Climate Changes

Engaged in the debate on the theme, AMAGGI has been evolving in its Climate Change Mitigation and Adaptation Program, which involves all its business areas, each one with its risks and opportunities.

Thereby, the first step in setting reduction targets and adaptation projects is to identify opportunities and challenges through emission inventory, as well as in-depth knowledge of the impact of climate change on the business.

To do so, in 2013 AMAGGI took one of the most important steps in the management of its emissions, participating in the pilot project to improve the methodology of the GHG Agricultural Protocol to calculate greenhouse gas emissions. The company thus established itself as a pioneer in the use of the tool for the agricultural sector.

Since then the company annually updates its emissions inventory. From 2015 the document began to be checked by an accredited institution, receiving the Gold Seal of the GHG Protocol. The inventory includes all emissions from administrative, agricultural, port, factory, warehouse, and power generation activities. It considers all stationary and mobile combustion emissions, fugitive emissions, effluents, agricultural emissions through the use of nitrogen fertilizers, lime and urea, electricity consumption, logistic distribution and business air travel.

Below is the comparison of 2015 x 2016 emissions; the data for 2015 have been adjusted and will be submitted to the GHG for updating the Public Emissions Register. In 2016 there was an updating of the methodology regarding the accounting of agricultural emissions and changes in land use, as well as the insertion of new scopes for the accounting of emissions, such as reforestation for biomass production and new logistic routes.

Emissions of greenhouse gases (tCO2e)

Main variations from 2015 to 2016 refer to the 47% increase in fertilizer consumption in soybean and cotton production; the 16% reduction in energy consumption in the grains crushing from Itacoatiara and Lucas do Rio Verde factories; and reducing road and rail transport emissions in 35%, even with the inclusion of fertilizer and cotton transport.

Details and justifications for variations of each scope (1, 2 and 3) as well as biogenic emissions and removals (carbon sequestration) can be accessed at this link.

In 2016 AMAGGI cotton planting area increased to 20,000 ha compared to 2015, which increased fertilizer and urea consumption, leading to an increase in emissions from 106,381 tCO2e to 217,532 tCO2e in the last year. The emissions associated to the planting of eucalyptus for biomass and the use of brachiaria in the off-season represented the emission of 1,131 tCO2e in 2016.

The amount of limestone used in 2016 decreased around 38%, since in 2015 a new area was planted - Vale do Araguaia farm. Typically this input is used on a large scale at every three years, and annually the only soil correction is being performed; therefore, the emissions related to it should be evaluated in medium term cycles (three to five years).
There was no change in AMAGGI total electricity consumption from 2015 to 2016 (80,553 MWh and 79,907 MWh, respectively). Although AMAGGI Agro showed a 20% increase in this consumption, because of the start of operation of the new cotton plant in Sapezal, it was compensated by a 50% reduction in consumption in factories due to the lower volume of crushed soybeans. It should be noted that the emission factor of electric power of the National Interconnected System decreased by 34%, which contributed to the reduction of total emissions by 17%.

Six units of the company use electricity produced by AMAGGI small hydroelectric stations, and in 2016 new units also started to consume this energy: Tanguro, Tucunaré and Itamarati (cotton plant and dryer) and Sapezal's cotton plant. The energy generated by the company's small hydroelectric stations is added to the National Interconnected System; being a direct link, it is necessary to consider the emission factor calculated by the Ministry of Science, Technology, Innovations and Communications (MCTI). The amount of renewable energy inserted in the Brazilian grid in 2016 by the company's plants was 56,170 MWh, or 202,214 GJ, equivalent to an increase of 51% in relation to 2015, representing 70% of all the company's consumption by own generation of renewable energy.
In 2016 AMAGGI included in the soybean transportation the railway route to Itaqui port, as well as incorporating the logistic routes of cotton and fertilizers. However, the reduction in grain volume, which between 2015 and 2016 fell from 8,044.000 t to 6,400.000 t, also led to a reduction in emissions in this period, from 540,935 tCO2e to 351,249 tCO2e.

AMAGGI Agro showed an increase in emissions from 164,780 tCO2e in 2015 to 260,576 tCO2e in 2016, mainly due to the increase in the consumption of NPK fertilizers in the soybean, corn and cotton planting.
Biogenic emissions are those resulting from the combustion of biomass (such as eucalyptus or soybean and rice husks) and biofuels (such as ethanol or sugarcane biodiesel and other sources). These biomasses come from a short biological cycle, and their emissions are considered neutral because the CO2 released into the atmosphere during their burning is equivalent to that taken from the atmosphere during the process of photosynthesis throughout the growing period of the plant.

