Reducing Deforestation from the Beef Supply Chain: the Story of the Good Growth Partnership

August 26, 2022

Paraguay, Environment

© UNDP Green Commodities Programme

Supply chains, as most stakeholders know all too well, are intensely complicated and difficult to understand. It's understandable therefore that many of the programmes aiming to improve sustainability and in particular deforestation in agricultural supply chains target one or two big issues that seem controllable, as targets for change. That can never succeed, however, because it doesn't take into account the interconnections, dependencies, and influences that define supply chain systems. This is what makes the Good Growth Partnership (GGP)[1] and our Integrated Approach to supply chain transformation different: we actively explore and work with the complexities of supply chains, addressing them as entire and interconnected systems, in order to create change. Our philosophy is to try to unpack obstacles, knowing that meaningful, lasting system change in commodity supply chains means understanding and creating effective interventions in production, demand, and finance – and adaptive, nuanced ways to monitor and evaluate outcomes. The beef supply chain is a good example of this approach, because its tight relationship with the soy supply chain makes beef production even more complicated than many others, and its impact on land conversion and deforestation has far-reaching consequences on biodiversity and ecological stability.

Beef is often framed internationally as a key climate issue, but in reality, the environmental impacts are much greater at the landscape than the atmospheric level. Indeed, in climate terms, fossil fuel combustion for energy is by far the biggest contributor to global emissions (at 73%), compared to just 5.8% from livestock and manure[2]. At the landscape level, on the other hand, beef production is the top driver of deforestation in the world’s tropical forests,  generating more than double the forest conversion of soy, palm oil, and wood products (the second, third, and fourth biggest drivers) combined. Beef also drives conversion of non-forest landscapes, from grasslands to savannas[3]. While the nature- and climate impact of beef production is set to grow as global demand for meat rises due to an increase in disposable income in many developing countries, there are other, more pressing challenges for beef producers in tropical and sub-tropical landscapes, such as securing increased demand and better market prices, and keeping costs low and production efficiency high, which can drive important decisions about land-use conversion. Given this context, producers may need compelling arguments, which speak to their needs and interests, to invest time and resources in increasing the sustainability of their beef production.

Paraguay is the world’s sixth largest beef exporter, and its agriculture sector employs almost half the population. The government plans to increase Paraguay’s agricultural exports, which though economically expedient, raises the risks of ecological exploitation in the Chaco, a vast semi-arid region encompassing the entire western half of the country, which is already fragile. Beef producers in Paraguay are bound by law to set aside at least 25% of forest on their land, which sets a national standard in beef production, even though monitoring and enforcement systems still need to be strengthened. Nonetheless, areas of ecological vulnerability could be more explicitly addressed in Paraguay’s agricultural development plans, to help maintain ecosystem integrity and the essential connector role of biodiversity corridors. Hence, the unique and valuable biodiversity and indigenous cultures of the Chaco are vulnerable to unsustainable agricultural expansion, but understanding how best to protect them, while at the same time supporting economic development, is difficult. In recent years the private sector and the government of Paraguay have made significant public commitments on climate adaption and mitigation, touching on land-use change, but the systemic sustainability challenges of the beef supply chain require coordination with multiple tools, sectors, and partners.

 


[1] Working across production, financing and demand, the Good Growth Partnership (GGP) convenes a wide range of stakeholders and initiatives to reduce deforestation and enable sustainable development. In its pilot phase (2017-2022), the GGP was funded by the Global Environment Facility, led by the United Nations Development Programme and implemented in collaboration with Conservation International, the International Finance Corporation, UN Environment and World Wildlife Fund. It focused on three global commodity supply chains - soy, beef and palm oil – and four countries associated with them – Brazil, Paraguay, Indonesia and Liberia.

