Wake up daily to our latest coverage of business done better, directly in your inbox.


Get your weekly dose of analysis on rising corporate activism.


The best of solutions journalism in the sustainability space, published monthly.

Select Newsletter

By signing up you agree to our privacy policy. You can opt out anytime.

Leon Kaye headshot

Indirect Suppliers, Deforestation and Brazil’s Beef Industry

By Leon Kaye

When it comes to climate change, Brazil has long been in the crosshairs for the continued deforestation in the Amazon, as well as across the country’s savannah-like cerrado region.

Environmentalists point out the Amazon's crucial role as the region’s and even world’s lungs, and the cerrado is also important for its biodiversity. Brazilians respond with the valid point that it is their right to develop their natural assets into capital however they see fit: Europeans, and later North Americans, turned forests into financial assets as they evolved from agrarian to wealthy industrial societies. From Brazil's perspective, they are doing the same, and much of this transformation can be seen with the growth of the nation's beef industry.

During last week’s Global Roundtable on Sustainable Beef in Banff, Alberta, Canada, TriplePundit spoke with Simon Hall, manager of the tropical forest and agriculture projects at the National Wildlife Federation, about where Brazil’s meatpacking industry has made strides and where improvements need to be made.

Why is Brazil’s beef industry central to this debate?

Prominent in this debate is Brazil’s beef industry, which boomed in recent years as more Brazilians can now afford this protein and more regions abroad (especially China, Russia and the European Union) import it. Environmental NGOs say the global beef sector is the world’s largest contributor to deforestation -- even more than palm oil, soy and timber – and what is happening in Brazil sums up how this industry operates.

The good news on deforestation in Brazil, Hall told us, is that after years of tensions between Brazil’s government, business and environmental activists, the evidence suggests the sector is changing its business practices. It's becoming much more cognizant of its impact and, therefore, more responsible. Systems such as PRODES, a satellite monitoring system that gauges deforestation in the Brazilian Amazon, and CAR, which requires landowners to electronically register environmental information about their properties with the Brazilian government, are among the tools meatpackers can use to ensure their supply chains are more responsible and sustainable.

Indeed, improved technology and greater transparency contributed to progress across Brazil. But a massive hurdle remains, say environmentalists and human rights activists: The indirect suppliers that comprise an integral cog in Brazil’s complicated beef supply chain mean the industry still contributes to significant deforestation.

So, what are indirect suppliers?

In the more linear beef supply chains throughout the European Union, Canada and the U.S., a large beef producer such as a Cargill or Tyson Foods generally has tight control over all stages of production. This is true from breeding to fattening to slaughter, either within a company's operations or via long-term contracts with ranchers and producers. The upshot is that traceability is simple, for the most part, as monitoring cattle from farm to retailer is a relatively seamless process.

But in Brazil, the beef industry’s supply chain is much more nebulous. Indeed, the country’s three largest meatpackers, JBS, Marfrig and Minerva, have made much progress. Their use of satellite imagery and other technologies to monitor direct suppliers offer stakeholders transparency.

Nevertheless, there is a huge caveat: Those operations only go as far as the suppliers who have contracts with these meatpackers – and those direct suppliers only offer traceability during their cattle’s last three to 12 months, which is the fattening stage before slaughter.

The problem is that during the three main stages of livestock raising – breeding, rearing and even fattening – the big three Brazilian meatpackers' direct suppliers are likely to purchase cattle from ranchers who could be responsible for illegal deforestation. For example, an independent Brazilian rancher could suddenly decide to sell a herd of calves to his or her counterpart due to poor cash flow. Or livestock could be auctioned off if the price for cattle reaches a high mark. So, instead of an industry that operates based on long-term contracts -- which would improve traceability and environmental and social performance -- the result is an unwieldy spot market that makes it a challenge for companies to guarantee their cattle were raised without any links to deforestation.

Those dynamics make it possible for cattle to be sold several times before it's acquired by a JBS, Marfrig or Minerva. And along the way, someone, somewhere could have cut corners -- as in cutting down forests to create more pasture land. Indirect suppliers may also participate in “land grabbing,” as in illegal occupancy or even stealing land to which they have no title, which is endemic across Brazil.

To be clear, many players within the beef industry are aware of these problems and are working hard to solve them.

“While there are still a lot of issues, it’s important to recognize the progress that has been made within Brazil's beef industry,” Hall told TriplePundit. "It’s always easy to point out the flaws. But let’s remember: Those three meatpackers have invested considerable resources in sophisticated monitoring and purchase-control systems that check thousands of properties, enabling them to monitor, support and, if necessary, block suppliers who are not compliant.”

Change unfolded over several years. The big three Brazilian meatpackers' improvement on environmental and social issues dates back to agreements they made with Greenpeace back in 2009. The results are improvement on the environmental front, as now these meatpackers will not purchase cattle from suppliers who are linked to recent deforestation. But as Hall pointed out, the meatpackers’ systems do not yet effectively monitor indirect supplying ranches. Since cattle can spend up to 75 percent of their lives on these indirect supplying ranches, with nearly no monitoring or accountability, the beef sector must focus here if the industry can come close to becoming truly deforestation-free.

What are the potential solutions?

Despite these frustrations – recently aired by Greenpeace -- Hall made it clear that the big three Brazilian meatpackers cleaned up their supply chains far more rapidly than anyone could have imagined just a few years ago. But improvements in three key areas must be made.

First, more meatpackers must commit to the level that JBS, Marfrig and Minerva have, which would make more of Brazil’s beef supply chain more transparent. That transparency, in turn, makes it possible to advance traceability standards for indirect suppliers. And finally, more third-party audits are needed to ensure companies follow through on their deforestation and social responsibility commitments.

The bottom line is: Brazil’s beef industry, as it feeds more of the world, must become more efficient. Environmentalists are quick to malign the beef industry in North America, but the cattle-raising process in the U.S. and Canada occurs relatively fast in what is generally a 24 month- to three year-cycle.

In Brazil, however, the process takes another year; and that means the industry is exposed to a larger window of time during which trees can be felled or local residents can be booted off their land. Better feed, as in improved grass blends that are easier to digest and therein more nutritious for cattle, can help shorten that cycle. In turn, the environmental benefits would include as much as 25 percent less methane emitted into the atmosphere as well as reduced water consumption. Results would also trickle down to an overall improved stewardship of the land, which means less pressure and temptation to cut down forests and replace them with pastureland or farms growing feed.

Finally, while the world focuses on the Amazon, multi-stakeholder action across the region is working. But now the beef industry is using land and resources across the cerrado – a region that does not have the star power of Brazil’s rain forest biome, but is still important for its biodiversity. Monitoring systems that work well in the Amazon must be adapted and applied to this region in order to mitigate deforestation and the industry’s impact on human rights.

Image credit: CIFOR/Flickr

Leon Kaye headshot

Leon Kaye has written for 3p since 2010 and become executive editor in 2018. His previous work includes writing for the Guardian as well as other online and print publications. In addition, he's worked in sales executive roles within technology and financial research companies, as well as for a public relations firm, for which he consulted with one of the globe’s leading sustainability initiatives. Currently living in Central California, he’s traveled to 70-plus countries and has lived and worked in South Korea, the United Arab Emirates and Uruguay.

Leon’s an alum of Fresno State, the University of Maryland, Baltimore County and the University of Southern California's Marshall Business School. He enjoys traveling abroad as well as exploring California’s Central Coast and the Sierra Nevadas.

Read more stories by Leon Kaye