rachael d. garrett
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Interactions between Global Supply Chains, Land Use, & Governance: The Case of Soybean Production in South America. Rachael D. Garrett Postdoctoral Fellow in Sustainability Science Harvard University [email protected]. - PowerPoint PPT PresentationTRANSCRIPT
Interactions between Global Supply Chains, Land Use, & Governance: The
Case of Soybean Production in South America
Rachael D. Garrett Postdoctoral Fellow in Sustainability Science Harvard University
Data: FAO STAT
Population & income growth & urbanization are increasing demand for livestock products
90,000,000
140,000,000
190,000,000
240,000,000
290,000,000
Soybeans
19861988
19901992
19941996
19982000
20022004
20062008
201055,000,000
68,000,000
81,000,000
94,000,000
107,000,000
Pig Meat
Notes: Yields are country averages.Data: FAOSTAT
Soybean area and yields by country -1986 & 2010
• Increased demand met both by increased yields & increased area, esp. in Argentina & Brazil
Garrett, Rueda, Lambin – Environ. Research Letters, Forthcoming
(Δ KM2)
2000-2010
<-4000-3999 to -500-499 to -250-249 to 01 to 250251 to 500>500
Clark et al. 2010
Land cover change in South America from Agricultural Expansion
Woody Vegetation Area Agriculture & Herbaceous Area
Counties w/ 50,000 ha or more of agricultural expansion in last 10 years
What can be done to halt land cover change in the Amazon, Cerrado, and Chaco for cropland expansion, while still allowing Brazil to develop (via agricultural intensification & value added
activities)?
Motivating question
• Interactions between the supply chain actors, institutions, land use
Knowledge gaps
• Non-linear feedbacks that can lead to rapid and unexpected changes
Questions Addressed
• How do consumer preferences in Europe influence trade & supply chain infrastructure in Brazil?
• How does supply chain infrastructure influence Brazilian farmers’ ability to access premiums for environmentally responsible soy?
• How does competition & diversity in the supply chain influence prices, rules, & information faced by farmers, thereby influencing incentives to expand cropland?
Questions Addressed
• How do consumer preferences in Europe influence trade & supply chain infrastructure in Brazil?
• How does supply chain infrastructure influence Brazilian farmers’ ability to access premiums for environmentally responsible soy?
• How does competition & diversity in the supply chain influence prices, rules, & information faced by farmers, thereby influencing incentives to expand cropland?
European Soy Preferences
• > 70% of Japanese & European consumers prefer foods that do not contain GM materials
• GM imports are not banned, but must be labeled – Meat & dairy products are excluded
• Total demand for certified non-GM soy is about 10% of world export market
• Now also asking for soybeans that do not result in deforestation – “Environmentally Responsible”
• Shift trade patterns• Incentivize land use through price premiums – Non-GM & eco-certification programs
Potential Effects of Preferences
Notes: Total includes only North and South America.Data: Isaaa.org
Total Non-GM soy area by country – 1996 & 2010
80% decrease
Non-GM soy area as % of total soy area
Production of non-GM soy
Garrett, Rueda, Lambin – Environ. Research Letters, Forthcoming
• Many EU countries with a strong non-GM preference shifted their imports to Brazil and away from countries that decreased their non-GM soy area, despite prices favoring US & Argentina
Garrett, Rueda, Lambin – Environ. Research Letters, Forthcoming
RTRS area by state - 2012
Data sources: Responsiblesoy.org, proterrafoundation.org, & direct communication
>160,000 hectares controlled by Maggi Group
Country Argentina Bolivia Brazil Paraguay Uruguay Canada China India USA
ProTerraHa
- - 1,100,000 - - - - - -RTRS 123,687 - 230,768 2,765 372 - - 29,801 -
Total eco-certified area by country - 2012
• Brazil’s continued production of non-GM caused EU importers to shift trade to this country
• The development of supply chains able to segregate GM from non-GM soybeans gave Brazil an advantage in producing eco-certified soy
• Mato Grosso has been state most able to capitalize on certifications; especially large traders that have highly vertically integrated supply chains
• Ironic because Mato Grosso is the state that experienced highest levels of direct deforestation for soy in 2000-2010 period (Macedo et al 2012)
Conclusions
Question Addressed
• How does competition & diversity in the supply chain influence prices, rules, & information faced by farmers, thereby influencing incentives to expand cropland?
Output & Prices
Ricardian & Thunian theories of rent (profit)
Biophysical conditions
Distance from markets Technology
Incentives to expand
New economic geography theory - Process of agglomeration
• Agglomeration creates positive externalities - Better prices, info, technology
• Influences incentives to expand
Profit from existing biophysical conditions &
transportation costs
Number of producers that location in region
Number of specialized agricultural firms that can
be supported
Variety of technology & services produced
in the city
Garrett, Lambin, Naylor – Land Use Policy, 2013; (based on Fujitsa & Krugman 1996)
Garrett, Lambin, Naylor – Land Use Policy, 2013
Case studies
Input reseller 1
Farmer networks & access to services
Input reseller
Sojeiro
CargillAves Para
Syndicate
HSBC
Sojeiro
Cargill
Nideira
ADM
Bunge
Noble
Caramuru
COOP. Sorriso
APROSOJA
Syndicate
EMBRAPAFIAGRIL
Dreyfus
Maggi Group
SICRED
RabobankBank of
Brazil
Input reseller 2
Santarém: good biophysical condtions low transport costs
Sorriso: good biophysical conditions high transport costs
Santarém Sorriso
Crop Area in Case Studies
1990 1995 2000 2005 20100
100,000
200,000
300,000
400,000
500,000
600,000
700,000Soy
Corn
Rice
Area
(1,0
00 H
a)1990 1995 2000 2005 20100
10,000
20,000
30,000
40,000
50,000
60,000
70,000Rice
Soy
Corn
Area
(1,0
00 H
a)
Source: IBGE
63% of area in soy<1% of area in soy
20111990
Garrett, Lambin, Naylor – Land Use Policy, 2013
Garrett, Lambin, Naylor – Land Use Policy, 2013
Case studies
Input reseller 1
Farmer networks & access to services
Input reseller
Sojeiro
CargillAves Para
Syndicate
HSBC
Sojeiro
Cargill
Nideira
ADM
Bunge
Noble
Caramuru
COOP. Sorriso
APROSOJA
Syndicate
EMBRAPAFIAGRIL
Dreyfus
Maggi Group
SICRED
RabobankBank of
Brazil
Input reseller 2
Santarém: good biophysical condtions low transport costs
Sorriso: good biophysical conditions high transport costs
enabling institutions
constraining institutions
• Clustering of many related agribusiness firms together creates many positive externalities that can overcome disadvantages from high transportation costs – lead to rapid expansion
• Institutions influence how local supply chains develop
Garrett, Lambin, Naylor – Land Use Policy, 2013
Conclusions
Source: Google Earth
Sorriso - 1990Sorriso - 2010
• Consumer preferences influence trade flows & supply chain structures, which influences producers ability to adopt eco-certifications
Conclusion
• Institutions help determine how supply chains develop, which influences profitability, compliance w/ rules, & incentives to expand cropland area
Non-linear process that amplify role of roads,
climate, policy interventions, etc..
Can lead to unexpected development patterns
Questions?
Rachael D. Garrett Postdoctoral Fellow in Sustainability Science Harvard University