Deforestation in the Amazon Region and agribusiness [12/11/2006 15:04]

This Special Feature report on deforestation, the fourth text in the series, analyses the agriculture and cattle-raising expansion into the rainforest. The reduction trend in deforestation rates is encouraging, but the environmental organisations believe that, in order to keep it up, it is still necessary to carefully monitor the dynamics of the main historic vectors of deforestation. Economic growth, announced as one of the government’s chief goals can again put pressure on the region for the opening of new areas for agribusiness.

The government announced and celebrated, on October 26, the decrease in the official rates of deforestation in the Amazon region for the second year running. According to preliminary data by INPE (National Space Research Institute - Instituto Nacional de Pesquisas Espaciais), between August 2005 and August 2006, 13.1 thousand square kilometres were deforested in the region, a 30% decrease in comparison with the previous period (see). The downward trend in the indices is encouraging, but it is still necessary to carefully monitor the dynamics of the main historic vectors regarding deforestation. Economic growth, announced as one of the current government’s main goals, can again put pressure on the forest for the opening of new areas for agricultural and cattle-raising activities. In the press conference in which the deforestation figures were presented, in Brasilia, Environment Minister Marina Silva, brought attention to the scope of the problem: “It is not possible to sustain the decrease in deforestation levels with forceful actions only. We need a profound change in the Amazon region’s development model. This is our present challenge.” 

Land tenure regulation actions and the great operations against environmental crimes promoted by IBAMA, the Federal Police and the Army have had an impact on the decrease in devastation rates. Since 2003, 11 operations have been carried out, which have resulted in the detention of 379 individuals and in the seizing of 814 thousand cubic meters of wood. Since the beginning of Lula’s government, 19.4 million hectares of federal Protected Areas have been instituted, corresponding to 38.9% of the total created up to the present, according to data of the Ministry of the Environment. 

The actions are part of the efforts developed within the scope of the Amazon Region Deforestation Control and Prevention Plan. The evaluation of the impacts of inspection, of the creation of Protected Areas and of other measures on the deforestation rate has not been yet carried out, and is fundamental in order to improve the plan – and guarantee the maintenance of the downward trend in devastation indices. The definition of goals and indicators that would allow for the monitoring and evaluation of such actions is a claim by civil society organisations. This procedure would also allow the definition of the economic scenario’s role in the dynamics of deforestation. According to the NGOs, the relationship between the recession in the agriculture sector and the two subsequent falls in the deforestation rates is one of the aspects to be considered so that directives allowing for the reduction in deforestation down to the legally authorised can be established.

Studies and analyses have confirmed the important role played by soy bean crops and above all of cattle-raising in the deforestation dynamics

The Ministry of Environment’s Secretary of Biodiversity and Forests, João Paulo Capobianco, admits that the recession in the agriculture and cattle-raising sector was a “window of opportunity” that has contributed to the decrease in deforestation rates. “To precisely quantify how much the producer has ceased to invest in deforestation due to the crisis or how much he ceased to deforest due to the lack of authorisation is very difficult. There is a synergy of factors involving the agriculture market and our actions.”

Studies and analyses have confirmed the important role played by soy bean crops, and, above all, by cattle-raising, in deforestation. The velocity of the increase of both bovine cattle throughout the Amazon region and of the cultivated areas within the State of Mato Grosso (responsible for over 90% of the soy bean production in the region) has closely followed the deforestation indices. Between 1998 and 2004, the soy bean crop area in Mato Grosso increased from 2.6 million hectares up to 5.2 million. The total cattle in the Amazon region (except the Eastside of the State of Maranhão) evolved from 37.8 million up to over 65.7 million, according to an estimate by IBGE (Brazilian Institute of Geography and Statistics - Instituto Brasileiro de Geografia e Estatística). It is certain that the deceleration of the sector’s expansion has directly reflected on the demand for the opening of new areas. The exact weight of the economic factor on the rainforest felling, however, can only be better evaluated with the recovery of the agriculture and cattle-raising sector’s growth.

"The absence of indicators and chiefly of ways of monitoring them stops us from enjoying a minimum clarity about the impacts of the different causes and variables”, points out Rodrigo Junqueira, ISA’s socio-environmental analyst. He considers that both environmentalists and rural producers have hardened their positions in the debate about the expansion of the frontiers of agriculture and cattle-raising production without the due technical grounding. “The definition of such indicators is fundamental for deforestation evaluation in the next few years.”

Problems

After the devaluation of the Real in 1999, the federal government increased the support for the export of primary products, via credit and transfers to the states, in order to widen the Brazilian currency reserves. From then on, despite the economic crises, agribusiness came to broaden its participation in the trade balance until it came to account for the main chunk of the country’s trade surplus, as it has done for the last few years. Today, Brazil is the biggest world exporter of meat and soy. The pair of products accounted for 40% of the US$ 43.6 billion generated by the agricultural and cattle-raising segment exports in 2005. Today, around 46% of the national soy bean and 25% of meat production is exported. Local prices, both of production and of input, are also influenced by the international market. Therefore, the puissance of these two sectors grew in parallel with its vulnerability regarding variations in exchange rates and in the price of commodities abroad.

