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August 25, 2016

Deadline Extension for Brazilian Rural Environmental Registry

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

Under the New Forestry Code adopted in Brazil several years ago, all rural properties in Brazil are required to be electronically registered into a governmental database. The purpose of the database is to assess the environmental situation in Brazil allowing political and governmental officials to better understand the state of the environmental in Brazil.

The property registration must indicate the environmental situation of the property including: how much of the original vegetation was cleared for pastures or row crops, how much of the original native vegetation remains in tack, and how much of the property is designated as permanent protected areas such as along streams and rivers. The registration is part of what is called the Rural Environmental Registry or CAR (Cadastro Ambiental Rural).

Once a property is registered, the landowner must then present a plan of action on how illegally cleared areas will be reforested, how degraded areas will be restored, and how environmental sensitive areas will be protected under a program called the Program for Normalizing the Environment or PAR (Programa de Regularizacao Ambiental).

The landowner must indicate in their PAR proposal how they intend to restore degraded areas to minimize erosion for example, how they will reforest areas that were illegally cleared and how they will protect sensitive environmental areas such as streams and rivers. As you can envision, a nationwide environmental plan such as this is very complicated and very controversial.

Under legislation recently introduced in the Brazilian Congress, the deadlines for registering the properties and presenting a recovery plan would be extended for approximately one year with the possibility of another one-year extension by executive order. Under the original legislation, landowners had until May 4, 2016 to register the property and until May 25, 2017 to present a proposal for environmental recovery.

Getting the New Forestry Code through the Brazilian Congress was very difficult. The most controversial part was the retroactive enforcement of environmental regulations. Many areas were cleared illegally decades ago and forcing landowners to reforest those areas was a "deal breaker." In order to help get the program approved in Congress, they grandfathered in that any environmental infractions committed prior to July 22, 2008 would not be included in the PAR program.

Even with that compromise, these new programs are going to impose heavy costs on Brazilian farmers in terms of restoration costs and lost production potential. Landowners who do not register their properties may lose government benefits and may be prohibited from using areas that are designated as permanent protected zones.

According to the Environmental Institute of Parana (IAP), 95% of the rural properties in the state are now registered into CAR. This number represents 353,000 rural properties.