International spillovers in SDG implementation: the case of soy from Argentina

Introduction

In a globalized world, with regions interconnected through ever more complex value chains, environmental and socio-economic impacts of consumption are increasingly externalized as so-called “spillovers” to producer countries, often across large distances to other world regions.

Implementation of the Sustainable Development Goals (SDGs) requires an integrated approach, both within and among countries. To achieve SDG 12 (responsible consumption and production) in particular, value chains and the full range of their associated impacts need to be better understood. For that, policymaking in both Argentina and Europe should draw on comprehensive quantitative assessments as evidence base for mitigating negative spillovers of consumption, managing trade-offs, and strengthening synergies.

This SEI policy brief is based on results from a comprehensive, multi-model and multi-stakeholder assessment of the value chains of several Argentine soybean commodities and their environmental and socio-economic implications for national SDG implementation.

*This article is a summary of the brief. Downloadthe full publication on the right-hand column for much more information.

Key messages

• The soy value chain from Argentina to Europe provides a well-researched example of a complex set of positive and negative environmental and socio-economic impacts – unequally distributed along the value chain – enabling a detailed spillover
• Economic impacts along the soy value chain are mostly positive, social impacts have both positive and negative components, while environmental impacts are mostly negative and largely occur on the production side (Argentina). At the consumption end (Europe), negative environmental impacts are averted by externalizing production to Argentina.
• Argentina experiences the negative spillovers as obstacles to its national SDG implementation, while the EU in principle recognizes its responsibility for spillovers resulting from all of its policies, through its commitment to Policy Coherence for Development.
• Taking shared responsibility and jointly achieving sustainable consumption and production (SDG 12) will require policies and interventions that are based on integrated assessments of positive and negative impacts across sectors and
• The SDGs are global in scope, and cannot be achieved by individual countries acting alone, but only through global partnerships for development (SDG 17). Entry points for Europe to meet its global responsibility include for example the Common Agricultural Policy (CAP), the EU-Mercosur trade agreement, as well as development
• In order for countries to jointly address spillovers, they also need to be accounted for in SDG monitoring and review.

Key results

Soybean is the most important crop in Argentina. The soybean cropping area has increased from virtually zero in 1970 to 18 million hectares in 2018 – more than half of the land currently under agricultural production in Argentina. Scenarios suggest that the production of soybeans and associated exports are likely to further increase.

Soybeans produced in Argentina are transformed into different products (in particular, soybean meal for livestock feed, as well as soybean oil, and biodiesel) which are consumed and/or used as inputs in global value chains that support a wide range of other products and services consumed worldwide. The vast majority (82%) of current Argentinian soybean production serves foreign final consumption, with just 18% supporting domestic final consumption in Argentina itself. Top final consumers are Europe, China and the USA. Within Europe, the top three consumers are Germany, Italy, and the Netherlands – mainly due to the consumption of a range of (livestock) food products.

The environmental, social and economic impacts of soy production in Argentina have significant external drivers – i.e. consumption, particularly in China and Europe. From a consumption standpoint (see Figure 1, page 2 of the policy brief) Europe is responsible for about 26% of the environmental and socio-economic impacts associated with soybean cultivation in Argentina.

However, assigning and operationalizing shared responsibilities among consumers, producers and other actors along the supply chain is not straightforward. This policy brief provides some insights towards this end.

Environmental, social and economic impacts of soy

Environmental impactsof soy commodities take place along their entire value chains, with many of the impacts occurring on the production side (i.e. crop cultivation), such as net loss of soil fertility (e.g. from loss of carbon, nitrogen, and phosphorus), soil erosion and subsequent eutrophication, pesticide use, and impacts to ecosystems that threaten species (including almost 100 vertebrates on the Red List of the IUCN).

The expansion of soybean crops contributes significantly to land use change, including by pushing the agricultural frontier, forcing other crops and cattle ranching to less suitable land, and fueling deforestation – at a rate of 300 000 ha per year in northwestern Argentina. Greenhouse gas (GHG) emissions in Argentina from soy cultivation, plus associated land use change, amount to approximately 35 million tons of CO2-equivalent, which accounts for more than half of Argentina’s total GHG emissions from agriculture. GHG emissions and other impacts such as water and energy consumption also occur downstream in the value chain, as the soy crop is transformed into different products and transported to final markets.

The social impactsare mixed, with both positive and negative effects along the value chain. At the production end, Argentine soybean cultivation has both destroyed and created jobs. Displacement of other crops has meant the destruction of jobs that were largely informal, while many of the jobs created in the soybean sector are formal, bringing improved labour conditions, including social security (33% of workers directly associated with soybean cultivation are registered employees). Because cultivation of the displaced crops tends to be more labour intensive, soybean cultivation reduces the amount of labour required per hectare, but with the expansion of production the net effect in terms of total jobs created is arguably positive.

However, it is worth noting that those who have lost jobs haven’t always obtained newly created formal jobs, and workers with lower qualifications, the elderly, and women have had greater difficulty in getting hired. There are also inequities among regions: some have faced a net loss of jobs, while in others there has been a net increase. Displacement of informal workers and other rural denizens has also affected the land rights of villagers and indigenous peoples. The ratio of men and women in the soy workforce is significantly skewed, with males being the overwhelming majority. Nonetheless, among formal employees, females tend to have better-paid positions. Lastly, soybean cultivation labourers are subject to fatal and non-fatal injuries.

