The dispute between soybean traders and farmers over the Soy Moratorium will endure for at least three more months — a period granted yesterday by Brazil’s antitrust regulator for companies to adopt practices that address anticompetitive concerns.
The Soy Moratorium is a public commitment by traders to avoid purchasing soybeans from deforested areas in the Amazon after 2008. Companies that are part of this pact include global giants such as ADM, Bunge, Cargill, Louis Dreyfus and Cofco.
Since its creation in 2006, the moratorium has been credited with curbing Amazon deforestation linked to soybean farming, helping Brazil expand production while keeping most new plantings on already cleared land. The initiative is often cited by environmental groups as one of the most effective corporate-led conservation efforts in the tropics.
However, the agreement has come under increasing scrutiny in recent years, in a movement led by Aprosoja, Brazil’s largest farming group.
Growers argue that the moratorium is unconstitutional and unfairly burdens farmers who cleared land between 2008 and 2012, when Brazil’s environmental law took effect establishing that up to 20% of a property in the Amazon can be deforested. The moratorium, however, pledges zero deforestation.
Farmers also claim the pact has been used as a cartel tool by trading companies, asking Cade, Brazil’s antitrust watchdog, to investigate. About a month ago, Cade’s General Superintendence preventively suspended the agreement and decided to probe the traders and associations behind it.
Soy industry group Abiove appealed, saying the moratorium is essential to preserve the Amazon rainforest while denying any anticompetitive practices. Brazil’s Federal Justice later ruled in favor of traders, allowing them to maintain the pact while Cade assesses the case — with a decision initially expected yesterday.
Instead, Cade’s counselors extended until year-end the preventive measure that keeps the moratorium in force.
The decision gives companies and government agencies time to negotiate a consensus. During yesterday’s session, Cade President Gustavo Augusto Freitas de Lima said agreements between competitors require “an antitrust protocol to monitor compliance with competition laws.”
Next Steps For Traders
In practice, the ruling doesn’t close the case. The industry has until Dec. 31 to propose alternatives, raising hopes the pact could survive under new terms. Meanwhile, Cade will continue investigating the moratorium ahead of a final ruling.
So far, Cade’s president said it’s “premature to say that we are facing a cartel,” while noting that “an agreement between competitors remains undisputed.”
To address antitrust concerns, one option would be for traders to adopt a protocol on handling sensitive information, said Patricia Carvalho, a partner at Brazilian law firm TozziniFreire.
