Brazil Supreme Court upholds laws that led to downfall of Amazon soy moratorium

Brazil’s Supreme Court has upheld state laws denying tax incentives to farmers who adhered to the country's soy moratorium

RIO DE JANEIRO -- RIO DE JANEIRO (AP) — Brazil’s Supreme Court on Wednesday dealt a major blow to the future of the country's soy moratorium, upholding state laws that deny tax incentives to farmers who complied with the agreement barring the purchase of soy grown on deforested Amazon land. At the same time, the court affirmed the constitutionality of the voluntary pact.

In January, major grain traders withdrew from the soy moratorium , which helped slash deforestation over its nearly two decades in effect, after top soy-producing states passed bills revoking tax benefits for participating companies.

Brazil is the world’s largest soybean producer, accounting for about 40% of global output. Much of the crop is grown in central and northern states that include parts of the Amazon biome, such as Mato Grosso, Para and Rondonia.

The Amazon, the world’s largest rainforest, plays a critical role in regulating the climate far beyond South America. Scientists warn that forest loss could accelerate global warming and disrupt agriculture as far away as the U.S. Midwest and parts of Europe.

The South American country produced 171.5 million metric tons of soybeans in the 2024-25 season, according to the U.S. Department of Agriculture. China was the top destination for exports, according to Brazil’s official trade data.

Launched in 2006 as a response to pressure from environmental groups and international buyers, the moratorium was a voluntary commitment rather than law. Major soy traders agreed — and the Brazilian government later endorsed — a ban on purchasing soy grown on Amazon land cleared after July 2008.

But soy producers long argued that the moratorium hurt business because it was stricter than Brazilian environmental law. Under national rules, farmers in the Amazon must preserve 80% of their land and may legally clear the remaining 20%, while the moratorium bans any deforestation, even when permitted by law.

The soy moratorium helped reduce deforestation in risk areas by 35% in the first decade since it became effective in 2006 without hurting productivity, according to a study published July in the journal Science. The end of the pact could drive up to 1.4 million hectares (3.5 million acres) of deforestation in the next decade and leave an area the size of Portugal vulnerable to legal deforestation, the study said.

After reaching record levels in the 1990s and 2000s, deforestation declined until former President Jair Bolsonaro’s 2019–2022 term, widely criticized for weakening environmental protections.