The economic impacts along the soybean value chain are mostly positive. In Argentina, soybean exports contribute to a macroeconomic equilibrium, providing foreign currency and public revenues. However, the concentration on this one crop makes Argentina also more vulnerable to the volatility of the global soybean market, as well as to climate shocks.

SDG implementation in Argentina and Europe

If Europe were to domestically produce the amount of soybeans or alternative protein-rich crops needed to support its final annual consumption (equivalent to 16 million tons of soybeans) many related environmental “costs” would shift accordingly from Argentina to Europe, along with some of the economic benefits, like jobs and income. These effects, of course, are not perfectly transferable due to contextual factors like more efficient production systems in Argentina, higher fertilizer inputs required in Europe, and higher total GHG emissions in Argentina per unit of production. Social and employment impacts would probably be less pronounced in Europe given the greater supply of agricultural subsidies as well as the reduced need for agricultural labour.

Thus, while Europe benefits significantly from current arrangements (except for some more complex indirect impacts, e.g. on health, resulting from growing consumption of cheaply available meat) in Argentina, the picture is mixed, as Table 1 shows. Negative impacts may counteract some of Argentina’s domestic goals and targets, slowing down SDG achievement. It is apparent that SDG implementation in Europe and Argentina is closely linked and there is a need for joined-up policymaking and cooperation and sharing of responsibility across borders. In the SDG Index, which ranks countries on their SDG achievement, many European countries achieve top rankings, while Argentina scores much lower (45 out of 162 countries). However, without accounting for the asymmetric spillovers in SDG monitoring, review, and scoring, we are presented with an incomplete picture of progress toward sustainable development.

Opportunities and policy recommendations

To fully implement the SDGs and enable sustainability transformations, there is a need for internationally coordinated interventions and multi-level governance all along the value chain.

At the global level, international treaties, agreements and other governance mechanisms (including e.g. the G7 and G20) must take into account the full production-to-consumption-system of each commodity. This may include:

• developing quantitative, geographically specific, consumption-based accounting methodologies to inform policy and decision-making, including financing
• adopting a consumption-based approach, such that consumers, including individuals, companies, and countries, share responsibility with producers for minimizing negative impacts and promoting positive ones and for protecting environmental commons, including ecosystems and other natural resources, possibly through compensation

At the national and regional levels, there are opportunities for both Argentina and the EU to contribute to more sustainable soy value chains.

For Argentina, it is critical for policymakers to reconcile the short-term economic benefits of soy production for export with long-term environmental and social sustainability. Opportunities to do so include:

• promoting sustainable intensification practices, including agro-ecological approaches, aiming to avoid the loss of ecosystems and their services as soy production increases
• investing in soybean processing activities, in order to create additional value before export and generate new economic opportunities before export
• diversifying agricultural production and exports, so reducing dependency on a single crop or trading partner
• continuing to enforce the Forest Law of 2007, which has reduced soy-related deforestation by 50%, and explore other legislative opportunities to promote sustainable development, including agricultural and trade policies and agreements regulating and effectively supervising the use of agrochemicals.

The EUis committed to implementing the 2030 Agenda across all internal and external policies in a comprehensive approach that addresses the broader impacts of its domestic actions at international and global levels. And individual member states, such as Sweden, with its “generational goal”, have committed to solving domestic environmental problems without increasing problems in other countries. Opportunities for the EU to pursue these aims include:

• diversifying feed crops, including domestic production of soy, legumes and other adapted crops (see e.g. the European Soy Declaration)
• working to revise the EU Common Agricultural Policy (CAP) to promote local feed production, limit agricultural waste, and reduce fossil fuel-based fertilizers and GHG emissions.

While the above activities can be promoted unilaterally within Argentina and Europe respectively, several of the most powerful opportunities to share responsibility for reducing negative impacts and promoting positive ones need to be implemented bilaterally, such as:

• including spillovers and sustainable practices in trade agreements, such as in the EU-Mercosur free trade agreement
• creating an SDG-based certification and labelling system and implementing more sustainable sourcing patterns
• addressing spillovers in bilateral and multilateral development

Beyond the direct role of governments, there are also opportunities for the private sector and consumers to promote a sustainable soy value chain and thus SDG implementation:

• companies should increase their voluntary commitments or pledges to sourcing sustainable soy, including by participating in sustainability rankings schemes
• consumers should demand more information about the products they purchase, including effects all along the supply chain, and use their political power to encourage decision-makers to strengthen policies in support of sustainable development. Consumers can also reconsider their consumption patterns, in particular the consumption of meat.

There are also opportunities for further research to support more sustainable supply chains. For example, there is a need for the following:

• hybrid tools based on existing methods that can improve the traceability of traded commodities and their associated spillovers
• integrated quantitative geographically explicit assessments of positive and negative spillovers across SDGs, countries and regions, as well as along supply chains
• more studies like the one on which this brief is based for a broader range of commodities, value chains, and spillovers to produce a more complete picture of shared responsibility between consumers, companies and countries.

This assessment of the soy value chain and its spillovers illustrates that achieving the SDGs globally will require strong collaboration between countries and actors, across multiple scales. It’s clear that solutions and policies in one location or region may have negative spillover effects elsewhere. This means that implementing the SDGs is truly a shared responsibility, achievable only through multilateralism and global cooperation and stewardship.