Top court upholds deal banning purchase of soy from deforested areas

Brazil's Supreme Court upheld the Soy Moratorium, an agreement signed 20 years ago by major companies in the sector to prevent the purchase of soybeans from deforested areas in the Amazon. The court ruled that the private agreement aligns with the Constitution and aids environmental preservation. The deal, established in 2006, requires companies to commit to not trading soy from deforested areas after July 2008, in exchange for tax exemptions and preferential credit terms.

Environmentalists expressed concern over the court's decision, as it also deemed two state laws partially constitutional. These laws prohibit tax incentives and public land allocation to participating companies in Mato Grosso and Rondônia states. The court ruled in favor of these laws, stating they are lawful but that incentive withdrawals or reductions can only occur in the following tax year or within 90 days in special cases.

The decision could potentially reverse the positive trend of reduced deforestation in the Amazon, as recent studies suggest. Major companies, including the Brazilian Association of Vegetable Oil Industries (Abiove), have withdrawn from the voluntary Soy Moratorium agreement since the state laws went into effect. A study published in the journal Science estimates an additional 1.4 million hectares of deforestation in the Amazon over the next decade if the Soy Moratorium were to be abolished.