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June 17, 2019

Industry Pushback against Weaker Environmental Rules in Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

Late last week, the Bolsonaro administration sent to the Brazilian Congress proposed legislation that would weaken or even eliminate the requirement for Brazilian landowners to register their land in the Rural Environmental Registry (CAR). Prior legislation required all rural property to be registered in CAR as a way to enforce environmental regulations pertaining to illegal land clearing and the requirement to maintain a certain percentage of the land in its native vegetation.

This the latest in a series of anti-environmental proposals put forth by the Bolsonaro administration. This proposal thought has been met with forcible pushback by one of the premier agricultural organizations in Brazil - Abiove.

This latest proposal apparently reached a tipping point for members of the Brazilian Association of Vegetable Oil Industries (Abiove). Members of Abiove include all the major grain companies and grain processors in Brazil. They are partially upset about the proposed weakening of the Rural Environmental Registry (CAR), which is the best way of tracking illegal land clearing and agricultural production on illegally cleared land in Brazil.

The reason why they are so concerned about this legislation is because they have spent decades promoting sustainable agricultural practices in Brazil that do not imperial the Amazon rain forest. They have promoted this "brand" of environmental stewardship especially to their European customers who import half of Brazil's soybean meal exports. The Europeans are particularly sensitive to tracking the origins of Brazil's soybean exports.

The president of Abiove feels CAR registration is essential because Brazil's foreign customers want to know if grain expansion in Brazil is occurring on open land or on deforested land and the CAR registration is the best way of tracking the production.

Registration in CAR allows the government to monitor if landowners have illegally cleared land along streams and rivers and if they have maintained the mandatory percentage of their property that must remain in native vegetation. If violations are detected, then the landowner is prohibited from obtaining credit from banks, from selling rural properties, and from selling any products produced on the illegally cleared land.

CAR was created as part of the Forestry Code that regulated all land clearing practices in Brazil after July 22, 2008. Registration in CAR was mandatory and more than 90% of producers in Brazil have already registered in CAR.

Additionally, Abiove continues to support the Soybean Moratorium in the Amazon that since 2006, has prohibited the sale of soybeans from land that had been cleared illegally.

President Bolsonaro feels environmental regulations are impediments to Brazil's agricultural sector and he has proposed the relaxation or elimination of many of these regulations. Nearly everyone outside of the agricultural sector are against these proposals and now even organizations within the agricultural sector are also expressing increasing concerns.

In fact, the prior Minister of Agriculture, Blairo Maggi, expressed concerns that Brazil could ruin its hard earned "sustainable brand" by catering to a few landowners who knowingly broke the law by clearing land illegally. Before leaving office, he warned that the short term financial gain for these few individuals could hurt Brazil's ability to sell its products around the world.