2.

Exports of forest-risk commodities from South America

Highlights:

  • Of the 2,500 traders exporting 450 million tonnes of forest-risk commodities from South America, just 36 account for over half of exports.
  • Trase data detail the activities of traders in forest risk commodity supply chains, revealing that many of the largest companies have operations that extend over multiple commodities and multiple producer countries.

 

Agricultural commodities connect many thousands of producers in the tropics with many millions of consumers worldwide. However, most traded commodities are handled by a relatively small group of traders, many of which are active in several commodities and in multiple countries.

Using Trase data, it is possible to analyse in detail the activities of these traders across entire markets, and assess their current and potential role in moving towards more sustainable supply chains.

This chapter presents the most recent data on the main traders engaged in exporting seven forest-risk commodities from for nine key South American countries. The data are for 2017, except in the case of Bolivia, were data are for 2014 – the latest year for which Trase data are available.

The nine countries exported a total of more than 450 million tonnes of soy, palm oil, palm kernel oil, cane sugar, maize, cocoa and coffee in 2017. These exports were handled by well over 2,500 traders; but just 36 traders accounted for half of all exports.


Exports of forest-risk agricultural commodities from Argentina, Brazil, Colombia, Costa Rica, Ecuador, Paraguay, Peru and Uruguay in 2017 and Bolivia in 2014. Companies that account for at least 1% of exports of any of seven forest-risk commodities (cocoa, coffee, maize, soy, cane sugar, palm oil and palm kernel oil) are identified. Clicking on the diagram allows you to zoom in on a single company, commodity or country and explore the linkages. Relative sizes are based on tonnage values which are calculated as raw equivalents.

Linking traders to commodities

Companies trading sugar, and sugar-based products like ethanol, represent a significant proportion of exports of these seven commodities. Four of the top ten traders exclusively export sugar products.

The remaining top traders export multiple commodities. And much of the traded volume is made up of maize, soy and cane sugar, coming particularly from two global powerhouses of agricultural production, Brazil and Argentina.

Exports of sugarcane products are also notable for the fact that Brazilian production dominates. The top 20 sugar traders in South America exclusively source from Brazil.

Click on a commodity or company to explore further.

 

Soy and maize exporters, on the other hand, show more diversity. Several of the same traders are dominant in both commodities, notably Archer Daniels Midland (ADM), Bunge, Cargill and COFCO. All of these companies are well established in multiple producer countries, particularly Argentina, Brazil and Paraguay. Chapter 4 gives more information on the sourcing patterns of these companies, while chapters 5 and 6 explore the exposure of these companies to deforestation risk, and linkages between voluntary zero-deforestation commitments and changes on the ground.

Slightly further down the list of major soy traders, we find companies that have a vital role to play in particular producer countries. For example, Amaggi (Brazil), Vicentin (Argentina) and Aceitera General Deheza (Argentina) export the vast majority of their soy from a single country.

 

Soy is the most valuable internationally traded forest-risk commodity. Photo credit: Toby Gardner

Soy, corn and sugarcane products make up the majority of exports by weight. However, it is helpful to look at other forest-risk commodities to get a clearer picture of these supply chains.

South American cocoa exports are dominated by Ecuador, while Brazil and Colombia dominate coffee exports. Olam stands out as a major trader in both cocoa and coffee exports. It sits alongside other familiar names, including major traders of other agricultural commodities, such as Louis Dreyfus and Cargill, and major manufacturers like Nestlé.

Click on a commodity or company to explore further.

Significant challenges abound. But so too do big opportunities for positive change

The highly consolidated trade in forest-risk commodities illustrated by these data creates both important opportunities and significant challenges for moving towards more sustainable supply chains.

On the one hand, the key players can exert tremendous leverage to promote superior standards among thousands of producers, in terms of avoiding deforestation, agricultural practices, labour conditions and many other aspects of sustainability.

On the other hand, their dominance gives them considerable power to suppress farm-gate prices, exert political influence, and justify their practices in the name of food security, often at the expense of social or environmental concerns.

Later chapters in the Trase Yearbook 2018 assess in more detail how a handful of major traders are involved in the supply chains of Brazilian soy, their potential exposure to deforestation risk, as well as the impact of their commitments to combating tropical deforestation.