Selection of SCF focus municipalities
The SCF’s scope accounts for 70% of recent native vegetation conversion to soy across 61 focus municipalities. The following methodological approach determines SCF members’ scope for reporting and collective action:
Out of the 5,570 municipalities in Brazil, focus municipalities must have at least 95% of their territory in the Cerrado.
The area of planted soy in focus municipalities must be larger than 5,000 hectares (PAM/IBGE 2020).
- Focus municipalities must be within the region’s top municipalities as measured by:
- Area of native vegetation converted to soy (Agrosatélite 2019/20 Soy Expansion Report, and PRODES 2018/2019); and
- Availability of remaining native vegetation in legal reserves suitable for soybeans.
- Focus municipalities must have at least two SCF members operating (sourcing or have physical presence) within their boundaries.
In accordance with its commitment to refresh its scope and set of focus municipalities every three years, the SCF will review and update these in 2024, as per the latest data available.
Monitoring traceable volumes
Members use the following methodological approach to individually produce the volume key performance indicators reported annually:
- Soy volume sourced in the Cerrado: The proportion (in tons) of soybean volume sourced by the member company from the Cerrado biome, in municipalities with at least 95% of its territory in the biome, compared with the total volume sourced outside of Brazil by the reporting company. This information is reported as the percentage of soy sourced in Cerrado and the percentage of soy sourced in other biomes.
- Soy volume sourced in focused municipalities in the Cerrado: From the total determined in the first step, the percentage of soybean volume produced in the focus municipalities, by considering the origination municipality. This information is reported as the percent of soy sourced in focus municipalities and the percent of soy sourced in other Cerrado municipalities.
- Direct and indirect sources: From the total in the second step, the percentage of soybean sourced directly from farmers and the proportion sourced from third parties, by considering the type of activity of the supplier (using the supplier’s tax registry number as a source to determine whether they are indirect resale, cooperative, warehouse or trading sources). This information is reported as the percentage of direct sources in focus municipalities and the rate of indirect sources in focus municipalities.
Reporting methodology for soy sourced by joint ventures
For each of these, there is a yes/no answer. The consolidated scenarios are:
- When a company knows the JV’s overall volumes
- If the SCF member controls the JV operations (e.g., it manages soy purchases from the JV), regardless of if it sources from the JV or not: report volume equivalent to its share on the JV as direct.
- If the SCF member does not control the JV but sources from it: report volumes effectively sourced to the SCF member as indirect.
- If the SCF member does not control and does not source from the JV: report volumes equivalent to its share as indirect.
- If it sources from the JV: report as indirect.
- If it does not source from the JV: report volume as indirect based on the financial revenue from the JV through the mathematical rationale described below:
- As a participant of the JV, company has revenues from JV expressed in USD $ 000 (A)
- Company has its own total revenue for the country expressed by USD $ 000 (B)
- A/B = X% of JV revenue representativeness over the company revenue. Companies shall consider such X% as a percentage of the company’s total origination volume.
- Companies shall add X% to the % of sourcing from the area and report as indirect.
Reporting methodology for deforestation- and conversion-free (DCF) soy
SCF measuring and reporting on DCF soy involves two indicators, each based on different data sources. Soy volumes sourced by joint ventures will integrate DCF calculations according to the established “reporting methodology for soy sourced by joint ventures” described above.
- DCF member reporting via individual company data
- Monitoring Farm area (polygon): based on data available from each company supply
- Soy area by polygon: Agrosatélite study for the crop year 2020/21 or active farm monitoring by companies individually
- Conversion area: PRODES Cerrado 2021 and 2022, or similar private monitoring service
- Reference date: December 31st, 2020.
- DCF percentage of each company in the 61 focus municipalities (FMs)
|Total volume of verified DCF soy purchased from farms in 61 FMs
|= % Verified DCF
|Total volume of soy purchased from farms in 61 FMs (direct and indirect)
For the calculations of DCF percentage and volumes at farm-level, a 25-hectare threshold is applied, below which soy production can still be considered as DCF. This indicator will allow for progress to be shown over time, as increasing monitoring will be implemented throughout the whole sourcing chain. Thus, the indicator shows the extent to which companies have effectively monitored and verified soy volumes as DCF. Such individual results are verifiable.
Volumes sourced from indirect suppliers are counted as non-verified DCF when no farm level traceability is possible as per the official methodology agreed by SCF members for reporting.
2. DCF reporting at landscape level via external databases
- Average municipality yield of the last three crop years (2018/19, 2019/20, and 2020/2021) with available information from IBGE (Brazilian Institute of Geography and Statistics)
- Conversion data from PRODES Cerrado 2021-2022, (covering six months of 2022 and one year of 2021), using a cut-off date of January 1st, 2021, to align with the EU deforestation regulation (EUDR)*
- Application of a threshold of 25 hectares as minimum converted area
- Soy area from Agrosatélite study commissioned by ABIOVE for crop year 2021/22
- Percentage of DCF soy at landscape level in the 61 focus municipalities (FM)
|Total volume of DCF soy of 61 FMs
|% of DCF soy in the 61 focus municipalities
|Total volume of soy of 61 FMs
*Note: EUDR cut-off date is December 31st, 2020, so SCF member accounting for application as a reference date is December 31st, 2020.
Verification protocol of data for traceability and deforestation- and conversion-free performance
The purpose of the SCF’s verification protocol is to verify that soy sourced from the SCF focus municipalities is DCF and that volumes are traceable to the farm.
The protocol is applied annually, using the calendar year prior to the current year of disclosure (e.g., the KPIs to be disclosed in 2022 refer to the calendar year of 2021).
The verification will be carried out by assessing a sample of traceable suppliers. The sampling should be based on soy sourcing commercial reports, presenting a list of contracts from the 61 FMs with indication of farm polygon for the ones that are traceable to farm, including direct and indirect purchases.
In terms of the definition ascribed, “verification” considers that the information is validated by persons other than those involved in monitoring the operation or entity being assessed. Furthermore, “first-party verification” considers that the verification is carried out by personnel from the same company who did not participate in the operations under verification; whereas “third-party verification” encompasses an independent entity that does not provide other services to the company being audited.
A set of information should be checked by the party responsible for carrying out the verification process. Those include, but are not limited to:
- Digital copies of purchase contracts
- Digital copies of invoices (minimum one)
- Farm areas (polygons)
- Deforestation and conversion assessments
- Registries of DCF indicator calculation
Farmer First Clusters (FFC) selection process for eligible farmers
- SCF members send a list of farms to the manager of funds. The list needs to contain the following KPIs, which are not criteria for selection:
- Surplus legal reserve or deficit legal reserve
- The willingness of the producer
- Smallholder yes/no
- The list is reduced according to the farm selection criteria set by SCF members and implementing partners.
- Implementing partners are responsible for prioritizing farm selection.