How China's evolving consumer habits may protect the Amazon rainforest

Highlights:

• Chinese meat importers pledge to buy deforestation-free Brazilian beef, challenging industry assumptions
• Brazilian beef industry lobby expresses concern over new sustainability requirements and potential trade barriers
• Imaflora developing certification for traceable, sustainable beef; adoption by meatpackers remains uncertain

When Xing Yanling posted on WeChat about her visit to the Brazilian Amazon in April, she described to her friends in China the unforgettable sensation of being "enveloped by tens of thousands of shades of green."

Xing is no ordinary tourist. She leads the Tianjin Meat Industry Association, representing importers responsible for around 40% of China's beef purchases from Brazil.

Under her leadership, Tianjin's members have committed to buying 50,000 metric tons of deforestation-free certified Brazilian beef by the end of the year, in what may be an early sign that China, one of the most powerful forces in global commodity trade, is willing to pay more for greener supply chains. The figure amounts to 4.5% of what Brazilian beef exporters are expected to sell to China this year.

The pledge challenges a long-held assumption among Brazilian farmers: that China, the world's largest importer of beef and soy, cares only about price.

It comes as China's government is sending signals that it wants to act on the environmental impact of trade while protecting its domestic industry.

In 2019, it changed its forest law to ban the trade of illegal timber. In 2023, it signed a joint commitment with Brazil to end illegal deforestation driven by trade. Starting last year, China's state-owned trader COFCO has committed to eliminating deforestation from its supply chain.

Beef tied to deforestation

The beef supply chain is ripe for concrete action because it is not as essential to the Chinese diet as other commodities, such as soy, said Andre Vasconcelos, the head of global engagement for Trase, a platform that tracks the environmental impact of several supply chains.

"At the same time, there is awareness, supported by available information, that beef, especially Brazilian beef, is the commodity most associated with deforestation among all agricultural commodities imported by China," he said.

The Amazon rainforest, the largest and most biodiverse in the world, loses hundreds of thousands of acres of trees every year, and 90% of that land is turned into pasture for cattle immediately after it is cleared, according to MapBiomas, a Brazilian nonprofit that monitors land use.

Some Chinese consumers are aware of that and are growing more discerning as they become wealthier, Xing said.

"It's not just 'cheap is good,'" she said. "This means deforestation-free, green, safe and traceable beef will have a stronger market in the future."

Choosing food products according to environmental credentials rather than price is impractical for most Chinese consumers, facing higher grocery prices like much of the world.

But the traceability the project offers consumers also appeases food safety concerns.

The beef will be marketed with a Beef on Track label designed by Brazilian nonprofit Imaflora, which includes four levels of compliance based on how far down the supply chain the beef is traced and whether ranchers can prove their farms were legally cleared.

Tianjin importers are willing to pay 10% more for beef from meatpackers that prove the farms that supply them are free of any links to both legal and illegal deforestation, as well as slave labour.

If the shift gathers momentum, the impact could be significant.

China buys over 10% of Brazil's beef, according to government data and beef export association ABIEC, whose members include JBS and MBRF.

But any impact could be undermined by Brazil's fragile traceability system, which is based on cattle transportation documents that prosecutors say can be easily defrauded by bad actors who hide wrongdoing in their supply chain, a practice commonly known as "cattle laundering."

Improvements to that system could take years.

Opportunity or obstacle?

When Xing and her delegation arrived at the Carioca farm in Castanhal, in the north of the Amazon rainforest, rancher Altair Burlamaqui was not expecting more than a fruitful conversation.

He showed them his cattle and part of the vast rainforest reserve on his land. By the end of lunch, the delegation was so excited that they asked him if he had a dream of having his beef sold in China as a product that helps protect the Amazon rainforest. The thought was both thrilling and overwhelming.

"What I gathered from the conversation with them is that they want a product with more added value for a section of their population who is willing to pay for it," he said. "But that section of their population may be bigger than the entire Brazilian population."

In the wider industry, Tianjin's sustainability project has received a more muted reception.

ABIEC, the beef export group, is displeased with Xing's effort, two people who spoke to its leadership recently told Reuters.

Their concern, one of the people said, is that a demand for sustainable beef may add an obstacle to an already constrained market.

This year, China imposed quotas for beef imports to protect its domestic industry, and Brazil is expected to hit its limit of 1.1 million tons by the end of next month, when Tianjin plans to import its first container of beef certified as sustainable.

In a statement, ABIEC said it "supports initiatives focused on certification but considers that any new labels should align with already established systems, avoiding overlaps and requirements that lack public infrastructure for implementation, which could create potential barriers to production."

It did not answer questions sent by Reuters.

The quota may slow Tianjin's plans because any beef imports after it is reached pay a 55% Chinese tax.

Beijing introduced its quotas in a year when global beef production is set to decline as ranchers rebuild herds in the United States and Brazil, inflating prices in many countries, including China.

Value added

Chinese consumers are used to buying traceable products. During their visit, Xing's team showed Brazilian officials and businesspeople how they add QR codes to eggs so consumers can trace them to their originating farm.

Traceability makes it easier for regulators to track the origin of disease outbreaks, and for companies to drop suppliers involved in environmental crimes.

People are willing to pay twice as much for those eggs, Xing said.

The Beef on Track certification will be ready for meatpackers, supermarkets and importers to adopt by the end of the year.

Its lowest-level standard is comparable to one used by Brazil's federal prosecutors' office to monitor whether farms directly supplying the beef industry comply with environmental and labour laws.

That programme approved suppliers that produce 2.7 million tons of beef a year, only a fifth of what Brazil produces, but almost twice China's imports last year. The beef Tianjin imports this year will be part of this output.

No Brazilian meatpackers have announced plans to adopt the certification, though.

Imaflora argues the certification it designed will create opportunity rather than become an obstacle to producers, as they say has happened with timber and coffee.

"The industry is still trying to understand how this certification can recognise and value Brazilian products, in a scenario of geopolitical tension," said Marina Guyot, an Imaflora policy manager.

But she added, the certification is supposed to recognise what companies are already doing to fulfil their own sustainability and traceability pledges.

"It's a certification that creates the possibility of valuing this effort," she said.