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As the Amazon Burns, Brazilian Agriculture Faces Backlash Threat

Brazil is one of the world’s most important agriculture exporters. The country ships huge amounts of sugar and coffee.

As the Amazon Burns, Brazilian Agriculture Faces Backlash Threat
Trees burn during a fire close to the Madeira River in the Amazon rainforest near Porto Velho, Rondonia state, Brazil. (Photographer: Leonardo Carrato/Bloomberg)

(Bloomberg) -- One of Brazil’s biggest agriculture groups is sounding alarm bells for the nation’s farm exports over fires in the Amazon rainforest.

Major importers could start snubbing purchases from the country because of environmental concerns, according to the key agribusiness group known as Abag. While shipments are still proceeding as normal, “things will get worse” if the government doesn’t take the steps needed to fight deforestation, according to Marcello Brito, chairman of the group.

“Brazil may be facing its worst reputation crisis,” Brito said Friday at a press conference in Sao Paulo.

Brazil is one of the world’s most important agriculture exporters. The country ships huge amounts of sugar, coffee, soybeans, beef, poultry and orange juice, and production has surged in recent decades. That expansion came at an environmental cost. Large swaths of the Amazon forest have been cleared for logging and burned to make room for crops and cattle. Brazil’s far-right president Jair Bolsonaro has dismissed the fires after pledges of slashing deforestation restrictions, and Donald Trump has tweeted his support for the leader.

As the Amazon Burns, Brazilian Agriculture Faces Backlash Threat

With the planet’s biggest rainforest burning at a record rate, global leaders, environmental groups and consumers expressed sharp criticism in recent weeks. The world’s largest Atlantic salmon producer, Mowi SA, said it was considering halting soybean imports from Brazil, and major leather importers indicated they could suspend purchases.

Speculation is mounting that bans on the nation’s products could emerge, drawing comparisons to Southeast Asia’s palm-oil industry: Borneo, home to endangered species such as the orangutan, has lost 30% of its forests in a little over four decades.

While drawing attention to the Amazon fires may be used by some companies as a “marketing strategy” to demonstrate their commitment to environmental protection, the crisis may affect the value of Brazil’s products, Brito of Abag said.

The group represents companies such as grain exporters Cargill Inc. and Cofco Agri Ltd., tractor maker Deere & Co. and the seed and agrochemical company Bayer AG. Abag is taking part in a national campaign to call on Brazil’s Justice Ministry to fight deforestation along with Brazil’s beef exporters group Abiec.

In the meantime, trade relations are at risk. A group of Democratic senators is asking the Trump administration to postpone future trade negotiations with Brazil until Bolsonaro takes action to protect the Amazon. French President Emmanuel Macron recently threatened to scrap the trade deal between the European Union and Mercosur, the South American customs union.

What Bloomberg Intelligence Says

“Boycotts of Brazilian products over fires and deforestation in the Amazon will likely match that faced by the palm oil industry, shifting non-China demand to U.S. soybean.”
-- Alvin Tai and Ashley Kim, analysts
Click here to view the research.

To contact the reporter on this story: Tatiana Freitas in São Paulo at tfreitas4@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi, Patrick McKiernan

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