French dairy company Danone has ceased sourcing soy from Brazil, opting instead for suppliers in Asia, in anticipation of the European Union’s new deforestation regulation. Key points include:
EU Deforestation Regulation (EUDR): This regulation, effective December 30, aims to ensure that companies can prove their products are not sourced from deforested land. A proposed 12-month delay by the EU Commission is under consideration.
Danone’s Soy Usage: In its 2023 report, Danone indicated it used 262,000 tonnes of soy-based products for animal feed and 53,000 tonnes for its Alpro and Silk brands. Previously, it sourced Brazilian soy indirectly for animal feed, which is now under review.
Shift to Asia: Danone’s finance chief, Jurgen Esser, confirmed the company has stopped sourcing soy from Brazil and is now importing from Asian countries, although specific details on the countries were not disclosed.
Sustainability Commitment: Danone emphasizes its commitment to sustainable sourcing, stating that it ensures all ingredients meet sustainability standards.
Comparative Exposure: Danone claims to be less exposed to deforestation risks than some competitors, with soy constituting about 5% of its dairy cows’ feed. The company sources soybeans for its Alpro products from Canada, France, the U.S., and Italy.
Market Context: Brazil remains the world’s leading producer of soy, projected to harvest a record 170 million metric tons. As European imports decline, exports to China have surged.
Industry Trends: Other companies, like Nestle and Unilever, are also adjusting their sourcing strategies in response to deforestation concerns. Nestle stopped buying Brazilian soy from Cargill in 2019, while Unilever continues to source but claims compliance with zero-deforestation requirements.
Environmental Impact: Deforestation in Brazil, particularly in the Amazon and Cerrado regions, contributes significantly to global emissions, accounting for about 10% of total emissions.
Concerns Over New Regulations: The EUDR is expected to disrupt supply chains, potentially exclude small-scale farmers from the EU market, and increase food prices as many suppliers may struggle to comply with the new requirements.