The abolition of tax breaks could force international traders to abandon an agreement to protect the Amazon forests, which would increase the area under soybeans.
In 2006, American companies ADM, Bunge, Cargill, China’s Cofco and Brazil’s Amaggi signed an agreement to protect the Amazon forests, which included a moratorium on soybean cultivation. Over two decades, this saved millions of acres of rainforest and traders received tax breaks worth $840 million between 2019 and 2024, including $269 million for ADM and Bunge each.
However, a new law in the state of Mato Grosso will eliminate tax breaks for program participants starting January 1, so several large traders are ready to withdraw from the forest protection agreement to avoid losing money, according to sources in the country's Ministry of the Environment.
It is not yet known which company this is, as none of the major traders have yet officially commented on the situation.
The moratorium has been one of the main factors that has slowed deforestation in the Brazilian Amazon over the past two decades, as it prohibited traders who signed it from buying from farmers soy grown on the site of forests cut down after July 2008.
Researchers estimate that without the moratorium, Brazil would have an area the size of Ireland under soybean plantations, as confirmed by the situation in neighboring countries, including Bolivia.
Critics of the moratorium say it restricts the market and hurts farmers. Under pressure, the state of Mato Grosso passed a law in 2023 that contradicts global climate change policies, even as record temperatures caused by deforestation and increased use of fossil fuels continue to rise.
Greenpeace considers the situation a "dangerous precedent" that could force companies to abandon forest protection in order not to lose tax breaks, even despite the climate emergency.
The Brazilian federal government has taken legal action against a new law in the state of Mato Grosso that eliminates tax breaks for traders who comply with environmental commitments.
