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Dairy giant Danone bans Brazilian soybeans
The French dairy producer Danone has stopped purchasing Brazilian soybeans, destined for the production of animal feed and plant-based dairy alternatives. This is in anticipation of the upcoming European anti-deforestation law that prohibits companies from importing raw materials associated with deforestation. Brazilian soybean farmers are furious about the decision.
Although all indications point to the implementation of the anti-deforestation law being postponed by a year until the end of 2025, Danone has already ceased importing Brazilian soybeans. Instead, the French dairy company is now focusing on soybeans from Asian countries, as the company's CFO recently informed Reuters. Additionally, Danone is also sourcing soybeans from countries such as the US, Canada, and Italy.
This move positions the company for compliance with the European anti-deforestation law, which is likely to come into effect by the end of 2025. This law prohibits companies from sourcing raw materials from deforested agricultural areas. Brazil, in particular, is vulnerable due to deforestation in parts of the Amazon. The fines are substantial and can amount to 20% of revenue.
Major Importer
Danone is a significant importer at the corporate level. In 2023, they purchased 262,000 tons of soybeans (or derivative products) for animal feed. Additionally, 53,000 tons of soybeans were bought for the production of dairy alternatives, including the brand Alpro. In the past, a substantial portion of these purchases (approximately 20%) came from Brazil.
Brazilian soybean producers are outraged by Danone's decision. The Aprosoja Brazil association describes it as a lack of knowledge and discriminatory. They are calling for a boycott of Danone in the future. Meanwhile, Brazilian soybean farmers are urgently seeking new markets, as the country is heading towards a record harvest. The production for the 2024/25 season is estimated to reach a record of 161 million tons, representing a 6% increase compared to the previous year.
