By Ana Mano and Manuela Andreoni
SAO PAULO (Reuters) -The fate of Brazil’s soy moratorium, a corporate pact credited with slowing soy-driven deforestation in the Amazon rainforest, is hanging in the balance as government agencies clash over its legality, heightening risks for global grain traders.
Brazilian antitrust regulator CADE launched a full-blown investigation this week as it suspended the 20-year agreement under which traders have vowed not to buy soybeans from recently deforested farms.
The agency’s General Superintendent Alexandre Barreto de Souza cited evidence suggesting the accord effectively created a cartel violating competition law.
However, both Brazil’s Environment Ministry and federal prosecutors, who back and monitor the moratorium, have mounted a public defense of the agreement, setting the stage for a struggle over its fate.
Andre Lima, who leads the Environment Ministry’s anti-deforestation efforts, warned that ending the moratorium may put pressure on the 25 million acres of Amazon rainforest that can still be legally razed – potentially reviving soy’s destructive impact on the biome from the 1990s and early 2000s.
If CADE rules the moratorium is illegal, “it will make it a lot harder to control and reduce legal deforestation,” Lima said, adding it could also drive up land values in the Amazon, which has also been a long-term driver of illegal deforestation.
Federal Prosecutor Ubiratan Cazetta said he will assess CADE’s suspension order and eventually issue an opinion, which could influence the final decision of CADE’s six commissioners, who are likely to hear companies’ appeals.
Cazetta, who has been monitoring the moratorium for two decades, said prosecutors never found evidence it hurt competition, adding that it had been “a very effective” policy.
“There is an institutional concern from the public prosecutors’ office regarding all vectors that could, in some way, encourage deforestation in the Amazon biome,” he said.
Brazil’s soy moratorium is not the first corporate environmental pledge facing regulatory challenges. These have helped derail efforts by insurers and banks around the world to collaborate in curbing their impact on climate change.
Many corporations have withdrawn from such alliances to avoid “being identified as potentially hampering competition,” said Valerio Micale, who leads the work on financial sector integrity at the Climate Policy Initiative, a London-based think tank. “The main reason is really the lack of clarity in legislation that was usually written before the climate crisis was an issue.”
‘LAWFARE’
For the 30 soy exporting firms and trade groups that enforce the moratorium, the support from government agencies may provide some cover against farmers trying to dismantle the agreement so they can push their crops deeper into the forest.
The Supreme Court is separately hearing three cases challenging state bills, pushed by farmer groups, that strip billions of dollars in tax benefits from grain companies over their role in the moratorium.
In a formal opinion before the top court, Brazil’s solicitor general expressed support for the pact.
In a 2024 lawsuit initiated by soy farmer lobby group Aprosoja in Mato Grosso state, a Sao Paulo judge authorized access to the private communications of two directors at Anec, which represents grain exporters, and two at Abiove, which represents soy crushers, according to four sources familiar with the case.
It was filed with the aim of producing “early evidence” against promoters of the soy moratorium before Aprosoja filed a separate suit requesting 1 billion reais ($183 million) in damages for losses allegedly incurred by farmers because of the agreement.
Anec said in a statement it had appealed the ruling authorizing access to private communications of one of its executives as well as the sharing of the data with CADE.
CADE and Abiove declined to comment.
Aprosoja maintains the moratorium is illegal, saying companies operate as a purchasing cartel.
(Reporting by Ana Mano and Manuela Andreoni; Editing by Brad Haynes and Sonali Paul)
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