CARGILL’S ADDITIONAL SUBMISSION TO THE PUBLIC CONSULTATION ON STEPPING UP EU ACTION AGAINST DEFORESTATION AND FOREST DEGRADATION February 2019

Cargill: provider of food, agricultural, financial and industrial products Cargill is a family owned company over 150 years old. Our purpose is to nourish the world in a safe, responsible and sustainable way. We connect farmers with markets, customers with ingredients, and people and animals with the food they need to thrive. We combine our experience with new technologies and insights to serve as a trusted partner for food, agriculture, financial and industrial customers in more than 125 countries.

Cargill moves a variety of raw materials around the world, from places of surplus to places of deficit. The company processes many of them – rapeseeds, sunflower seeds, or soybeans into oil and meal, cocoa beans into cocoa butter, powder and paste - and then sells the subsequent ingredients to many food and feed manufacturers of branded foods, as well as into food service. For more information please visit Cargill.com.

Cargill purchases agricultural commodities from more than 9,000 farmers and more than 500 cooperatives and private dealers across the different EU member states. We work with approximately 20,000 suppliers in the EU and engage with them to achieve continued innovation and improved efficiencies. With our strong European1 footprint in 18 countries, 154 sites, four centres of excellence in innovation and over 14,000 employees, we are interested in engaging with policy makers and contributing to responding to major societal challenges.

Cargill is committed to applying its global knowledge and experience to help meet economic, environmental and social challenges. The private sector has an important role to play in finding solutions to the world’s most pressing challenges and achieving the Sustainable Development Goals – from addressing climate change, to protecting natural resources and improving food security. We are working with farmers, governments, industry groups, customers and consumers to make the future of food more sustainable. Cargill is contributing by adhering to core commitments of operating responsible supply chains, working to feed the world efficiently and sustainably, conducting business with integrity and supporting local communities.

1 Europe and Norway 1

Protecting forests and promoting sustainable agriculture Cargill, its customers and the public are concerned about agriculture’s role in contributing to deforestation, particularly of the world’s rainforests. Forests are crucial to life on the planet. They support four-fifths of terrestrial plant and animal life, and capture and store greenhouse gases that contribute to climate change. Forests also provide food, water, fuel, medicine and livelihoods to billions of people.

The complexity of the combat against deforestation is linked to population increase and its corollary of food security and nutrition. This is why forests and farming must coexist. This is possible if development is managed responsibly, providing both a healthy environment and a secure food supply for a growing, more affluent global population.

Furthermore, if deforestation is a global issue, it is a local challenge. What works in one part of the globe doesn’t necessarily work somewhere else. As many industry players have accelerated their efforts to combat deforestation, companies such as Cargill cannot combat deforestation alone, but need partnerships with farmers, governments, customers, environmental groups and others in industry to shape diverse and lasting solutions.

As one of the world’s largest buyers of soy, palm oil, cocoa and other crops, we are aware of our role in promoting sustainable development. This is the reason why Cargill has committed to transform our agricultural supply chains to be deforestation-free through prioritized supply chain policies and time-bound plans. For more information on our approach, you can read our updated Policy on Forest and our new Policy on Sustainable Soy.

Tackling deforestation is complex, and we must ensure we meet the needs for all stakeholders - including farmers and local communities- balancing forest protection with inclusive growth and sustainable development.

Comments on potential EU actions to combat deforestation and forest degradation For the reasons set out above, Cargill welcomes the European Commission’s consultation on stepping up EU Action against deforestation and forest degradation.

The EU has an important role to play in tackling deforestation, including ensuring that there is a consistent and harmonized approach in addressing the challenge at the Member State level, together with leading the way for actions at international level in the framework of global commitments on climate change.

