Brazil’s Soy Traders May Abandon Amazon Protection Pact Over Tax Changes

Post by : Saif Nasser

Some of the world’s largest soy trading companies are preparing to withdraw from the Amazon Soy Moratorium in Brazil, a landmark pact that has protected millions of acres of rainforest for nearly two decades. Sources with direct knowledge of the matter told Reuters that the firms aim to preserve tax benefits in Mato Grosso, Brazil’s leading soy-producing state.

The Amazon Soy Moratorium, signed in 2006 by companies including ADM, Bunge, Cargill, Cofco, and Brazil’s Amaggi, prohibits buying soy from lands deforested after July 2008. The pact has been credited with slowing deforestation and protecting an area of rainforest roughly the size of Ireland.

However, a new state law in Mato Grosso, passed in 2023, will strip tax incentives from companies participating in the conservation program starting January 2026. The law is seen as a win for Brazil’s powerful farm lobby, which has long criticized environmental rules for limiting market opportunities and income.

According to state auditors, soy traders benefited from tax incentives worth about 4.7 billion reais ($840 million) between 2019 and 2024. ADM and Bunge were the largest recipients, each receiving around 1.5 billion reais ($269 million). Sources say most companies may choose to abandon the moratorium rather than lose these financial benefits.

Environmentalists warn that ending the moratorium would be a major setback for Amazon protection. Cristiane Mazzetti of Greenpeace, who oversees the pact, called the potential withdrawals a “dangerous precedent” during a global climate emergency. Without the moratorium, deforestation could increase as farmers clear land for soy cultivation.

The change also comes amid other environmental rollbacks in Brazil. This year, the farm lobby successfully weakened environmental permitting laws and reduced protections for Indigenous lands. Experts fear that abandoning the soy moratorium could encourage further dismantling of key environmental rules, including parts of the country’s forestry code, which restricts tree cutting on large portions of private land in the Amazon.

The federal government under President Luiz Inacio Lula da Silva has fought in courts to challenge the Mato Grosso law. Andre Lima, a senior official at the Environment Ministry, warned that companies may abandon the moratorium for economic reasons if the law takes effect, though firms have not officially confirmed plans.

The retreat from environmental commitments could have far-reaching consequences for global soy markets. Brazil is the world’s largest soybean producer, and deforestation from soy expansion has attracted international criticism. European farmer groups have cited environmental concerns to challenge trade agreements between the European Union and South America’s Mercosur bloc.

Legal challenges are ongoing. Brazil’s Supreme Court has temporarily allowed the Mato Grosso law to take effect while halting antitrust investigations into the soy moratorium, leaving uncertainty over the pact’s future. Environmental organizations continue to fight the law in hopes of preserving the agreement that has helped save vast areas of rainforest.

The possible exit of these major companies from the Amazon Soy Moratorium underscores the tension between economic incentives and environmental protection. Without strong action, Brazil risks undermining years of progress in protecting the Amazon, one of the world’s most vital ecosystems.