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October 28, 2016

Brazil Levies Fines for Illegal Grain Production in Amazon Region

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

The Brazilian EPA (Ibama) and the Brazilian government have renewed their efforts to slow down illegal deforestation in the Amazon Biome by making it harder to produce and market grain from areas that have been cleared illegally. They are doing it by targeting farmers and companies that either finance or assist in marketing grain produced in these areas.

In 2008, the Brazilian government joined with international grain companies and environmental organizations to prohibit the selling of grain produced in areas that were illegally deforested. When the embargo went into effect, the embargoed areas were publically announced so that everyone was aware of the program, but the Amazon is a very large area and some individuals have tried to skirt the embargo

Over the last few weeks, the federal government has renewed its efforts to maintain the embargo by identifying and issuing fines to farmers, grain companies, transportation companies, agricultural processors, and one bank that violated the embargo.

The initial efforts have focused on the state of Mato Grosso and it has already resulted in dozens of fines that have totaled approximately R$ 170 million for the planting or marketing of approximately 148,000 sacks of soybeans and corn (325,000 bushels) that have been produced illegally. These fines are not only due to the production of grain, but also for preventing the forest from regenerating itself in illegally cleared areas.

Data from the Brazilian National Space Research Institute (Inpe) indicates that in 2015 there were 6,207 square kilometers (1,533,000 acres) deforested in the Amazon biome with 25.8% occurring in the state of Mato Grosso. It is not surprising that Mato Grosso is the state where this is occurring the most because it is the leading grain producing state in Brazil.

In the central and southern regions of the state, there is a tremendous amount of soybean and corn production, while in the norther part of the state, it is part of the Amazon biome. So farmers who produce grain illegally in northern Mato Grosso have the infrastructure available in the form of grain elevators and transportation networks that are necessary to move the illegally produced grain.

Ibama's strategy for slowing down deforestation is to make it more difficult for anyone to sell or market products for illegally cleared areas. Grain production though is a very small part of the reason why areas are being deforested. The overwhelming reason for deforestation in the Amazon Biome is for the establishment of pastures for cattle ranching and for lumber extraction.