Welcome to the Business Engagement Programme

Business.2010 newsletter: Agribusiness

Volume 3, Issue 2 - February 2008: Agribusiness

Best Practice in tobacco, an example from Southern Brazil

Flavio Goulart
Corporate Affairs Maanger, Souza Cruz
Marilia Borgo
Project Coordinator, Sociedate de Pesquisa em Vida Seivagem e Educação Ambiental
Monica Harris
Corporate Partnerhsips Manager, Fauna and Flora International
Tobacco, like other agricultural crops, can present a risk to biodiversity. Habitat fragmentation and clearance, soil erosion, pollution by pesticides, and others are often related with this activity. In the municipality of Paula Freitas in the southern state of Parana in Brazil, tobacco leaf growing farmers contracted by Souza Cruz, the Brazilian subsidiary of British American Tobacco (BAT) have been taking a hard look at how their activities affect the natural environment and the services it provides.

Biodiversity partnerships
The work is being undertaken by Souza Cruz in partnership with the Brazilian NGO Sociedade de Pesquisa em Vida Selvagem e Educação Ambiental (SPVS), and Fauna and Flora International (FFI) with support from the British American Tobacco Biodiversity Partnership. The initiative is aimed at developing and implementing mechanisms to support sustainable management of tobacco farms, including conservation and rehabilitation of native areas; also to ensure that farmers comply with national environmental legislation that, amongst other things, requires farmers to set aside 20% of their property for conservation of native areas in addition to protecting riparian forests and headwaters.

Farmers growing tobacco leaf occupy only 3.6% of land in Paula Freitas municipality but it is the third main income generator in the municipality and, therefore, of vital economic importance. The project, to date, has surveyed 119 leaf growing farms. Preliminary results indicate that all farmers are involved in small scale production that uses around 70% of the farm area for agriculture. The survey has also confirmed that forest cover is still relatively abundant in the region, although the quality and long term sustainability of the forest is questionable.

The challenges ahead are also very large. Although farmers are aware of 20% set asides stipulated by the Brazilian Forestry code, they are unsure of their role and responsibilities. Poor management practices in some farms where cattle are allowed to graze freely in the forest have led to the preservation of only the oldest trees with no under-storey. This obviously has implications for levels of biodiversity. Natural forest continuity is reduced and the risk of soil erosion and soil nutrient depletion is increased.

The use of wood as a fuel for curing tobacco is another key potential impact. The lack of cultivated wood in the market and fair prices for this supply was noted as a general problem in several parts of Southern Brazil, where a wood deficit is foreseen in the short-term. This scenario has highlighted the importance of a Souza Cruz incentive programme for the production of fast growing cultivated wood species, which will be essential for the continuity of leaf curing and most importantly to prevent the illegal use of native forests.

Currently, the economic activity incentives work against the protection of biodiversity and in favor of the inadequate use of native forest. Furthermore, the controversial nature of the industry means that organic schemes and other means of price differentiation that might encourage sustainable farming practices are very low. This means that the role played by tobacco companies in directly influencing environmentally responsible production of tobacco and guaranteeing the global sustainability of the production chain is paramount, recognizing that maintenance of environmental quality needs to be part of their overall business agenda.

Ahead of the game
Stepping ahead of the game, the British American Tobacco Biodiversity Partnership developed a biodiversity best practice tool to support the business operations in assessing threats of business activities to biodiversity and ecosystems services (1). The tool also supports the development of an action plan with corrective measures to mitigate these impacts. The tool was used to identify risks in the Paula Freitas region as a pilot study and the Partnership is now preparing to replicate the trial on a much larger scale looking at the three southern states of Brazil in 2008.

Although the challenges are paramount, there is a clear business case for Souza Cruz to use its strong outreach mechanisms to support farmers to comply with legislation and ensure that good practices guarantee the conservation of soil and water that are essential for crop productivity. For FFI and SPVS, to tap into the Souza Cruz network of contract farmers, initially in one municipality, but with potential to impact and replicate good practices to over 40,000 contracted farmers is a once in a life time opportunity to change the landscape of Southern Brazil where native Araucaria Forest is estimated to cover less than 1% of its original distribution in the state of Paraná.

The environmental problems identified are part of a broad and complex development scenario where natural resources have ‘no value’. Environmental legislation is written for those with schooling and it is poorly enforced. Knowledge about the importance of ecosystem services and good practices to maintain them are in their infancy, if existent at all. Engaging farmers and government in the construction of the solution of these issues will be vital in guaranteeing the success of the project.

This project represents an innovative approach within the tobacco sector. Souza Cruz is working to understand the farmers’ reality and to identify the problems of the farms by recognizing each one of them as an essential component of the ecosystem, not just a crop production area. Equally important is how the project identifies the farmers as having key responsibilities to the industry due to the integrated production system, where technical assistance is provided but the farmer is responsible for agricultural production and farm administration. The action-plan is evidence that the project is orientated towards making scientifically identified and positive steps to manage and mitigate impacts on biodiversity. This forward-looking approach reflects a comprehensive understanding of the effective management of business impacts on biodiversity and is illustrative of just how far some industry sectors have moved in recognizing the responsibility of their productive processes. However, the opportunities and incentives for business to move beyond legal compliance are limited by competition for supply of wood for fuel or other products, and lack of information on the amounts produced. This creates a difficult operating environment for all industries involved.

In this context, we see the potential role of government as twofold. Firstly, to ensure that all farmers comply with the law – this currently varies widely between different regions. Secondly, to convene the major players and develop an inclusive approach to identifying guidelines and the best way to apply them — working with industry, the NGO sector and farmers alike.

It is this collaborative way of working which is key if the potential benefits to biodiversity in this region are to be realized.

Flavio Goulart is Corporate Affairs Manager, Souza Cruz; M. Borgo is Project Coordinator, Sociedade de Pesquisa em Vida Selvagem e Educação Ambiental (SPVS); and Monica Barcellos Harris is Corporate Partnerships Manager, Fauna and Flora International (FFI).

(1) British American Tobacco (BAT) Biodiversity Partnership