The use of these renewable fuels reveals AMAGGI commitment to sustainability, as they replace fossil fuels. The use of renewable fuels by AMAGGI in 2016 prevented the burning of 143.64 million l of diesel oil.

The company's biogenic emissions increase in 2016, compared to 2015, mainly due to the use of sawmill waste to replace the use of native wood chips as biomass at Lucas do Rio Verde and Itacoatiara mills. The benefits of this replacement are presented in the shares of AMAGGI Commodities.
In this scope the stock of sequestered carbon is calculated and can be re-emitted into the atmosphere. It is available in above and below ground biomass as well as decomposing organic matter. The variation in this stock represents the carbon flux: there may be an increase in inventory, by the removal of carbon from the atmosphere, or its reduction, as a result of emissions into the atmosphere.

In the methodology used up to 2015 to account for the biogenic removals, the techniques used in the agricultural area (no-tillage, conventional planting, conventional pasture, etc.) were considered with different carbon emissions / removals being associated. In 2016 accounting it was used the GHG Agricultural Note "Use of the GHG Protocol Agricultural Guidance and accounting for emissions resulting from agricultural practices and land use change - version 2.0”.

Soil organic matter monitoring data were used to calculate the increase of carbon stock in the soil due to no-tillage techniques, which are to maintain the straw in the post-harvest area for cover and radiological protection. Also included were the variations in the stock of planted eucalyptus and rubber trees, as well as the removal of carbon from the farm preservation areas, according to the table below.

In partnership with GVces in the TeSE initiative, AMAGGI, through the methodology for valuing ecosystem services (Devese 2.0), developed the study called "Quantification of the ecosystem service of global climate regulation resulting from actions to preserve native voluntary areas and compliance with Brazilian legislation". The study concluded that, through the preservation of the total native forest areas maintained by the company, the emission of approximately 57 thousand tCO2e was avoided in one year. For the evaluation of this externality, the Social Cost of Carbon (CSC) was used - which considers the estimated costs of the probable impacts for adding one ton of carbon to the atmosphere - and reached a value of approximately R$7 million in the year. That is, an approximate value of the costs that would no longer be spent compensating for adverse impacts of climate change on society if such areas were deforested.

Considering the Brazilian representativeness concerned to agribusiness, AMAGGI understands that it is important to quantify the externalities of actions to preserve native forests, whether voluntary or legally compliant, that generates positive impacts in terms of global climate regulation. This is because the company understands that preservation, even if mandatory, provides a benefit to society, and this should be configured as a competitive international trade differential.

In the implementation of the small hydroelectric stations Divisa, Segredo and Ilha Comprida, located in Sapezal city, it was developed a Clean Development Mechanism (CDM) project strategy, which provided the generation of carbon credits of 106,560 tCO2e. These credits remain in AMAGGI possession and are available for sale, when it is opportune. More information about the projects is available on the United Nations Framework Convention on Climate Change (UNFCC), projects 9540, 10047 and 10022.

Program for Mitigation and Adaptation to Climate Change

Known and analyzed the emissions inventory, it starts an analysis of the impact of climate change on AMAGGI activities, from agricultural and cattle production to energy generation, going through fluvial operations and distribution.

Thus, understanding how their operations cause impacts to the climate, both positive - for the preservation of forest areas - and negative - for the emission of greenhouse gases from their operations and in the value chain -; and also how climate change influences AMAGGI activities, the company has established the following plans, actions and commitments:

Emission Reduction Plan

As the company is expanding - illustrated by the increase in the number of warehouses, capacity expansion at the Lucas do Rio Verde plant, and increased grain outflow - its absolute emissions are expected to increase organically.

So, after evaluating the results of the inventories of previous years and projections of greenhouse gas emissions for 2025, with the growth and efficiency variables in the different business units, AMAGGI, through initiatives to improve efficiency in operations, expects to reduce its relative greenhouse gas emissions by 5% up to 2025 compared to 2015 (Scope 1 of the GHG Protocol inventory).

This number is being worked on in actions and projects in the company's business divisions, taking into account the most relevant and impactful issues for the business.

It is important to emphasize, however, that the premises and methodologies for calculating the emissions inventory are being improved every year, especially by the GHG Agricultural Protocol. Thus, AMAGGI reduction commitment can be strengthened or modified as a better understanding of the most impactful emissions and also of a larger amount of data is served, which will serve as inputs to improve the technical justification for the calculation of emissions.

