UK supermarkets ask commodity traders to maintain Brazil Soy Moratorium

Supermarkets including Tesco, Sainsbury’s and Morrisons have written a letter to the CEOs of commodity trading companies asking them to maintain Brazil's Soy Moratorium despite recent legal uncertainty.

The Soy Moratorium is a sectoral agreement signed in 2006 by grain trading companies such as ADM, Bunge, Cargill, Louis Dreyfus Company and COFCO to eliminate Amazon deforestation from the global soybean supply chain. 

Under the initiative, these companies collectively agreed not to buy soy from farmers that cut down areas in the Amazon after 2008. It is largely seen as a success: in the 2018/19 crop year, it’s estimated that less than 2% of the total soy area was non-compliant with the moratorium.

But in August this year, the moratorium was suspended by Brazil’s competition authority, CADE, which opened an investigation into its signatories for allegedly sharing commercially sensitive information.

If CADE concludes that the Soy Moratorium constitutes a violation of Brazil’s anti-monopoly laws, commodity traders could face fines of 0.1% to 20% of their gross revenue.

‘A serious threat to this vital agreement’

In their letter, the 28 UK food retailers call the Brazilian government’s decision “a serious threat to this vital agreement”. 

“Even though a temporary injunction was put in place concerning the immediate implementation of the order, action is needed to remove any market uncertainty over this time regarding the protections of this vital ecosystem,” they add, noting that CADE itself confirmed that companies may continue to apply the 2008 cut-off date independently and in line with national legislation.

Reminding the commodity traders that their companies remain committed to sourcing deforestation-free soy, the supermarkets urge ADM, Bunge, Cargill, Louis Dreyfus Company and COFCO to publicly reaffirm the 2008 cut-off date for all soy purchases in the Amazon biome, and to maintain compliance with the moratorium.

‘We expect you to be prepared’

“Should any suspension of the Amazon Soy Moratorium occur, we expect you to be prepared to immediately deploy an interim compliance measure on an individual company basis until a longer-term solution is secured,” they write.

Should the sectoral agreement be dismantled, the grocers explain that they will individually evaluate each company’s performance against their own procurement policies – which typically reflect independent benchmarks for responsible sourcing of soy, including the 2008 cut-off date in the Amazon.