More Direct Financial Incentives Needed for Sustainability Standards to Take Off in Soybean Sector

March 7, 2024 – Coordinated action from all value chain actors is needed to increase demand for sustainably produced soybeans and develop effective incentives that reward farmers for adopting more sustainable practices, new research shows.

A new report from the International Institute for Sustainable Development (IISD) unearths recent production and consumption trends. It explores why voluntary sustainability standards (VSSs) have yet to fully take off in the soybean sector.

Soybean plantations have encroached on important forest land across the globe, meaning that the sector is one of the biggest contributors to greenhouse gas emissions in global food systems. Establishing deforestation- and conversion-free supply chains is critical to ensuring the sector sustains and nourishes us without harming the natural environment that it relies on.

“VSSs support and promote practices that can help soybean farmers and workers preserve vital ecosystems and build resilience to climate impacts,” says Vivek Voora, an expert in agricultural commodity markets at IISD. “However, uptake of VSSs in the sector has been slow, with VSS-compliant soybean production representing less than 3% of total global production.”

Demand for VSS-compliant soybeans is low because the main consumers of these commodities, traders and processors, are unwilling to pay higher prices for them. As a result, VSS-compliant soybean producers often must sell their soybeans as conventional, without premiums. This is financially unsustainable, considering the costs and efforts involved in achieving and maintaining certification.

“While our research shows that farmers in major producing countries might benefit from premiums and higher prices when selling VSS-compliant soybeans, these are not guaranteed, as VSSs in the sector have not yet implemented a formal system for setting minimum prices and premiums for certified soybeans,” says Steffany Bermúdez, IISD’s commodity pricing expert. “Recognizing the social and environmental costs of growing soybeans in the market pricing structure of the commodity would make VSS-compliant soybeans more competitive—because the way they are grown can reduce some of these external costs.”

Pursuing certification can improve farmers’ environmental performance and productivity, help them save costs on inputs, and provide them with access to finance. However, the report concludes that more direct financial incentives are needed, such as payments for ecosystem services, to motivate more farmers to get on board and reward them for their investments and results in adopting more sustainable practices. It calls upon VSS-setting bodies, major soybean trading and processing companies, governments, and private sector actors to all play their parts in paying the price for sustainability in the sector.

Contact

For more information or to set up an interview, contact media@iisd.org.

About the Sustainable Commodities Marketplace Series

This report is part of the Sustainable Commodities Marketplace Series of global market reports that analyze agricultural commodities to foster transparency, knowledge, and strategic decision making for sustainable development. The series covers bananas, cotton, cocoa, coffee, palm oil, soybeans, sugar, and tea. The series is published by IISD’s State of Sustainability Initiatives, which aims to advance inclusive value chains by providing credible and solutions-oriented research, dialogue, and strategic advice for decision-makers about voluntary sustainability standards and other supportive initiatives.

About the International Institute for Sustainable Development

The International Institute for Sustainable Development (IISD) is an award-winning independent think tank working to accelerate solutions for a stable climate, sustainable resource management, and fair economies. Our work inspires better decisions and sparks meaningful action to help people and the planet thrive. We shine a light on what can be achieved when governments, businesses, non-profits, and communities come together. IISD’s staff of more than 120 people, plus over 150 associates and consultants, come from across the globe and from many disciplines. With offices in Winnipeg, Geneva, Ottawa, and Toronto, our work affects lives in nearly 100 countries.