Globalization's unexpected impact on soybean production in South America: linkages between preferences for non-genetically modified crops, eco-certifications, and land use

The land use impacts of globalization and of increasing global food and fuel demand depend on the trade relationships that emerge between consuming and producing countries. In the case of soybean production, increasing trade between South American farmers and consumers in Asia and Europe has facilitated soybean expansion in the Amazon, Chaco, and Cerrado biomes. While these telecouplings have been well documented, there is little understanding of how quality preferences influence trade patterns and supply chains, incentivizing or discouraging particular land use practices. In this study we provide empirical evidence that Brazil's continued production of non-genetically modified (GM) soybeans has increased its competitive advantage in European countries with preferences against GM foods. Brazil's strong trade relationship with European consumers has facilitated an upgrading of the soybean supply chain. Upgraded soybean supply chains create new conservation opportunities by allowing farmers to differentiate their products based on environmental quality in order to access premiums in niche markets in Europe. These interactions between GM preferences, trade flows, and supply chain structure help to explain why Brazilian soybean farmers have adopted environmental certification programs on a larger scale than Argentinian, Bolivian, Paraguayan, and Uruguayan soybean producers.