Grain traders oppose Brazil's soy ban to protect savannah

CAMPINAS, Brazil (Reuters) - Global grain traders are against banning soy purchases from newly deforested areas of Brazil’s savannah region, that would duplicate a similar moratorium in place for the Amazon rainforest, an industry association said on Thursday.

“There is no intention of doing this,” Lucas Brito, executive assistant at grain exporters group Anec, told Reuters on the sidelines of an industry conference in Campinas.

Anec represents major grain traders including Archer Daniels Midland Co, Cargill Inc, Cofco, Louis Dreyfus Corp, Glencore and others.

Brito’s comment comes two days after Brazilian farmers said they would launch a campaign to eliminate the so-called “soy moratorium” in the Amazon and that they saw no room for a similar agreement in the Cerrado, as Brazil’s savannah is known.

Agreed to in 2006, the Amazon soy moratorium bans trading in soy from areas deforested after 2008. The industry previously praised it for virtually eliminating soy-related deforestation in the region.

Neighboring the rainforest, the Cerrado savannah takes up roughly a quarter of Brazil and is the country’s second largest biome after the Amazon.

The region has been critical to the expansion of Brazil’s soy farming, but that growth has also lead to the destruction of about half of the Cerrado’s vegetation over the last 50 years.

Environmentalists say Brazil’s success in preserving the Amazon helped push further soy expansion in the Cerrado, leading some to call for a similar moratorium in the savannah.

Anec claims that replicating the model in the Cerrado would not work.

Brito said one reason is Brazil’s new forestry code, which came into force in 2012. Under the code, farmers have the right to expand planting on their properties, observing certain limits, which is incompatible with the concept of the moratorium, he said.

Brito said the challenge now is to reconcile those land-use rules and the sustainable production requirements imposed by Brazil’s main customers.

He suggested one long-proposed idea that would pay farmers to preserve areas they could otherwise plant on. Prior efforts to institute such payments for “environmental services” have stalled as it is unclear how they would be paid for.

A representative of Brazil’s Agriculture Ministry agreed with Anec’s call for such a system to be implemented.

“If the market and consumers see a premium in this additional preservation, they are free to pay for this type of initiative,” said Flavio Bettarello, a trade and international affairs officer at the ministry.

Reporting by Ana Mano; Editing by Jake Spring and Marguerita Choy