Anyway, the company's premise is that its goals are always tied to its objective, which is to ensure efficient carbon management in operations and the value chain, with the least possible negative impact and maximizing the positive impacts.

Learn about the strategic and operational efficiency actions of each AMAGGI business division to mitigate emissions and contribute to achieving the reduction target, clicking here.

AMAGGI Commodities has worked intensively to improve the efficiency of dryers and aerators by adjusting equipment to improve biomass burning, aeration of silos and warehouses, as well as adjustments in biomass storage to increase wood quality and extend its life. One example is the automation of the Sinop warehouse in 2016, where an intelligent system for temperature and humidity monitoring was installed, which will save energy in 2017.

Over the past year, AMAGGI Commodities has also implemented two major climate change projects in its industries: Reduced Energy Consumption at the Itacoatiara plant and Sustainable Use of Alternative Energy Source at Lucas do Rio Verde plant.

The first one consisted of the replacement of exhaust system equipment and boiler ventilation. With the initiative, the system stopped being turned on at full power, using only the power required. The project reduced energy consumption, steam and biomass, totalizing an economy of R$340,000 / year, contributing to reduce atmospheric emissions by 143.5 tCO2e / year.

The change in the boiler process at Itacoatiara plant saved R$340,000 / year and stopped issuing 143.5 tCO2e / year.

The second project, developed at the Lucas do Rio Verde plant, allowed the unit to also use the saw dust as fuel for its boiler. Sawdust is usually a waste disposed of by sawmills, with a negative impact on the environment. After successive tests and adjustments in the boiler, it was possible to use it as biomass, enabling the company to purchase this by-product from logging companies as an alternative source of energy.

The project brought mutual benefit to the unit and the supplier, strengthening the company's role as a value generator for its stakeholders. The use of the new input contributed to reduce the process costs around R$ 1.26 million in 2015 and the preservation of 134 st of firewood. In addition to improving the efficiency of the boiler, it is estimated a reduction of approximately 4,700 tCO2e emitted.

The change in the supply for the boiler at Lucas do Rio Verde plant boosted a new alternative fuel source, which made it possible to avoid the use of 134 thousand tons of firewood and the emission of 4,700 tCO2e in scope 1.

AMAGGI Agro invests heavily in different tactics for operational efficiency. One of them is the Telemeclima project, which allows the management of the environment at the time of the field activities, through meteorological stations installed at strategic points in the field. With an investment of approximately R$250,000 so far, the project provides greater accuracy of the local weather forecast. The project also included the installation of chips in agricultural vehicles, allowing on-line monitoring of vehicle speed and trajectories, bringing greater efficiency in the consumption of the defensive and fuel.

An important initiative undertaken by AMAGGI Agro was the renovation, in the last years, of the fleet of agricultural vehicles composed of a large scale model, with equipment that covers a larger area, optimizing efficiency and working time in the field. It has already been verified a fuel economy of 26% in the planting stage, from the 2009/2010 harvest to the 2016/2017 harvest and also a 110% increase in operating income over the same period.

With these actions AMAGGI Agro achieves better performance with lower fuel use, greater efficiency and greater assertiveness in its operations.
The use of electricity from the small hydroelectric stations of the group by farms, warehouses and the headquarters generated a free market economy of more than R$2.8 million (before taxes) in 2016.

For 2017 the entrance of other units to the free market is being studied.
In order to make it possible to transport the grains produced at its units in Mato Grosso to Itacoatiara port, from where they are exported, AMAGGI invests in the diversification of logistics modalities: from Porto Velho, the company replaces the road carts with barges that follow the Madeira River to the port. On the waterway, each 20 barge convoy carries the equivalent of one thousand bulk carriers.

In addition to easing the flow of roads and adding efficiency to the business, water transport is more sustainable: according to a study carried out to calculate the Carbon Footprint in 2015, according to the GHG Protocol and in partnership with Pangea Capital, the emission of greenhouse gases from river transport (0.014 tCO2e / t corn) is 90% lower than the emission of road transport (0.15 tCO2e / t corn). Furthermore, there are parts of the way where the railroad is used, in which the emission is 99% smaller, according to the same study.

For more information click here.

In 2014 AMAGGI Logistics started an automation project, which consists in adopting an electronic equipment that collects real-time information from sensors installed on vessels (motors, generators, tanks, etc.) and transmits them to a control center, which translates them into visual information and alarms. The system has brought great results in the efficiency of using fuels in boats.

