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Brazil’s Next Tropical Hot Spot Is Getting Hotter

Brazil’s Next Tropical Hot Spot Is Getting Hotter

(Bloomberg Opinion) -- With peak burning season in the Amazon basin still to come, the commotion over destruction of the storied rain forest will grow. Yet even as Brazilian President Jair Bolsonaro prepares to lecture the United Nations General Assembly on who’s boss in the jungle and enjoins Brazilians to don the national colors to show that “Amazonia is ours,” the next tropical hot spot is already under duress. And given the economic stakes, expect the outrage to spread.

No one marches along Ipanema beach to save the Brazilian savanna. Still, the sprawl of scrub and low-lying forest three times the size of Texas on the lower lip of the Amazon basin is falling fast, and so has become cause for global concern. The heightened scrutiny is an opportunity for officials already on the defensive to get something right. That won’t happen, however, unless producers, politicians and environmentalists drop their fists, use their collective heads and stop treating the savanna as a zero-sum game.

The first step is to recognize that the cerrado is not a second Amazon. Yes, it is a natural wonder: home to 4,800 unique plant and vertebrate animal species, and 800 kinds of fish, a quarter of which are found nowhere else, and the source of 43% of Brazil’s fresh water outside the Amazon basin. It’s also one of the world’s most promising agricultural frontiers, where enterprising planters sow some 60% of the national crop, including soybeans, cotton, corn and sugarcane, and herders graze beef cattle from horizon to horizon. Year-round harvests on these tablelands are the engine of Brazilian agribusiness, which kicks in nearly a quarter of Brazilian gross domestic product, and have kept Latin America’s economy growing even when industry tanked and services stalled.

Yet such bounty has come at a cost. The drive to the grain belt has already leveled close to half (46%) the cerrado forest and scrub, leaving untouched only 20% of the original vegetation. Between 2002 and 2011, deforestation increased 2.5 times faster in the cerrado than the Amazon, according to a study by Bernardo Strassburg of the International Institute for Sustainability. By one estimate, soy in the cerrado contributed 80% of Brazil’s climate-warming carbon gas emissions in 2016.

Fortunately, the rate of felling has decreased. But for how long? While the Amazon’s fragile soils are a natural barrier to big agriculture, soy can be sown on more than 88% of what remains of the savanna. Under farmland business as usual, that’s an invitation to a conflagration.  

Some cerrado champions now want to import the rules of the Amazon soy moratorium, under which planters and traders are barred from trading in soy grown on recently cleared land. That arrangement helped brake land-clearing in the Amazon basin earlier this decade and slashed carbon emissions.

It’s also tricky politics. Cerrado farmers have cash and clout. They control some of the world’s most productive farmland. Maligned as predators, many of them heard in Bolsonaro’s aggressive campaign cant an ode to creative destruction. Yet if Brazil wants to refurbish its soiled international brand, farmers need to listen to another tune.  

The timing couldn’t be better. When Bolsonaro sacked the respected head of the space research institute over unflattering deforestation data and dismissed critics as vegans and arsonists, he brought farmers risk instead of redemption. The blazing rhetoric has spooked grain dealers and Swedish pension funds, driven away retailers from Kipling  to Timberland, and shaken Brazil’s trade partners.

To reach a better green deal, Brazil needs its best farmers to become partners, not targets or martyrs. Wonks, scholars and green activists can help by hacking through the bureaucratic deadwood. There’s an awful lot of green tape in Brazil. No other country holds its farmers to such severe environmental standards, according to Earth Innovation Institute president Daniel Nepstad, a scholar of tropical forests. Soy producers need 20 permits just to do their jobs.

In a region where converting forests to crops is the leading source of greenhouse emissions, tough standards for farmers make good sense. Yet without assurances that leaving forests standing can be as rewarding as clearing them for export crops, the push for zero deforestation to the savanna will likely come up short.

Enterprising cerrado planters know that the world has turned and customers expect conservation on the farm and good green governance from the silo to the supermarket. Most planters in the grain-belt state of Mato Grosso have reportedly committed to zero deforestation and want to be recognized and compensated for their troubles. That’s one reason why companies selling verification and inspection services are part of a new growth industry in the grain trade, according to Bloomberg Intelligence.

Grupo Amaggi, Brazil’s biggest soybean producer, helps planters upgrade their operations to qualify for environmental certificates, which now cover 3% of the local crop. However, few farmers have qualified for the much-heralded market in carbon credits and most are frustrated that certified green soy fetches only slightly higher prices than conventional grain. “The message here is confusing,” Juliana Lopes, chief sustainability officer at Amaggi, told me. “Buyers want certified grain but they aren’t willing to pay for it.”

Another problem: securing credit to convert to environmental best practices. “The law obliges producers to maintain a forest reserve, but just try to use your standing forest as collateral for a farm loan,” said Aline Maldonado, CEO of the Aliança da Terra (Land Alliance), which advises more than 1,300 farmers on greener ways. “The forest reserve still has no value.”

Fortunately, such quandaries have brought together onetime adversaries. Farmers, academics, green groups, traders and government officials are speaking out in forums such as the Roundtable on Responsible Soy and the Soy Buyers Coalition. Even Chinese buyers, better known for their appetite for natural resources than for environmental stewardship, have joined the conversation.

The savanna is the key to success. “There’s skepticism among producers who have heard lots of promises but seen few results,” says Strassburg. “They need to be brought to the table.” That’s a cause worth wearing the national colors for.

To contact the editor responsible for this story: James Gibney at jgibney5@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Mac Margolis is a Bloomberg Opinion columnist covering Latin and South America. He was a reporter for Newsweek and is the author of “The Last New World: The Conquest of the Amazon Frontier.”

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