China has become the biggest importer of the Brazilian soy, used to produce feed for farmed animals. But this rush for commodities is having consequences on environment and global food security
“Sorriso” in Portuguese means “smile”: it is the name of a town in the heart of Brazil, in Mato Grosso. The city has 90.000 inhabitants and is located in the Cerrado, the largest savannah in South America and one of the main biodiversity reserves globally. But there is very little left of savannah and biodiversity in Sorriso: over 600.000 hectares of soybean crops lie around the town, producing 2,2 million tons of soy, a record amount in Brazil. According to Trase, most soy from Sorriso (60 percent) reaches China.
“In recent years there has been a real surgence of dominance from China,” said Toby Gardner, researcher at the Stockholm Environment Institute and analyst at Trase. “Whereas 15 years ago the European Union dominated the imports of Brazilian soy, we can see that in recent years China really pulled ahead”.
The Trase database follows the soy produced in different Brazilian cities, some in the Amazon, others in the Cerrado. Scrolling the list, Chinese imports’ dominance is clear: from Sao Desiderio, Bahia, in 2018 China imported 56 percent of the 1.5 million tons of soy produced; from Nova Mutum, Mato Grosso, China imported 27 percent of the 1.3 million tons produced; from Nova Ubirata, Mato Grosso, China imported 45 percent of the 1.2 million tons. The list is long: in 2018 China imported 68 million tons of soybeans from Brazil, far more than Brazilian domestic market (18 million tons) and European imports (13 million tons). “And the pattern is continuing right now, in 2019 and 2020,” said Gardner.
“By 2030 China will be the biggest economy in the world, with nearly 30 percent of the global GDP”, said Badi Besbes, from FAO Animal Production and Health Division. “This means that the purchasing power will increase in China, and this reflects directly on the consumption of meat: when the Country becomes richer, the people consume much more meat.”
According to FAO, meat production in China in 2018 reached 441 million pigs (compared to 190 million in Europe and 74 million in the United States) and 13,9 billion chickens slaughtered every year. Per capita meat consumption in China grew from 44kg/year in 2010 to 60,5kg/year in 2018 (far below the average US consumption, 124,1kg/year). “China today represents 21 percent of the global population, but they only have 9 percent of the land and 6 percent of the total water globally. One of the problems of China is how to produce food for their population, and livestock is part of this problem”, said Besbes.
Increased meat consumption means greater demand for oilseeds: “We started working in 1995, but at the time we were only involved in feed production,” said Yuanfei Gao, vice president of the Yangxiang group, a leading company for pork production in China. We met Gao at the company’s headquarters in the Guangxi Zhuang region, Southern China. “Today we supply our farms with the feed we produce. We imported feed processing machinery and technologies from Switzerland and developed a system that allows us to produce up to three tons of feed per hour,” said Gao.
Although the African swine fever epidemic nearly halved the production of Chinese farms in 2019, last year Yangxiang produced over 2 million pigs, and was planning to build several other farms. The number is not huge if compared to other companies in China: the biggest pork producer, Wens Foodstuffs Group, produced 18,5 million pigs in 2019 and told Reuters its plans to increase production to 56 million pigs by 2024. In the first half of 2020 the Chinese government incentivated the construction of 20.000 new pig farms in the country, with a production of further 150 million heads. Meanwhile in August 2020 China signed an agreement with Argentina: 3,8 billion dollars invested to double the argentinian pig production and supply the Chinese market with another 882.000 tons of pork.
A rush for South America
On September 22 Chinese President Xi Jinping announced to the United Nations a long-term commitment for the climate crisis: “We aim to have CO2 emissions peak before 2030 and achieve carbon neutrality by 2060”. According to data from the Global Carbon Project, China in 2018 was responsible for 28 percent of global greenhouse gas emissions: “Humankind can no longer afford to ignore the repeated warning of nature and go down the beaten path of extracting resources without investing in conservation, pursuing development at the expense of protection, exploiting resources without restoration,” said Xi.
For what it concerns “exploiting resources”, however, China seems to go in the opposite direction. In November 2019 Chinese officials flew to Brasilia to sign an agreement promising 100 billion dollars of investments for developing infrastructures to transport raw materials. The agreement is the latest step of a plan to develop roads, railways, ports and other infrastructures in different parts of South America. According to a 2016 report published by the China-Brazil Business Council: “China has the required capital to execute initiatives in this area that are aligned with the interests of the Asian giant in the region, facilitating the outflow of the main products in Brazil’s basket of exports, such as soy and minerals.”
Who pays the bill
If Chinese demand for Brazilian soybeans spikes, Brazil takes profit. For this reason Brazilian president Jair Bolsonaro, who called China “a predator” during the 2018 election campaign, now welcomes Chinese investments. But resources are limited and if there is over-exploitation, someone has to pay for that.
The increase of Brazilian soybean production is putting pressure on Amazon forest and Cerrado. “In 2019 we estimated that about 100.000 hectares of Cerrado were cleared with the intent to grow soy”, said Toby Gardner. In 2019 Brazil became the world largest soybean producer, but in the same year, a record amount of fires were lit in Amazon and Cerrado.
Meanwhile Chinese demand for soy and other food commodities is producing consequences on food prices globally. “Brazilians have never exported so much to China and they have never had such high prices,” said Enrico Zavaglia, oilseed trader for the Italian company CerealDocks. “In the last months China has doubled its buying, it is replenishing stocks, has an exaggerated demand for seeds in Brazil and US”. According to Chinese authorities, China imported 8,69 million tons of soybeans in October 2020, with an increase of 41 percent compared the previous year. “All this has caused prices to rise”, said Zavaglia, “and someone is starting to say: now how are we going to deal with such high prices?“.
In November 2020 global food commodity prices rose sharply to their highest level in nearly six years, according to a benchmark United Nations report. The rise of prices shows the consequences of a scenario of tight competition for food resources. “It’s the whole model that we question. People used to eat much less meat in the past”, said Badi Besbes from FAO. “The livestock sector requires a lot of lands to produce feed and for some species they are in direct competition with the staple food with humans, so the equation is not simple.”