Soybean and oil palm expansion in South America

A review of main trends and implications

Center for International Forestry Research (CIFOR)Bogor, Indonesia

This paper examines trends associated with commercial agriculture expansion in South America. It emphasises soybean and oil palm expansion associated with food, feed and biofuel markets, paying particular attention to their economic, social and environmental implications. The paper assesses two cases in detail: expansion of soybean production in Brazil (with its epicentre in Mato Grosso) and oil palm expansion in Colombia. These crops generate economic benefits and multiplier effects for the broader economies in the two countries. Multiple factors drive the expansion of soybean and oil palm and their socio-economic and environmental effects, including policy incentives, market conditions, improved technologies, expansion of roads and changes in tenure. Together, these factors have led to a vigorous expansion of the agribusiness in South America under different business models, which present some interesting differences in these two cases. The outcomes of this expansion are still under debate. In some cases, it has contributed to increase economic incomes in production zones, and generated additional earnings for local and national economies through the development processing industries down the value chain. In other cases, it has contributed to land concentration and favoured traders and industry owners at the expense of smallholders. In addition, land conversion has created more homogeneous landscapes linked to adoption of large-scale mechanised and capital-intensive agriculture. Nonetheless, it is difficult to argue that economic gains have outweighed environmental and social costs. A more nuanced analysis is required to devise development pathways that can improve distribution of social and economic benefits while at the same time reducing carbon emissions.