General remarks Lasting solutions to tackling deforestation require long-term cooperation and joint efforts between governments and public administration in producer countries and in destination markets. With the involvement and active support of authorities of both producer and destination countries, private players’ initiatives reach more comprehensive and lasting results and benefit from a multiplier effect, achieving better visibility and gaining momentum. In addition, more than 10 years of active participation in the soy moratorium in Amazonia has demonstrated that action plans need to include key stakeholders such as NGOs, farmers communities and consumers. 2

In producer countries, this implies enacting the right legislative instruments for the implementation of best agricultural production practices, sustainable production and economic development while protecting natural habitats. This also requires legislation to be set-up and enforced and for the governments to have the power to do so, the public services and tools to act effectively against offenders. Actions in this respect, go hand in hand with the need for farmers to have effective and enforceable land rights and land titles which are vital to ensuring strong agricultural economies that support the livelihoods of millions of farmers around the world. Accordingly, transparent and secure land rights are the foundation of sustainable farming.

In destination markets, close cooperation of all players in the value chain including governments is necessary, particularly around shared objectives and responsibilities, but also political support to create and sustain the commitments to change. This would include technical assistance and public service capacity building in countries with the greatest risk of deforestation and facing challenges on land and human rights. This requires continued engagement with different supply chains and actors to influence their behaviour rather than exclude those without the technical and financial capacity to achieve sustainable agricultural practices at any given point in time.

In this respect, policies that recognize global trade flows and are geared at improving livelihoods for farmers of all sizes should be promoted. Farmer and rural prosperity is key for a safe, secure and affordable food supply. For any action to endure in preventing deforestation, it must include actions that address the local social and economic issues. Specific consideration should be given to the inclusion of smallholders. Cargill works alongside smallholders in a number of geographies and we have seen the value of providing technical and financial support on the ground. For instance, through Cargill Cocoa promise we have reached over 100.000 smallholder farmers in Cote d’Ivoire and Ghana. However, in a market where there are millions of smallholders, support from member states and the EU to bring these interventions to scale is critical.

Overall, EU action should build on and reinforce existing initiatives as well as governments’ and private sector actions in producer countries. More specifically we would like to emphasize:

• The need to build consensus around definitions and standards of measurement recognised internationally- There is an urgent need for locally relevant definitions and metrics on deforestation, land conversion and forest conservation. Such geographic specific definitions should reflect latest data sources, the unique context of different biomes and their different socio-economic and environmental challenges. For example, we support the work of the Cerrado Working group2 as this group considers the specific and different context of the Cerrado biome and what is feasible from an environmental, social and economic perspective.

• The importance of further dialogue and cooperation between producing and consumer countries and government to government discussion, which can take place bilaterally and at international level, around an agenda adapted to the national/regional/local circumstances.

2 The GTC is a stand-alone entity that is responsible for agreeing terms of an agreement between producers, industry, consumer organizations and civil society, as well as an action plan for eradicating deforestation in Brazil’s Cerrado biome. The GTC is composed of industry members, NGOs, producer organisations, government and financial institutions and well as Brazilian consumer goods companies 3

• Promoting trade in sustainable commodities through international trade and investment agreements should be further explored at EU and multilateral level.

• Certification is a tool to begin building sustainable supply chains, and Cargill is pursuing certification in a number of our value chains. Effective certification frameworks, whose value is recognized in the market, can provide an important demand signal to farmers, as well as, valuable training and technical assistance to local farmers with incentives for continued improvement. Additionally, participation of farmers provides a means to monitor and evaluate performance over time. However, we should be mindful that certification is not a silver bullet to solve global deforestation. It needs to be complemented with other supply chain strategies including and combining traceability, monitoring and landscape approaches which need in turn, to be supported and complemented by government (Federal and State level) policies moving in the same direction to achieve a level playing field.

• Large scale conventional finance mechanisms represent the majority of finance to forest risk commodities. However, such mainstream mechanism have not yet broadly incorporated social and environmental (including forests) considerations. Mainstreaming sustainable production criteria needs to be addressed by international, regional and local financial organizations.

• Emerging approaches to green finance require substantial upscaling and they can be good vehicle to address the social and environmental context of forests and land rights. They are vital to create proper incentives for those impacted by forest policy and land use issues, especially where land expansion into high conservation land is legally permitted under local law.

Any action undertaken at destination in consumer countries should build on and reinforce existing initiatives as well as governments’ and private sector’s actions in producer countries. Within this very complex framework, simply imposing stricter rules on the trade of raw materials that reach the EU territory from any origin, would likely trigger a shift in trade flows in the absence of global rules on the topic, while doing little to improve the rules and conditions of production overall.

