Brazil fines five grain trading firms, farmers connected to deforestation

BRASILIA (Reuters) - Five grain trading houses, including Cargill Inc and Bunge Ltd, and dozens of farmers have been fined a total of 105.7 million reais ($29 million) for activities connected to illegal deforestation, Brazilian authorities announced on Wednesday.

The five trading firms, which include ABC Indústria e Comércio SA, JJ Samar Agronegócios Eireli, and Uniggel Proteção de Plantas Ltda in addition to Cargill and Bunge, were fined 24.6 million reais.

Government environmental agency Ibama, which imposed the fines, said in a statement that the firms bought nearly 3,000 tonnes of grain produced in areas off-limits to farming under environmental rules.

Cargill said it had not received notification from Ibama about the irregular soy purchases and would look into the matter.

Bunge said that its grain purchases in the area where it was fined are in line with best practices and that it had consulted public databases on banned areas. The company said it supports Ibama and Brazil’s conservation efforts.

Representatives for the other traders could not immediately be reached for comment.

The fines were a phase of “Operation Soy Sauce” carried out since April in which Ibama and federal prosecutors clamped down on illegal land use in the Matopiba region - comprising Maranhão, Tocantins, Piauí and Bahia states - in Brazil’s Cerrado savannah.

The Cerrado is one of the fastest growing soy regions thanks to cheap and abundant virgin land that is also subject to far less stringent rules on deforestation than those applied to the Amazon rainforest.

Renê Luiz de Oliveira, the head of environmental enforcement at Ibama, said illegal deforestation of the Cerrado savannah was advancing much faster in Matopiba than in other regions of the biome.

“This requires stepping up control strategies to deter every illegal link in the supply chain,” he said in the Ibama statement.

The operation focused on areas that had already been illegally deforested and had been declared out of bounds by Ibama, in order to allow native vegetation to regrow.

Dozens of farmers were fined for producing grains in these areas, for preventing the regrowth of the native vegetation or otherwise seeking to trade products originating in the banned areas.

Trading firms had purchased grains under advanced purchase agreements that in some cases financed the illegal farming to be carried out, Ibama said.

The statement said public prosecutors planned to take legal action beyond the fines to ensure the offenders repair all environmental damage.

Reporting by Jake Spring; Editing by Lisa Shumaker and Frances Kerry