Brazilian court suspends law to cut tax breaks for soybean companies

A judge in Brazil’s highest court on Thursday suspended a law in the country’s largest soybean-producing state that eliminated tax breaks for companies that agreed not to buy soybeans from deforested areas of the Amazon rainforest, Reuters reported.

Judge Flavio Dino suspended the law in the western state of Mato Grosso from January 1 until the court makes a final decision.

WHY IT MATTERS

Brazil is the world’s largest producer and exporter of soybeans, and the state of Mato Grosso is the top producer.
The “Amazon soybean moratorium” agreement, praised by scientists and conservationists, was voluntarily signed by the world’s commodity giants in the mid-2000s, who pledged to stop buying soy from rainforest farms that were cleared after 2008.
Under Brazilian forestry laws, landowners in the Amazon can clear up to 20 percent of their land. But a surge in deforestation in the early 2000s prompted calls for action from companies that feared a broader ban.

KEY QUOTES
Dino wrote that the state law “ appears to violate the principle of free enterprise” because it creates an unequal playing field for companies that voluntarily choose to join the agreement.
He also said the law “shows signs of an abuse of purpose because it uses tax rules as a punitive tool.”

ANSWER MEASURES.
Mato Grosso state governor Mauro Mendes said he would appeal the decision, in a video published Thursday on his social media accounts.
He said that if the appeal was not accepted, further action would be taken.
“We cannot accept that companies, national or foreign, come to Brazil and make demands that are not in Brazilian law,” he said.

ADDITIONAL CONTEXT
Earlier this month, soybean farmer lobby Aprosoja-MT, based in the state of Mato Grosso, formally asked Brazilian watchdog CADE to lift the moratorium, saying it promotes a “procurement cartel” and harms farmers who strictly abide by the South American country’s forestry code.

Tags: Brazil, prices, soybean