A recent paper published by global auditing firm KPMG has stated that only three percent or less of the world’s soy supply is currently certified under one of the standards designed to promote more responsible production.
The report identifies the barriers that are preventing growth in responsible, certified soy production and proposes an action plan to overcome them.
The paper titled – A Roadmap to Responsible Soy: approaches to increase certification and reduce risk, was a collaboration with the Sustainable Trade Initiative (IDH), WWF, FMO (the Netherlands Development Finance Company) and the International Finance Corporation (IFC).
The reports emphasises that sustainable production of soy is paramount as it is one of the world’s most valuable crops, yielding more protein per hectare than almost any other crop.
The paper highlights the fact that soy is lagging far behind other commodities which have demonstrated increasingly higher levels of certified production with examples including: 50 percent of non-farmed whitefish, 16 percent of coffee and 14 percent of palm oil production.
Jerwin Tholen of KPMG and co-author of the report, says that unsustainable soy production is having significant environmental and social impacts.
“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," he said.
“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.”
The four key barriers identified in the report include:
- Weak market demand for certified soy
- Variable availability of certified soy
- Fragmentation of the certification landscape
- The cost of certification for soy farmers.
Key recommendations made in the report 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
The study has found that there is a convincing business case for many farmers from key producing companies such as Brazil and Argentina to invest in certifying their production, with the average payback period being only three years and only one year for larger farmering operations..
Tholen adds, “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.”