTRS) will convene its International Forum on Responsible Development of the Soybean industry, in Beijing, China, May 28-29, 2013 under the theme “Building Global Bridges for Responsible Soy.” Sessions will cover such topics as the latest development in the soy production and trade in China, Chinese overseas investments in the soy sector, best practices for responsible expansion of soy, and the opportunities and challenges of building a global market for responsible soy.
For more information, please contact:
Global Communications Manager, Center of Excellence for Climate Change & Sustainability
+ 44 7815 778798
Global Director of Thought leadership, Center of Excellence for Climate Change & Sustainability
+ 31 6 4676 1884
1WWF, The 2050 Criteria (PDF 12.5 MB ), 2012
2Profundo, Verdeling van de economische waarde van de mondiale sojateelt, 2012
3Commodity Platform, Strategies for reducing the negative impacts of soy production
4ISTA Mielke, Germany
5Productschap Margarine, Vetten en Oliën (MVO), Factsheet soy, 2011