Other important benefits of the system are the automatic engine protection, which turns off if any parameter reaches a pre-programmed critical value, and the Significant Database analysis, which calculates the average fuel consumption of vessels throughout the year, serving as a basis for a more accurate and efficient budget.

From 2013 to 2016 vessel efficiency increased from 5.61 liters of fuel per ton transported to 4.47 liters per ton, which represented an average efficiency gain of 13% in fuel consumption per ton transported, also contributing to greenhouse gas emissions reduction.

Climate change adaptation plans EC2

In relation to climate risks, AMAGGI establishes adaptation plans so that its operations are perpetuated and the impacts on the operation are minimized.

Thus, in 2015 the company initiated a pilot project in the study of the seed production process, using the Climate Change Adaptation Tool developed by GVCes in the Companies for the Climate Platform (EPC). In 2016 the study was expanded to AMAGGI Agro, and the same methodology was implemented in AMAGGI Logistics, since the activities of these business areas suffer direct climate influences.

In 2016 several meetings were held with people responsible for the areas, in order to discuss and measure, with the risk and impact tool help, the activities and actions of the company in the short, medium and long term, as well as the influences of the climate changes over operations. The results of the risk identification and adaptation plans implemented by AMAGGI in its operations and in the value chain are presented below.

Agricultural activity is highly dependent on climatic factors: changes in humidity and air temperature, as well as increase on floods or prolonged droughts, or changes in rainfall (short summer), for example, can significantly affect the crops productivity, reduce the production overflow capacity, cause loss of investment and infrastructures, besides increasing direct and indirect costs and food prices. All this elements can affect the balance of the market, bringing risks to the business and even to food safety.

As a way of adapting to these different climatic scenarios and their consequences, AMAGGI Agro uses several techniques and controls in the crop, such as:

Climate monitoring to carry out planting and harvesting in the best season;

Use of no-tillage technique, which does not revolve the soil and increases the carbon fixation in it;

Use of brachiaria and other coverages in the off season to reduce soil exposure, maintaining its physical, chemical and biological quality, in addition to increasing resistance to adverse climatic conditions as well as soil biodiversity;

Recovery of degraded areas, for example, by planting stylosanthes (fodder legume), which improve soil quality;

Crop-livestock integration (see table).

At Itamarati Farm, in the municipality of Campo Novo dos Parecis, a pilot project of integration between agriculture and livestock was started in 2013, in an area of 240 ha. Due to the soil quality, in this area it was not possible to plant a second crop, then the Brachiaria ruziziensis planting experiment was started. The project was expanded to other pasture areas, currently covering 840 ha. Its first results show a drop in production costs, lower use of pesticides and fertilizers, and increased productivity from 60% to 70%. There is an improvement in the soil profile, with increased rooting and biodiversity, and reduction of natural enemies.

AMAGGI uses integrated pest management in all its farms, according to research recommendations of the Brazilian Agricultural Research Corporation (Embrapa) for grains and seeds, and in accordance with the social and environmental certifications implemented in the areas. These techniques used to control pests minimize the consumption of pesticides, which have a direct impact on Scope 3 of AMAGGI Greenhouse Gas Inventory. In 2016 AMAGGI started a pilot project at Tucunaré Farm with the technique of biological control. There are areas where control of caterpillars by means of pesticides has been completely replaced by biological control, with good results.

The company continues its research with new cultivars, with technology adapted to the new climatic conditions and pests, to reduce the number of applications of pesticides, and to seek the use of those that are more efficient.

In relation to seed processing, the company has invested in the improvement of seed storage technologies in cold rooms, in order to guarantee the quality of the product for the following harvests.

AMAGGI has participated in committees that discuss the use of biotechnologies and agricultural pesticides, in addition to establishing partnerships with institutions such as Ipam, Embrapa and Emater. This position is fundamental for the implementation of actions that will ensure the adaptation of AMAGGI Agro's operations to climate change.

As AMAGGI also acquires grains from partner producers, work carried out along its supply chain is very important because climate change can directly influence the availability of grains in the market.

So, to support the rural producer in maintaining and improving his productivity, the Technological Circuit - an action promoted by AMAGGI in partnership with biotechnology producers - is developed to provide farmers in the region in which the company operates with access to suitable agricultural pesticides and seeds. Important information is provided on the correct management of these inputs, to reduce the environmental impact, increase the safety of workers and the productivity of the crop. The socio-environmental certifications A.R.S., Proterra and RTRS also play a significant role, since in their implementation important controls are adopted to support the efficiency of the operational, social and environmental management of the producing farms.

