Mato Grosso Law Overturns Soy Moratorium, Jeopardising Amazon Deforestation Progress

A significant agreement that has helped reduce deforestation in Brazil's Amazon for nearly 20 years has faced a setback. Mato Grosso, the largest soybean-producing state in Brazil, has enacted a law that removes incentives for processing and trade companies involved in the Soy Moratorium. This 2006 agreement was established after a Greenpeace investigation linked soy production in illegally deforested areas to major U.S. commodity firms like Cargill, Bunge, and ADM.

The new legislation, supported by soybean producers and most lawmakers in Mato Grosso, eliminates tax benefits for companies that adhere to agreements restricting agricultural expansion into legally deforestable areas. Governor Mauro Mendes signed this law on October 24, and it will take effect on January 1, 2025. However, regulations are still pending. The law specifies that only soy from illegally deforested parts of a farm will be restricted from sale.

Impact on Deforestation Efforts

Studies have shown the moratorium has played a crucial role in preserving the Amazon. A 2020 study published in Nature Food indicated that the agreement, alongside public policies, led to the most significant reduction in deforestation recorded in Brazil's Amazon between 2003 and 2016. The new law allows for legal deforestation of up to 20% of large rural properties, which supporters argue is less restrictive than the moratorium's 2008 limit.

Critics of the new law include environmental nonprofits and the Brazilian Association of Vegetable Oil Industries (Abiove), which represents leading soybean trade and processing companies. "The law is a setback," stated Bernardo Pires, Abiove's sustainability director. He believes companies committed to sustainability should receive more benefits rather than losing them.

Reactions from Various Stakeholders

The law has sparked mixed reactions within President Luiz Inácio Lula da Silva's government, which aims for zero deforestation by 2030. André Lima from the Ministry of the Environment and Climate Change argues that withdrawing tax incentives from sustainable companies contradicts Brazil's deforestation reduction goals and national tax reform guidelines promoting sustainable development.

Agriculture Minister Carlos Fávaro supports the new law, stating that the moratorium is stricter than existing laws, causing dissatisfaction among producers. Meanwhile, Cristiane Mazzetti from Greenpeace Brazil criticizes politicians associated with agribusiness for opposing the moratorium while attempting to weaken environmental protections.

The Soy Moratorium's zero-deforestation policy remains a market demand, especially from European customers who do not want products linked to deforestation. Abiove members like Cargill, Bunge, and ADM purchase over 90% of Mato Grosso's soy production. The state's tax benefits amount to $308 million annually.

Lucas Costa Beber, president of Mato Grosso soy producers, expressed determination against the moratorium: "We will not rest as long as the moratorium harms even one producer." The new law challenges efforts to curb deforestation but reflects ongoing tensions between economic interests and environmental conservation in Brazil.