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China takes nascent steps towards sourcing sustainable farm products

China's flagship food group COFCO International landed its very first cargo of deforestationfree soybeans for domestic use on Friday, marking what market players say is a milestone for a country that has prioritised cost over sustainability in its farm imports.

China is a top purchaser of agricultural goods, consisting of soybeans and beef, which are drivers of international deforestation, but has actually lagged western peers in demanding that produce consisting of palm oil not be sourced from land linked to deforestation or conversion of natural habitats.

That is slowly changing, with state-run COFCO International as well as China Mengniu Dairy Company and Inner Mongolia Yili Industrial Group Co Ltd in the past year asking suppliers and experts for sustainable soybeans, traders and sustainability professionals informed .

The volumes are small in the context of China's total buying however the ramifications of the greener sourcing are substantial, given China's ravenous hunger for farming goods, even as it looks for to cut its reliance on imports.

The participation of COFCO, which brought in Friday's freight at Tianjin port for Mengniu's subsidiary Modern Farming Group, likewise sends a signal to other buyers of Beijing's intent.

There is a noticeable shift in buying trends amongst Chinese buyers towards more sustainable and eco-friendly products, a Singapore-based broker said, declining to be named due to company confidentiality.

Some Chinese business have been strongly requesting deforestation-free soybeans and carbon-neutral grease considering that in 2015, a manager with a global trading firm stated.

Friday's 50,000 metric heap cargo of Brazilian soybeans worth $ 30 million had a logging and conversion-free (DCF) stipulation for the very first time for an order of the oilseed from China.

Our market needs to act to help reinforce our food systems (and) promote sustainable agriculture practices that secure our environment and environment, COFCO International Chief Executive Wei Dong stated in a declaration.

The shipment is a pilot job driven by the World Economic Forum's Tropical Rain forest Alliance to suppress commodity export-driven logging. Its executive director, Jack Hurd, said COFCO's involvement will promote more Chinese demand for sustainable products.

POLICY PUSH

While sustainability efforts in the West have typically been customer driven, China's shift is activated by policy signals as well as investor pressure.

In 2020, President Xi Jinping promised that China, the world's greatest polluter, will attain peak emissions by 2030 and carbon neutrality by 2060. In an agreement last year, China and the United States stated they will work together to suppress forest loss.

New domestic stock exchange rules needing business to reveal ESG (environmental, social and governance) information from 2026 have actually included pressure, while the approaching European Union Regulation on Deforestation-Free Products (EUDR) offers additional impetus, experts said.

Mengniu in 2023 dedicated to a zero-deforestation supply chain by 2030 and signed up with market group the Roundtable on Sustainable Palm Oil (RSPO) this year. Yili has a comparable target for soy, palm oil, pulp and paper supply, and has stated it will raise annual purchases of RSPO-certified palm oil by 50 metric lots from 2024 to achieve 650 metric heaps by 2030.

A palm oil producer in Indonesia stated selling to China will quickly require greater standards. They are paying more attention to sustainability ... unlike in the past when cost was the just factor.

COFCO, meanwhile, has a 2025 target for a zero-deforestation soybean supply chain in environmentally delicate locations in Latin America, consisting of the Amazon, and has prepare for sustainable palm oil and coffee supply chains.

In January, COFCO International signed a memorandum of understanding with COFCO Group's China Shengmu Organic Milk Ltd. to provide 12,000 lots of DCF soybeans from Brazil,. with a contract to gradually increase the volume.

RSPO China's head, Fang Lifeng, stated China's need for. licensed sustainable palm oil, initially driven by. multinationals such as L'Oreal and Unilever,. are now being led by local firms.

Still, the demand is a small fraction of China's imports,. which last year consisted of 4.3 million lots of palm oil and 99.4. million tons of soybeans.

Cost remains a deterrent. DCF soybeans can cost $2-$ 10 more. per load, while RSPO-certified oil can cost upwards of $15 more.

A Singapore-based trader at a global trading company. that runs soybean processing plants in China stated volumes will. not even represent 1% of imports.

We don't see considerable volumes being available in, the trader. stated, including that pressure from trade financiers might assist the. push towards sustainable sourcing.