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Soy – a versatile raw material
Soy as raw material
The boom of soybean utilization for industrial purposes
started in the 1940s and has since then grown exponentially.
The main producing countries are the US, Brazil,
Argentina, India, and China, and the biggest consumers
are China, the US, Argentina, and Brazil.
Soybean oil is one of the most versatile commodities,
with a large number of applications other than food. The
main one is as the source of SME (soy methyl esters) or
biodiesel. Soy is also used as raw material in feedstuffs,
pharma, paint, personal care, lubricants, plastics, resins
and more.
Rich in polyunsaturated fatty acids, soybean oil is
mainly relevant for AAK in regard to its use in baking
fats, mayonnaise, salad and cooking oils, as an
ingredient in margarine and within our Special Nutrition
segment.
In terms of volume, soy is a rather small commodity
for AAK. However, because of the sustainability risks
in the soy industry, especially deforestation, soy was
included in the list of key raw materials for responsible
sourcing in 2018. In 2019, we have progressed with
complying to our ambitions set in our Code of Conduct
for Suppliers of Raw Materials. In 2018 AAK had
assessed the risk linked to our current supply chains
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volumes. AAK is currently working with Proforest to
develop a methodology to verify these deforestation free
volumes in our supply chain. Our ambition is to achieve
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across our soy supply chain by 2020.
Understanding our supply base
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our Code of Conduct is to fully map and understand
our supply base. In 2019, AAK has built on the work
done in the previous year and engaged our tier 1 soy
suppliers in regard to the traceability of supply chains as
well as human and labor rights. Environmental impact,
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has also been a top priority. We have gained important
knowledge and in 2020 we will continue to deepen our
insights into our soy supply base and strengthen the
way we engage our key suppliers.
Engaging with suppliers and farmers
AAK Kamani (our joint venture in India) has committed
to include smallholders in our supply chains, which is
one of the cornerstones of the AAK Group Policy for
Responsible Sourcing of Vegetable Oils. As part of that
effort, AAK Kamani signed, at the end of 2018, a memorandum
of understanding to participate in the State of
Maharashtra Agribusiness and Rural Transformation
(SMART) project in the Indian state of Maharashtra.
Headed by the Government of Maharashtra with
support from the World Bank, the SMART project
supports climate-resilient agriculture. AAK Kamani’s
role in the project is to engage in the community-based
purchase of soy and groundnuts through the SMART
model.
The key objectives of the project are:
Supporting value addition in the post-harvest
segment of agricultural value chains
Developing a mechanism for productive alliances
involving various stakeholders in agricultural supply
chains
Improving the current policy and regulatory framework
in the agribusiness sector
Developing marketing and credit linkages with
community-based organizations (CBOs) like farmer
producer companies, cluster-level federations and
smallholder groups
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through private sector partnerships that can be scaled
up through project interventions
This model creates a more direct supply chain,
increases traceability and ensures improved control
of quality and food safety requirements. Additionally,
SMART empowers smallholder to directly engage
with buyers and to become part of contract farming
agreements. The program also strengthens the local
infrastructure to enable smallholders’ long-term capacity
building.
During 2019, the foundation has been laid at AAK
level to incorporate such a supply chain. We will
continue to work on this project in 2020.
Contributes to: