Poster #92 - Laundering and Evasion in Response to Sustainable Sourcing Policies: Evidence from Brazil's Cattle Sector

• In Event: Friday Poster Reception

Abstract

Modern slavery is a hidden and pernicious form of labor exploitation that persists in agricultural supply chains worldwide. In sectors characterized by dispersed production and weak oversight, experts emphasize the need for combined public enforcement, transparency mechanisms, and private-sector sourcing restrictions to ensure supply chains remain free of modern slave labor (MSL). Yet the hidden nature of labor exploitation has limited rigorous evaluation of whether these policies meaningfully change employer behavior.

We analyzed how a public transparency policy—the Brazilian government’s “Dirty List” of employers found to use MSL—interacted with private-sector sustainability commitments in the cattle sector, a major source of both labor exploitation and deforestation in the Amazon. Using detailed administrative data on cattle movements from 2009–2023, we tracked how ranchers changed their sales behavior when they were publicly named for labor violations and faced exclusion by export-oriented slaughterhouses that had signed sustainable supply chain commitments promising to block suppliers with illegal deforestation or MSL.

Our results provide the first causal evidence on how sanctioned employers responded to and evaded anti-slavery policies in Brazil’s cattle sector. Ranchers placed on the Dirty List did not reduce overall cattle sales, but they significantly changed their destinations of sale. Specifically, ranchers sharply reduced direct sales to signatory slaughterhouses, but continued to sell to non-signatory slaughterhouses and increased sales of slaughter-age animals to other ranchers. Many of these intermediary ranches subsequently sold cattle to the same slaughterhouses that had ostensibly excluded Dirty Listed suppliers, indicating systematic laundering of cattle through “clean” properties. As a result, labor-sanctioned ranchers remained embedded in both domestic and international supply chains, including exports to major global markets such as the EU.

Our results highlight the urgent need to strengthen current strategies used to monitor and mitigate MSL in supply chains. Companies face growing consumer pressure and legal liability to rid their supply chains of MSL. The EU Deforestation Regulation will soon require importers of certain products – including cattle, beef, and leather – to conduct due diligence that all suppliers complied with country-of-origin labor laws and other legislation. And beginning in July 2027, public prosecutors in Brazil will include in their slaughterhouse audits labor and environmental infractions by second-tier suppliers. Our study demonstrates that to comply with these policies and fulfill commitments to remove labor infractions from supply chains, meatpackers must implement traceability systems that allow visibility into upstream production practices and are difficult to evade.

Author

• Tara Mittelberg, University of Wisconsin-Madison
  Presenting Author