Tuesday, November 11, 2014

[biofuelwatch] Oil palm set to take over from cattle ranching as the biggest threat to Brazil’s Amazon rainforest?






http://www.redd-monitor.org/2014/11/10/oil-palm-set-to-take-over-from-cattle-ranching-as-the-biggest-threat-to-brazils-amazon-rainforest/

 

Oil palm set to take over from cattle ranching as the biggest threat to Brazil's Amazon rainforest?

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Despite the reduction in deforestation in Brazil over the past decade, "the deforestation problem is far from solved", notes Datu Research in a recent report about the beef industry and deforestation in Brazil.

Datu describes the most effective tactic in reducing deforestation as "pressure from Western companies that demand deforestation-free supply chains".

Demand for Brazilian beef is increasing. In August 2014, Russia announced a suspension of beef imports from several countries, including the USA, Australia, and the EU.

Even before that announcement, demand was increasing. The Brazilian Beef Exporting Association reports that beef exports increased by more than 10% in the first eight months of 2014.

Datu's report, "Deforestation in the Brazilian Beef Value Chain", presents a useful overview of the beef industry in Brazil. It also looks at a new threat to Brazil's forests: the expansion of oil palm plantations. But Datu doesn't raise the alarm about this expansion, commenting instead that it "could turn out positive or negative for forests".

Brazil's beef industry

The three largest beef processors in Brazil, JBS, Marfrig and Minerva had a 37% market share in 2013, up from 24% in 2011. In Mato Grosso their market share is 68%. Datu reports that ranchers and smaller processors are concerned that these three firms increasingly control the market and distort prices.

Development banks have invested heavily in these three firms. Datu notes that between 2008 and 2010 the Braziliam National Development Bank (BNDES) lentUS$4.4 billion to JBS. And in 2013, the International Finance Corporation, the World Bank's private sector arm, bought a 3% share of Minerva and approved US$60 million financing for the firm.

Illicit cattle operations

Datu reports that "illicit cattle operations still have ample opportunity to enter legitimate supply chains". Datu provides an illustration of how this happens:

Datu argues that ranchers face perverse incentives to continue deforestation: there is no price premium for deforestation-free beef; complying with regulations is costly; and unlicensed ranchers can easily sell cattle.

Industry representatives that Datu spoke to, said that only the smallest ranching operations are unlicensed. Datu explains that this might be partly because of the costs involved. The per hectare cost of obtaining licenses in Pará is R$12.6 for a 500-hectare ranch, but only R$1.7 per hectare for a 10,000-hectare ranch.

"Deeply flawed" land tenure

Another problem facing ranchers is land tenure, which Datu describes as "deeply flawed" in Brazil. Datu reports that,

Several ranchers interviewed for this study have been waiting for years — sometimes more than 20 — to receive a title to their land. Without a title, banks will not approve ranchers for the credit they need to make the costly transition to a deforestation-free operation.

Datu found that it is cheaper for ranchers to clear forest for new land rather than adopting a pasture management system that produces enough grass to fatten cattle. Costs include planting, fences, watering stations, machinery, and fertilizer.

The costs of raising cattle has increased, sometimes beyond the market price for beef. For three years, ranching in Rondonia has not been profitable. A rancher in Pará told Datu that,

"Inputs have become increasingly expensive recently, especially costs to improve productivity. Ranching is not a good business nowadays. So some smaller ranchers still consider deforestation the best way to expand production without having to invest in the land."

Land grabbing and increasing land prices

Meanwhile, Brazil's forests face increased threats from land grabbing. In the state of Pará, for example, much of the deforestation takes place around infrastructure projects such as Transamazônica and highway BR-163.

Land values in the Amazon are increasing rapidly. A rancher in Mato Grosso told Datu that,

"For me, the future of ranching isn't in cattle, but in the appreciation of the land value. I bought this 515-hectare ranch in 2001 for 45,000 reais, and today I can sell it easily for 2.5 million reais."

Datu describes how speculators are clearing forest in Pará and Rondônia in anticipation of ranchers moving further north in search of cheaper land. Researchers have speculated that industrial agriculture is expanding onto ranchland, displacing ranchers who move onto newly deforested land. Datu suggests that attempting to prevent deforestation by soy plantations, for example, may have the effect of shifting deforestation to another commodity. More research is needed, Datu adds.

A new threat: Oil palm plantations

Oil palm plantations are expanding in Brazil. Companies operating in Pará plan to increase the area of oil palm plantations in the state to 329,000 hectares by 2015, more than double the current area. The government of Pará says that by 2022, the area of oil palm plantations just for biofuel will be 700,000 hectares.

The four biggest palm oil companies operating in Para are Agropalma, ADM, Petrobras and Biopalma. All have plans to increase their oil palm plantation areas. In 2010, Petrobras signed an agreement with Galp Energia for a US$530 million project to produce palm oil in Brazil and ship it to Portugal, where it will be refined to biodiesel.

In 2011, the mining giant Vale bought up Biopalma as part of its strategy to produce biodiesel for its machinery and trains. Biopalma opened its first palm oil extraction plant in Para in 2012, part of a US$500 million project. Another plant is planned to open in 2015 to convert the oil to biodiesel.

These are massive industrial-scale operations. Yet Datu suggests that palm oil could be an "environmental win for the Amazon" as long as "only already-degraded land is used".

Elsewhere in the report, Datu comments, somewhat dryly, that,

Given the devastating record of deforestation in Indonesia and Malaysia, the world's two top palm-oil producing countries, it is worth closely monitoring the development of this industry in the Amazon.

Datu describes a range of government-backed incentives through which Agropalma, ADM, Petrobras and Biopalma have started programmes encouraging small producers to plant oil palm on their land.

But as Guilherme Carvalho, from FASE Amazônia, told IPS in 2013, the danger is that palm oil companies are trying "to force family farmers to invest in this monoculture crop and abandon food crops, which would create food insecurity, a loss of autonomy over their land and dependence on market prices."

Jurisdictional approach and REDD – out of the frying pan and into the fire

Datu argues that with the expansion of palm oil and other commodities, "it will become increasingly difficult to attribute deforestation to a specific commodity, making commodity-by-commodity enforcement methods less effective". Instead, Datu and the Environmental Defense Fund (which paid for the report) suggest complementing deforestation-free supply chains with "enforcement and certification mechanisms focused not by commodity, but by jurisdiction".

Datu is promoting a "zero net deforestation" approach, where forest can be cleared in some areas, "as long as other areas are sufficiently reforested to maintain net carbon density". This raises the risk that biodiverse forests could be cleared, and "offset" by monocultures of fast-growing eucalyptus plantations.

Or even oil palm. Datu notes that the Brazilian government sees palm oil as a win-win opportunity: green fuel, green jobs, and a carbon sink "ideal for reforesting lost segments of the Amazon".

The report notes that REDD "has not yet been implemented at sufficient scale to have significant impact". But with the jurisdiction approach, Datu writes that "the stage would be set" for REDD, "giving producers economic incentives". In other words, payments from the sale of carbon credits that would allow greenhouse gas emissions to continue elsewhere.




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Posted by: almuth@ernsting.wanadoo.co.uk



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