In conclusion, Forests and farming can and must coexist in order to sustain the health of people and the planet and Cargill is working in partnership with our suppliers, customers, NGOs and governments to innovate and scale real solutions in this sector. It is also imperative to strike the balance between forest protection on the one hand, and inclusive growth and sustainable development on the other. Solutions for forest protection must also promote farmers’ economic livelihoods, community wellbeing, indigenous peoples and community rights, and global food security needs.

We thank you for the opportunity to submit our initial comments and remain interested to continue to engage in this debate and participate at the different forums and opportunities for discussion.

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Annex: Cargill’s efforts to combat deforestation At Cargill, we recognise there is much more work to do and our efforts are accelerating. Our progresses include:

• In 2004, we partnered with The Nature Conservancy in 2004 to address deforestation in the Brazilian Amazon.

• In 2006, we implemented the Brazilian Soy Moratorium, a voluntary zero-deforestation agreement through the Soy Working Group (GTS), which has contributed to an 80 percent decline in the rate of deforestation in the Amazon. Today, we are participating in the Cerrado Working Group (GTC) alongside World Wildlife Fund and other partners. This is a unique forum that now includes farmers as active participants.

• In 2014, Cargill issued a Policy on Sustainable Palm Oil and committed to a 100-percent transparent, traceable and sustainable palm supply chain by 2020. Today, 94% of our supply is traceable to the mill and 44% is traceable to the plantation. 64% of our direct suppliers have a No Deforestation, No Peat, No Exploitation (NDPE) policy and we continue to engage our direct and indirect suppliers on the implementation of these commitments to drive continuous improvement and sector transformation.

• In 2014, we endorsed the New York Declaration on Forests, the only global agricultural commodities company to do so.

• In 2015, we released our first global Policy on Forest and action plans for priority supply chains, including palm oil globally, soy in Brazil and Paraguay, and strategic sourcing and procurement of fiber-based packaging.

• In 2016, we partnered with World Resources Institute and Global Forest Watch to ramp up our no-deforestation efforts and jointly develop a baseline for measuring progress.

• In 2016, we published a Statement on Human Rights with provisions for responsible supply chains in soy, palm and others.

• In 2017, we introduced the Cargill Policy on Sustainable Fiber-based Packaging, which stipulates that 100 percent of fiber-based packaging with fiber origins in higher risk regions will be sourced sustainably by 2020.

• In January 2017, we released our first Report on Forests. The report includes progress on palm oil globally, soy in Brazil and Paraguay, and fiber-based packaging. The report also includes ground-breaking work to map deforestation against our global sourcing footprint, which is a necessary first step in measuring progress toward our commitment.

• In September 2017, we launched a new Cargill Supplier Code of Conduct, which highlights Cargill’s expectation for its supplier partners to be responsible global citizens by, among other things, striving to reduce environmental impact by ending deforestation.

• In 2017, we co-founded the Cocoa and Forests Initiative (CFI), a collective effort of 34 chocolate and cocoa companies, the World Cocoa Foundation and the IDH Sustainable Trade

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Initiative, focused on ending deforestation in cocoa supply chains in Côte d’Ivoire and Ghana. At COP23, the governments signed on with new Frameworks for Action.

• In 2018, Cargill established a Forest and Land Use Steering Team to ensure Executive level engagement in the development of an integrated approach to forest protection across critical supply chains.

• In 2018, Cargill Cocoa & Chocolate outlined its plan to eliminate deforestation from its cocoa supply chain. The Protect Our Planet plan provides concrete actions the company is taking to achieve 100 percent cocoa bean traceability and includes a commitment of “no further conversion” of any forest land in Ghana and Ivory Coast for cocoa production.

• In 2019, Cargill released a new Policy on Forests, with commitments to transform our agricultural supply chains to be deforestation-free through prioritized supply chain policies and time-bound plans. For more information on our approach, you can read our updated Policy on Forest and our new Policy on Sustainable Soy.

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