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Brazil Traders Exit Forest Pact for Tax Breaks
30 Dec
Summary
- Major soybean traders may abandon a two-decade Amazon protection pact.
- A new Mato Grosso state law will remove tax incentives for participants.
- The moratorium has saved millions of acres of rainforest over 18 years.
Major global soybean trading firms are reportedly preparing to abandon the long-standing Amazon Soy Moratorium, a pact credited with preserving millions of acres of rainforest over the past two decades. This decision stems from a new law in Brazil's Mato Grosso state, set to take effect in January. The law will strip tax incentives from companies participating in the environmental agreement, prompting traders to prioritize financial benefits over conservation commitments.
The Amazon Soy Moratorium, established in 2006, has been a critical tool in slowing Amazon deforestation by preventing signatories from purchasing soybeans grown on land cleared after July 2008. However, Mato Grosso's new legislation represents a significant retreat from environmental pacts, driven by a desire to maintain tax benefits, which amounted to approximately 4.7 billion reais between 2019 and 2024. Critics warn this move sets a dangerous precedent amid a global climate emergency.
Brazil's federal government is challenging the Mato Grosso law in court, advocating for the preservation of environmental commitments. The potential collapse of the moratorium could embolden powerful farm lobbies and undermine broader environmental protections in Brazil, potentially impacting other industries. The situation is also drawing attention from European groups concerned about the impact of Brazilian agribusiness on vital ecosystems, potentially affecting EU-Mercosur trade agreements.