In relation to its own operation, the AMAGGI Commodities grain storage stage is influenced by the climate, as the temperature rise requires more activation of the warehouse fans - which can increase energy and biomass expenses. In addition, rainfall can deplete biomass stocks, since the more humid it is, the more of it is required for grain drying; this is why most of the warehouses now cover their tarpaulin stocks. On the other hand, rain minimizes the dust of the yards and irrigates the lawn, discarding the use of groundwater.

In industries, during periods of heavy rain, the consumption of biomass and energy is increased. In 2017 the Lucas do Rio Verde plant will invest more than R$800,000 to build a biomass storage shed in order to optimize its stock and consumption.
The rainfall regime also impacts river operations. Drought makes transportation difficult, with the formation of sandbanks and the narrowing of shipping channels, which requires more safety precautions and reduces the volume of cargo per barge. The flooding period can lead to loading risks if the level of the river rises excessively, which may compromise the quay structures.

In order to deal with these difficulties, AMAGGI seeks to strengthen relations with institutions such as the National Water Agency (ANA) and the Amazon Protection System (Sipam), monitoring the information disclosed and exchanging technical experiences, such as a study conducted in 2016 to evaluate influences of Madeira River flow. The company also began to monitor some fluviometric indexes in order to increase the forecast, feasibility and safety of its loading and transport plan. Improvements were also made in the loading structures of the barges of Porto Velho units, improvements in the vessels for the navigation monitoring, and the operation was adapted to the depth of the river, reducing the risk of accidents and seeking more efficiency against its current navigation conditions.

Aware of all these risks and committed to managing them and improving its productivity, AMAGGI has invested in the generation of knowledge and new technologies. By identifying and mitigating these risks, the company increases its operational efficiency, turning them into competitive advantage and pioneering.

Products Carbon Footprint

The Carbon Footprint, technically known as Product Life Cycle Analysis, presents the greenhouse gas emissions from each stage of production, from the acquisition of the raw material to the delivery of the product to the customer, involving the entire chain of production value. It provides important information for managing emissions internally to the company as well as to its suppliers and customers.

In the calculation of AMAGGI Carbon Footprint, the emissions and removals of the transportation stages of the agricultural inputs were considered; production and consumption of agricultural inputs; change of land use; as well as the production and consumption of fuel and biomass used in warehouses and transportation from the farm to the international port.

AMAGGI soybean carbon footprint was calculated based on data from 2014, following the ISCC standard.

The soybean production at the company's farms (Itacoatiara, Santos, Paranaguá, São Francisco and Belém) was considered, and the results were compared to the average market in Brazil (Mato Grosso), Canada, United States, Ukraine and Argentina. The ports of Fredrikstad, where Denofa and Rotterdam are located, were considered as the destination of the soybean.

Main results:

Maritime logistics accounts for 55% of greenhouse gas emissions, followed by 34% of emissions from the crop.

AMAGGI has one of the lowest diesel consumptions in agricultural production, due to the scale of the machines used and, consequently, to its productivity.

AMAGGI consumes one of the smallest amounts of energy and nitrogen fertilizers in the group of countries due to the use of high technologies and good agricultural practices.

The comparison showed that AMAGGI export operations emitted 14% less CO2e than the average companies in Brazil, and almost 20% less than the United States average for delivering grains at the same destination.

AMAGGI Corn Carbon Footprint was calculated based on 2015 data basis, following the GHG Protocol standard, "Product Life Cycle Accounting and Reporting Standard".

The corn produced at AMAGGI farms was considered, with output from the main ports (Itacoatiara, Santos, São Francisco and São Luís), and the results were compared to the market average of Brazil (Mato Grosso), Hungary, United States, France and Ukraine. Rotterdam´s port was considered as the corn destination.

Main results:

The road logistics modalities in Brazil are one of the biggest impacts on greenhouse gas emissions, accounting for 57% of emissions.

The agricultural stage has the second largest emission, representing 22%, followed by the production of agricultural inputs, with 17% of the emissions of AMAGGI corn Carbon.

In Brazil the climate is conducive to the manifestation of pests, which increases the demand for pesticides. This demand is lower in countries with colder climates.

The average of the Brazilian and the Hungarian productions present the highest emissions of the studied group, being 40% above AMAGGI´s.

The final comparison between the countries showed that the AMAGGI has a performance equivalent to the one in France, with the lowest total emissions of the group studied, and also shows the lowest emission in the agricultural phase.