Bloomberg News

Brazil Faces $100 Billion Hit If Forest Bill Fails, Senator Says

November 04, 2011

Nov. 3 (Bloomberg) -- Brazil would lose about $100 billion in agricultural output if the senate rejects legislation that forgives farmers for illegally clearing protected rainforest, said Senator Katia Abreu.

Failure to approve the bill would force farmers to reforest about 70 million hectares (173 million acres) of land currently under coffee, oranges and other commodities, said Abreu, 49, who is president of the Brazilian Confederation of Agriculture and Livestock.

“We would have a brutal reduction in the country’s food production,” she said in an interview at Bloomberg’s headquarters in New York on Nov. 1. “The legal uncertainty we are living in is deeply worrying.”

The Senate vote, scheduled for this month, comes as deforestation increases in the world’s biggest rain forest amid surging demand for agricultural and wood exports, according to the National Institute for Space Research. Environmental campaigners say the amnesty may encourage formers to flout regulations that limit deforestation.

The bill will update the 1965 Forest Code, which requires farmers to keep a certain percentage of their land as forest. That percentage varies from 80 percent in parts of the Amazon to 20 percent in the swampy Pantanal region in western Brazil.

The new legislation would make the current percentages law, eliminating the risk that they may be changed by presidential decree.

Agricultural Giant

Since the 1960s, farmers have helped transform Brazil from a food importer to one of the world’s largest exporters of soft commodities, and they should be allowed to remain competitive, Abreu said.

Brazil is now the world’s top producer and exporter of coffee and sugar cane, the biggest beef exporter, the largest producer of oranges and the second-largest producer of soy after the U.S.

Much of that expansion has been made possible by cutting down the rain forest, not always legally.

The proposed bill would grant farmers amnesty and exempt them from being required to replant areas illegally deforested before 2009. That is fair because many farmers complied with the limits on deforestation, only to see those restrictions then tightened by decree, making them outlaws, Abreu said.

The legislation was approved by the lower house in a 410-63 vote on May 24. Since then, the bill has been altered to address concerns expressed by President Dilma Rousseff, said Abreu, a member of the Social Democratic Party who represents the state of Tocantins. She expects a vote by Nov. 23.

‘Lost Opportunity’

Opponents of the bill say it doesn’t take the opportunity to adapt 1965 rules to current global environmental standards.

“It is a lost opportunity,” said Roberto Smeraldi, founder and director of Amigos da Terra - Amazonia Brasileira, a Sao Paulo-based public interest group that focuses on the Amazon region. “After so many years discussing the Forest Code reform, this proposal doesn’t look to the future.”

Smeraldi, 51, said the focus on forgiving landowners will lead to further logging.

“One thing is to regularize, another totally different thing is to give amnesty,” he said in a phone interview from Sao Paulo. “When the citizen sees there is no difference between who acted in one way or another, he loses interest in the rule.”

Deforestation doubled to 267.9 square kilometers in May from 109.6 square kilometers a year earlier, led by destruction in the central state of Mato Grosso, the National Institute for Space Research said.

While environmental protection is a concern for farmers, the burden shouldn’t lay only with them, Abreu said.

“In Brazil, the environment is a collective good with an individual burden to the landowners,” said Abreu. When the environmental discussions started, in the 80s, “we went to sleep as heroes and woke up as villains,” she said.

--With assistance from Maria Luiza Rabello in Brasilia and Marvin G. Perez in New York. Editor: Will Wade

To contact the reporter on this story: Fabiola Moura in New York at fdemoura@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net


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