Brazil Top Court Backs State Laws That Ended Amazon Soy Pledge

Brazil's Supreme Court has ruled on a landmark environmental initiative, upholding state laws that effectively dismantled the Amazon soy moratorium. The decision, delivered on Wednesday, rejected farmers' claims that the 20-year-old voluntary pledge was unlawful, thereby shielding major grain traders and processors from billions of reais in potential damages.

The court, however, also supported state-level measures, including a Mato Grosso law that revoked tax benefits for companies participating in the moratorium. That move prompted several major traders, including U.S. firms ADM and Cargill and China's Cofco, to withdraw from the pledge in January, a step environmentalists said effectively ended the effort.

The moratorium, introduced in 2006, barred participants from buying soybeans grown on land deforested after July 2008. Research credited the initiative with significantly reducing Amazon deforestation, a critical factor in global climate regulation. Farmers had argued the restrictions were unfair, noting Brazilian law permits clearing up to 20% of a property, while the moratorium prohibited any post-2008 deforestation.

Brazil's soy crushers group, Abiove, welcomed the ruling, saying it removed legal uncertainty. Its head, Andre Nassar, indicated members were unlikely to rejoin the moratorium. Greenpeace's Cristiane Mazzetti called the decision a setback that could reverse positive deforestation trends in the medium term. Farmers group Aprosoja MT said it would evaluate options for reconsidering compensation claims.

The ruling adds uncertainty to President Luiz Inacio Lula da Silva's goal, launched in 2023, to halt Amazon deforestation by 2030. A July study estimated that ending the moratorium could lead to an additional 1.4 million hectares of deforestation and roughly 745 million metric tons of greenhouse gas emissions over the next decade.