By Ana Mano and Ricardo Brito
SAO PAULO (Reuters) – Brazil’s Supreme Court will allow the country’s biggest farming state to withdraw tax incentives from signatories of the so-called “Soy Moratorium”, a voluntary ban by grain traders on soybean purchases from Amazon areas deforested after 2008.
Conservationists have praised the initiative for slowing damage to the world’s largest rainforest. But it is under growing pressure from farmers’ lobbies interested in expanding plantings to meet rising demand for soy from Brazil, the leading producer globally.
Mato Grosso state, which supplies almost a third of Brazil’s soybeans, passed a law last year pulling tax advantages for those joining the Soy Moratorium.
The Supreme Court had provisionally suspended enforcement of the law pending a ruling on its compliance with the constitution.
In the decision handed down on Monday following arguments from Mato Grosso, Justice Flavio Dino acknowledged the moratorium as an important conservation tool, however, he wrote it cannot be used to constrain the actions of the state.
The state “may base its tax incentive policy on criteria that are different from those of a private agreement, as long as it is in compliance with national legislation,” Dino wrote.
“It seems reasonable to me that [Mato Grosso] state should not be obliged to grant tax incentives or public land [use] to companies failing to comply with laws that took effect after the signing of the Soy Moratorium,” he added.
The ruling must now be confirmed by a panel of Supreme Court justices before it can be enforced from January 1, 2026, the decision said.
Abiove, which represents soybean traders, did not have an immediate comment on the ruling though it said last week that the case gave the soy industry a chance to improve the moratorium.
The current agreement bars soy purchases from a whole farm if it includes areas deforested since 2008, and one potential change could allow more flexibility by drawing a distinction between individual soy fields.
Farmers and traders, however, have yet to reach a compromise.
(Reporting by Ana Mano in São Paulo and Ricardo Brito in Brasília; Editing by Joe Bavier)
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