[2] https://ourworldindata.org/emissions-by-sector; 2020

[3] https://www.worldwildlife.org/magazine/issues/summer-2018/articles/what-are-the-biggest-drivers-of-tropical-deforestation

Silvopastoral system in Alto Paraná

© UNDP Green Commodities Programme

With legal frameworks already providing limits on land uses, and with globally negligible carbon emissions, it’s understandable that Paraguayan beef producers sometimes struggle to see why they should raise their sustainability standards – especially when that investment may not always be recognised with better returns from the international market. However these are the kinds of barriers and bottlenecks the GGP sets out to identify, in order to help Paraguayan producers improve their operating environment, in terms of local and global economics, socio-political agreement, and ecological stability. Through our Integrated Approach, we engage with supply systems as complete units, seeking out complexities like contradictory policy, market imbalances, or fiscal incentives. Change requires sensitivity, understanding, and the capacity to offer attractive, compelling, and workable alternatives to the status quo. Just like fomenting change in Brazilian soy, or Indonesian and Liberian palm oil incentives (or blocks) in legal frameworks, markets, finance, perception, and relationships need to be created to motivate change in beef production. Demonstrating to producers the benefits they can get by adopting more sustainable practices including higher productivity and increased resilience to climate events has been a central contribution of the GGP, changing the attitude of producers from a defensive to a constructive approach on sustainability issues.

To achieve this, we have been supporting policy and governance, as well as pioneering efforts to better understand the beef supply chain system, and working in advocacy, training, and support at the levels of production, demand, sustainability definitions, and finance. Despite outstanding work in the private sector, traditional approaches to addressing deforestation and sustainable agricultural practice have often neglected the need to develop effective land use governance and policy frameworks. The GGP has helped facilitate engagement between the private sector, government, and civil society, through multi-stakeholder platforms which build trust and a shared vision, despite multiple interests which frequently diverge.

One of these platforms, in the Paraguayan Chaco, developed a Beef Action Plan. Stakeholders are now working together to implement the plan, which includes actions to strengthen policy, as well as improving the producer support system for sustainable production, keeping in mind the diversity of producers present in the Chaco, from indigenous communities to large cooperatives. The GGP also helped provide the foundations to strengthen the enabling environment for sustainable beef production, by supporting the development of policy reform and improvement of existing regulations, so that they allow and incentivise better land use allocation and protect endemic Chaco biodiversity. Part of the GGP’s work here has also involved clarifying and defining which areas of production landscapes need to be protected, and how to create the frameworks to do so in a healthy, sustainable economic setting. To this end, we have been working with public and private stakeholders in Paraguay to define regional criteria to identify areas equivalent to High Conservation Value (HCV) and/or High Carbon Stock (HCS)[4], so that planned agricultural expansion can avoid important conservation areas. Some more information on concrete results can be found in this Impact Brief Overview and its interlinked Impact Briefs.

We have also piloted an exercise to map and better understand the Paraguayan beef supply chain. The process has helped to identify areas where deeper engagement and collaboration can have a high ripple effect, as well as issues that need to be better understood because they make change difficult. Two key variables in the system map were ‘attractiveness for investors to purchase land for agricultural production’ and ‘ability of government to change or enforce laws on sustainable production practices’. Both are integral to the perceived value of protecting forest, as opposed to converting it to other purposes. Effective, workable laws require a strong understanding not only of what needs to be protected, but also what needs to be produced, within a mutually supportive, ‘sustainable’ society. Understanding which legal or fiscal frameworks are promoting imbalance between economic, ecological, and social sustainability helps identify areas for improvement which benefit many stakeholders. For example, under current regulations in Paraguay, natural forest has no financial value – fiscal structures mean that cutting trees down is more profitable than protecting it. Knowing where to focus efforts and resources to change that is tremendously powerful, and the GGP’s Integrated Approach helps identify those intervention points.

 


[4] The High Conservation Value (HCV) and High Carbon Stock (HCS) Approaches aim to identify and protect areas important for conservation and livelihoods – and to support no deforestation commitments. The HCV Approach is a methodology to identify, manage, and monitor important environmental and social values in production landscapes – across any ecosystem or habitat type (including aquatic ecosystems, grasslands and other non-forest ecosystems). There are six categories of HCVs covering biodiversity, rare ecosystems, ecosystem services, landscapes, and livelihoods and cultural values. The HCS Approach is an integrated conservation land use planning tool to distinguish forest areas in the humid tropics for conservation from degraded lands that may be developed while ensuring the rights and livelihoods of local peoples are respected. There are four main classes of HCS forests which range from high to low density forests and young regenerating forests. Different areas within a landscape can be attributed with one or more HCVs, as applicable; there is also a high degree of overlap between HCS forests and the location of HCVs. More information here.

