Soybeans

Globally traded and highly versatile, the soybean is the world’s largest source of animal protein feed and the second largest source of vegetable oil. Climate change and deforestation are the most salient issues associated with soybean production.

This brief provides a summary of the main environmental and social factors that affect soybean production worldwide; however, it spotlights key players in the U.S. value chain and provides examples of actions being taken by companies operating or headquartered in the U.S.

KEY TAKEAWAYS

  • Soybean production has more than doubled worldwide over the past 20 years, expanding into a $123 billion market. As global demand for meat has increased, the use of soybeans in livestock feed has exploded. In human food products, soybeans are used as a cooking oil, a source of protein in meat and dairy substitutes and an ingredient in many processed food products.
  • Deforestation and the loss of native vegetation is the most salient, region-specific issue associated with soybean production. It is a significant driver of greenhouse gas emissions and leads to the loss of biodiversity, which impacts not only the health of the local ecosystem but also the local populations that depend on these natural resources to survive.
  • In the Amazon Basin, the Atlantic Forests and the Brazilian Cerrado, carbon dioxide emissions (CO2) from land conversion are significant. Based on the Cerrado alone, this equals about 60 percent of Spain's total emissions in 2015. While the Soy Moratorium in Brazil has reduced impacts on the Amazon, the loss of native vegetation in areas like the Cerrado, that are not covered by the Moratorium, remain a material business risk.
  • Investors should address risk in the soybean supply chain through direct engagement with their portfolio companies and by supporting relevant policies and multi-stakeholder collaborations. Effective implementation of a company's policies requires promoting commodity traceability and having a clear approach to supplier engagement, verification and disclosure of progress. 

Environmental and Social Factors that Drive Risks

Commodity Background

  • The Vast Majority of Global Soybean Production is Used to Feed Animals
  • Globally traded and highly versatile, soybeans are the world’s largest source of animal protein feed and the second largest source of vegetable oil.
  • About 85 percent of global soybean production is crushed into meal and vegetable oil. The other 15 percent is sold as whole beans. 
  • Of the soybeans crushed: 80 percent is used for meal; 20 percent for vegetable oil.
  • For the meal: virtually all (98 percent) is used to feed animals (e.g., pigs, poultry, cattle and farmed fish); 2 percent is processed for food use. 
  • For the oil: most (95 percent) is for food use — cooking oil and processed food products such as margarines, dressings and mayonnaise—with the remainder (5 percent) used for industrial products such as fatty acids, soaps and biodiesel.

Top Production Regions

The U.S., Brazil and Argentina account for more than80 percent of global soybean production. 

CERES

Supply Chain

The soybean supply chain is complex and includes many sectors, however a small group of big companies control large volumes of production at key points in the supply chain.  

CERES

Company Examples

McDonald's

McDonald’s in Europe is striving for 100 percent sustainably certified soy in its chicken meat supply chain by 2020. In 2014, its suppliers of chicken products purchased more than 58,000 RTRS credits, which covered about 20 percent of McDonald’s soy needs.

Smithfield

Smithfield, as a pork producer which purchases large quantities of animal feed containing soybean meal, has set a goal to have 75 percent of its grain purchased go through a fertilizer optimization and soil health program by 2018. In 2016, 55 percent of Smithfield’s total grain purchases came from farmland participating in the SmithfieldGro Program and/or the Land O’Lakes’ SUSTAIN™ sustainability platform.

Unilever

Unilever sourced 72 percent of its soy oil from sustainable sources in 2017. In the U.S., soybeans are Unilever’s most important agricultural raw material, as the oil is used in Hellmann’s mayonnaise. As part of its commitment, Unilever partnered with ADM and other important stakeholders in a program that helps soy farmers and soy oil suppliers in Iowa increase the use of cover crops and qualify for cost share payments. This program involved around 170 farmers cropping more than 26,000 acres in 2017.