Cattle are raised next to a recently deforested and burnt area in Candeias do Jamari, Rondônia state, Brazil. Cattle ranching accounts for 80% of the deforestation in the Brazilian Amazon (Image © Victor Moriyama / Amazônia em Chamas)

How China can help save the Amazon via the leather trade

New EU law means China must act to avoid becoming a ‘dumping ground’ for the products of deforestation

Written by Head of Commodities Policy Rick Jacobsen. This article was originally published on Diálogo Chino under the Creative Commons BY NC ND licence.

Deforestation in the Brazilian Amazon reached a 15-year high in 2021, threatening global efforts to mitigate climate change and halt biodiversity loss. Aside from Brazil itself, there is perhaps no other country with as great an opportunity to help prevent this deforestation than China, Brazil’s biggest customer for the two agricultural commodities that are the main drivers of deforestation: soy and cattle.

In 2021, China was the destination for around 70% of the soybeans, 64% of the frozen beef and 34% of the processed cowhides exported by Brazil, valued at over US$30 billion, according to data from UN Comtrade. This gives China a significant opportunity to help shape how these commodities are produced in Brazil.

Cattle ranching accounts for 80% of the deforestation in the Brazilian Amazon, most of which is illegal under existing laws protecting the environment and Indigenous peoples’ rights. But in recent years, the country’s government has not been adequately implementing or enforcing these laws. Those who profit from environmental crimes are also rarely held responsible.

Global markets that accept products linked to deforestation and crime also play a role. The Environmental Investigation Agency (EIA) recently published the findings of a multi-year investigation showing how cattle raised in illegally deforested areas in the Amazon, including inside a protected area, enter the supply chains of Brazil’s largest meat and leather companies. These companies export to major consumer markets, including the United States, the European Union and China, where the leather is used to make a wide array of products, from shoes to sofas to the car seats found in iconic brands like BMW, Ford, GM, Toyota and Land Rover.

Production of “wet blue” hides at a tannery in Brazil. The semi-finished leather’s blue hue comes from a chromium tanning agent, a condition it is often traded in before drying, dyeing or finishing elsewhere (Image: Environmental Investigation Agency)

The leather industry tries to wash its hands of its role in deforestation by claiming leather is just a by-product of the meat industry, but the sale of hides is important to the profitability of slaughterhouses in an industry where margins can be narrow. Brazil exports over 80% of its hides, and the global automotive industry is one of the largest end users.

EIA’s investigation showed how systemic weaknesses in government oversight and corporate traceability systems in Brazil allow the laundering of cattle raised on illegally deforested land into supply chains. Our findings add to an extensive body of evidence published by civil society and the government over the last decade, which has shown how voluntary commitments by Brazilian meat companies to eliminate these animals from their supply chains have proven woefully inadequate in curbing forest loss.

Brazil and its trading partners must now put in place regulatory measures to systemically delink deforestation from agricultural production and trade. In the cattle sector, traceability requirements must take into account the full life-cycle of animals from birth to slaughter.

Newly inaugurated President Lula has made ambitious public commitments to stop deforestation and invasions of Indigenous peoples’ lands, but he will face fierce opposition from the powerful minority that is profiting from the destruction. A strong market signal from Brazil’s largest trade partners – none more influential than China – would backstop Lula’s efforts by bolstering the business case for the systemic reforms needed. Such measures must help to create traceable and transparent commodity supply chains, enforce laws protecting the environment and the rights of Indigenous peoples and traditional communities, and halt deforestation.

Measures by the Chinese government to require importers to ensure soy and cattle products are not associated with deforestation or environmental crime would create a powerful incentive for the Brazilian government and agricultural producers to provide goods that meet these standards.

The flipside of this opportunity are the inherent risks in maintaining the status quo. The EU is in the final stages of adopting a new regulation that would require companies placing key agricultural products on its markets to carry out due diligence to ensure they weren’t produced through deforestation or in violation of local laws. Lawmakers in the US are considering similar measures. As major markets close their doors to products linked to deforestation and environmental crime, the most destructive products will increasingly be routed to unregulated markets.

The US and EU consume far less soy and cattle products from Brazil than China does, making it all the more important that Chinese lawmakers also step up to ensure commodity imports are not in any way linked to deforestation. China would not want its markets to become a dumping ground for the products of deforestation and environmental crime as this would harm its credibility as a global leader in efforts to tackle climate change and halt biodiversity loss, and as a signatory of the Glasgow Leader’s Declaration to halt deforestation by 2030.

There are other interests for China to consider in stopping deforestation in Brazil. Scientists are warning that a rapidly approaching deforestation tipping point could cause a large portion of the Amazon ecosystem to collapse. Besides releasing billions of tonnes of carbon dioxide into the atmosphere, and putting the Paris Agreement’s warming limits out of reach, this could have potentially dramatic impacts on rainfall patterns and the reliability of agricultural production in the region. Considering its dependence on food imports from Brazil, China’s adoption of domestic regulations to ensure this trade does not contribute to deforestation may well be a matter of national security.