SAO PAULO/BRASILIA (Reuters) – A judge in Brazil’s top court on Thursday suspended a law by the country’s top soy-producing state that would end tax breaks for companies following an agreement not to buy soy from deforested areas of the Amazon rainforest.
Judge Flavio Dino suspended the entry into force of the western state of Mato Grosso’s law on January 1 until the court makes a final decision.
WHY IT’S IMPORTANT
Brazil is the world’s largest soy producer and exporter, and Mato Grosso is the top producing state.
The Amazon Soy Moratorium Agreement, praised by scientists and conservationists, was signed voluntarily in the mid-2000s by global commodity giants, who pledged to stop buying soy from rainforest farms deforested after 2008.
Under Brazilian forestry rules, landowners in the Amazon can mine up to 20% of their properties. But a wave of deforestation in the early 2000s led to calls for action from companies fearing a broader ban.
KEY QUOTES
Dino wrote that the state law “appears to violate the principle of free enterprise” because it creates an unequal environment for the companies that voluntarily decide to comply with the agreement.
He also said the law “shows signs of target abuse, as tax rules are used as a punitive instrument.”
THE REACTION
Mato Grosso will appeal the decision, Governor Mauro Mendes said in a video published on his social media accounts on Thursday.
He said if the appeal is not accepted, additional measures will be taken.
“We cannot accept companies, national or foreign, coming to Brazil and making demands that are not stated in Brazilian law,” he said.
ADDITIONAL CONTEXT
Earlier this month, the soybean lobby Aprosoja-MT, based in Mato Grosso, formally asked Brazilian watchdog CADE to end the moratorium. She said it fostered a “purchasing cartel” and harmed farmers who strictly adhered to the South American country’s forestry code.
(Reporting by Lisandra Paraguassu in Brasilia; additional reporting and writing by Andre Romani in Sao Paulo; Editing by Leslie Adler)
