SAO PAULO/BRASILIA (Reuters) – A Brazilian Supreme Court judge on Thursday blocked a law from the country's largest soybean-producing state that would have ended tax breaks for companies after an agreement not to buy soy from deforested areas of the Amazon (NASDAQ: ) Rainforest.
Judge Flavio Dino suspended the law in the western state of Mato Grosso from taking effect on January 1 until the court makes a final decision.
Why is it important
Brazil is the world's largest producer and exporter of soybeans, and Mato Grosso is the top producing country.
The Amazon Soy Freeze Agreement, praised by scientists and environmentalists, was voluntarily signed by global commodity giants in the mid-2000s, which pledged to stop purchasing soybeans from farms in deforested rainforests. After 2008.
Under Brazil's forest rules, landowners in the Amazon can clear up to 20% of their property. But a wave of deforestation in the early 2000s sparked calls for action from companies who feared a broader ban.
Key quotes
The state law “appears to violate the principle of free enterprise” because it creates an unequal environment for companies that voluntarily decide to abide by the agreement, Deno wrote.
He also said the law “shows signs of abuse of purpose, because it uses tax rules as a punitive tool.”
Reply
Governor Mauro Mendes said in a video posted on his social media accounts on Thursday that the state of Mato Grosso will appeal the decision.
He said that if the appeal is not accepted, additional measures will be taken.
“We cannot accept that companies, national or foreign, come to Brazil and make demands that do not exist in Brazilian law,” he said.
Additional context
Earlier this month, soybean farmer lobby group Aprosoja-MT, based in Mato Grosso, formally asked Brazilian watchdog CADE to end the moratorium, saying it had strengthened a “buying cartel” and harmed farmers who strictly adhere to the country's forest law. In South America.