Barriers to deforestation- and conversion-free agriculture also hide in national legislation. Unsustainable land use change can take place in the limits defined by the law. Incentives for conserving forests in productive areas, combined with a well-informed regulatory environment, is therefore essential, backed up by enforcement and strong monitoring systems. A lack of capacity at governmental bodies, however, makes it difficult to develop and implement regulations to ensure vulnerable ecosystems are protected, and to monitor compliance with existing regulations. The GGP is seeking support from donors so that we can continue supporting government in this critical arena.

Demand for beef is increasing, but awareness of why sustainability in beef production is important, is not rising at the same rate. Demand for sustainable beef is patchy at best, mostly limited to markets like the European Union and North America, which are small in comparison with markets like China, Russia, and the Middle East, where sustainability criteria are far less present and consistent. Paraguayans themselves are enthusiastic consumers of beef, but Paraguay´s largest markets are Chile, Russia, and Brazil. Not only are many consumers unaware of sustainability issues in beef production, but so too are many downstream sourcing companies. GGP and partners have been helping to address this awareness gap, while at the same time supporting the development of an agreed national definition for sustainable beef, combined with a strategy to position Paraguay in the international market as a producer of sustainable beef. Supported by enhanced supply chain transparency, this is helping to provide regulatory and market incentives for transformation in the beef supply chain. The GGP has supported the local chapter of the Global Roundtable for Sustainable Beef in Paraguay, Mesa Paraguaya de Carne Sostenible (MPCS), to implement a set of national standards for best management practices in the beef supply chain. At the same time $16 million in financing from the IFC went to producers and meatpackers complying with these performance standards for sustainable beef, and training has been rolled out to ranchers on fire prevention and control, and on sustainable cattle ranching to the diversity of producers present in the Chaco, as well as to financial actors.

Working with Proforest, the GGP has produced The Beef Toolkit – currently focussing on Brazil, but with potential for other major beef suppliers too. The toolkit helps companies build sustainability into their sourcing strategies, do risk analysis, establish purchase control systems, and monitor, verify, and report on progress. Similar toolkits have been developed for soy and palm oil, and all three provide training as well as information. However, it’s essential to combine a range of tools, approaches, sectors, and partners, to build lasting transformation in complex systems. It is also vital to act at multiple levels, to reach all relevant actors of the supply chain and foster scaling up and replication. Another platform, Evidensia, developed by several key partners and supported by the GGP, helps increase understanding among business leaders, policy makers, and researchers on the impact and effectiveness of sustainable supply chain initiatives and tools.

Training in sourcing and financial transactions has also been provided, helping international corporations and investors set precise, actionable commitments to deforestation-free and conversion-free supply chains, guiding them on how to implement and monitor them, and helping establish financial norms to reduce deforestation and conversion. Working closely with the finance sector, the GGP has delivered training to Paraguayan financial institutions and the Paraguay Central Bank on risk management strategies for investments that drive ecologically unsustainable agricultural practices, and on identifying and communicating deforestation- and conversion-free investment opportunities. We have developed an investment decision-making tool based on a biodiversity map of the Chaco, which identifies areas of ‘critical habitat’ that producers should avoid during expansion. Each of these interventions is mutually supportive.

Transformation in supply chain systems requires a deep understanding of the interests, concerns, and relationships of all the actors in that system, and ensuring that the benefits of producing more sustainably – and the finance to make that happen – offer an incentive to change. By building relationships and establishing trust and working with many partners, we have helped stakeholders work together to design a future that works for them and for the environment. The combination of local, national, and international actions at different points in the supply system, are helping to create the change we want to see at the global level. However, as we learnt during our pilot phase, these processes take time and more needs to be done in an integrated fashion across the policy and incentive levers of systemic change at various geographic scales. We hope for your support to pursue this transformation to a sustainable future for agricultural commodities production. Please consider joining us.