The increase in the bovine cattle has followed deforestation rates. Between 1998 and 2004, the total figure for cattle heads in the Legal amazon has increased from nearly 17.8 million to over 65.7 million

Problems started precisely with the valuing of the Brazilian currency, the Real. The American Dollar reached an exchange rate of R$ 3.60 in February 2003, due to speculations in the financial market regarding the fate of the economic policy of the then recently-elected Lula Government. From then on, a constant decline progressed until it reached R$ 2,14 at the end of last October. In the meanwhile, the average value for a sack of soy beans should reach the end of the year at under R$ 30, after having reached R$ 42.00 in mid-2004, the highest price in seven years. Abroad, the price fell from US$ 14.42 in mid-2004 down to US$ 12.28 a year later. The production costs for soy inputs reportedly rose up 38% in the comparison between 2003-2004 and 2004-2005. In its turn, the average value for bovine meat arroba (15 kg) reached R$ 62.00 in mid-2004, and then fell to R$ 48.00 in the middle of the current year. Between 2003 and 2006, the growth rate of national bovine cattle significantly decreased. According to the Ministry of Agriculture, between 2003 and 2005, the participation of agribusiness in Brazilian exports fell 41.9% down to 36.8% and, in relation to NGP, from 30.6% to 27.9%. The national grain harvest fell from 123.2 million tons, between 2002 and 2003, down to 113.5 million, between 2004 and 2005.

“The State of Mato Grosso is the country’s greatest grain and cattle producer. These activities naturally incorporate savannah (cerrado) and forest areas”, admits Homero Pereira, also president of the Famato (Mato Grosso Agriculture and Cattle-Raising Federation - Federação da Agricultura e Pecuária do Estado de Mato Grosso). He defends that in the case of Mato Grosso, the agriculture and cattle-raising vocation should prevail over the concept of Amazonian biome. “The maintenance of the State of Mato Grosso within the Legal Amazon Region leads to the distortion of the agriculture and cattle-raising and deforestation indicators for the whole of the region. We feature a completely different economy from the country’s North region.” Pereira was elected with the second highest vote count in the State in the elections last October. A member of the PPS party, he says that he will defend in Congress that his State ceases to be considered an Amazonian Federation Unit. As Mato Grosso has been responsible on average for 40% of the total deforestation in the Amazon region in the last few years, Pereira thinks that this alternative would have significant impact on deforestation rates. He considers that it is not necessary to widen the deforested area in Brazil so as to guarantee the growth of agribusiness. If Mato Grosso leaves the Legal Amazon Region, that would cause the Legal Reserve limit in rural properties to decrease from 80% down to just 20%.

“It seems to me that with the world market and agriculture crises, agriculturists have realised that there is no use in deforesting and producing if the market will not absorb production”, states Congressman Xico Graziano (PSDB-SP). He ponders that the two-year moratorium for the trading of soy originating from new deforestations adopted by some of the sector’s big traders is beneficial to producers. “They will gain because it allows the market’s recovery. You signal that there will be more controlled offer, the price for soy goes up and at the same time the possibility of deforesting is removed”. Considered one of the chief agribusiness spokesmen in Congress and a specialist in the matter, Graziano also agrees that the increase in productivity, with the recuperation of degraded areas and investments in technology, is sufficient to secure the expansion of agriculture and cattle-raising without the need to fell more forest.

Rentability crisis

The Ministry of Environment claims that the agribusiness crisis did not play such an important part in the deceleration in fresh felling, since both the soy bean crop areas and grazing land areas in the North region and in Mato Grosso increased in the 2004-2005 and 2005-2006 harvests, a period in which there was a consecutive fall in deforestation rates. However, as stated by Ministry of Agriculture technicians and ruralist leaders, the crisis, in fact, is one of income and debt. It does not hinder the growth of the already planted (opened) area, since the agriculture sector debt has been negotiated year after year and the credit offered both by the government and the private sector continues to grow. What has been deforested between 2001 and 2004, around 7.5 million hectares, was more than enough for a substantial and progressive increase of the planted and grazing land areas in the region in subsequent years. The additional conversion of forests, between 2004 and 2006, on the level of 3.2 hectares, has allowed the continuity of the increase in the planted area even with the fall in deforestation rates.

It was the capacity for investment in the opening of new areas that was expressively reduced. The cost of the activity is high, varying between R$ 660 to R$ 1.5 thousand per hectare, and is justified only in an extremely favourable market scenario, as was the case between 2001 and 2004. Besides, with the increase in inspection and in the amount of environmental penalty fees, the risk of illegal felling also rose. The rentability crisis has reached its peak at the height of the 2006-2007 harvest, now indeed with a direct impact on the reduction of the planted area.

In technical notes, CONAB confirms that the motive for the decrease in the planted area with grain all over the country lies on the decapitalisation of the producer and on the low prices of the products in the market (see). According to the institution’s forecast, the cultivated area with grain all over the country in the 2006-2007 harvest, estimated in up to 45.8 million hectares, can suffer a reduction of up to 3.1% in relation to the 47.3 million hectares of the 2005-2006 harvest. During this period, the area planted with soy in Brazil can decrease up to 4.9%, diminishing from a maximum of 22.2 million hectares down to the mark of 21.1 million. Around 1.1 million of hectares planted with soy may have been replaced, chiefly by the cotton, rice and beans crops. For the first time since 1999, the area planted with soy in Mato Grosso should shrink this year, in 200 thousand hectares, after beating the earlier record of 6.1 million hectares in 2005. Soy production in the state should decrease 17.7 million tons down to 15.8 million, between the last harvest and the next. 

A combination of factors 

The end of Fernando Henrique’s mandate and the beginning of Lula’s government were characterised by an unheard of combination of factors favourable to Brazilian agribusiness – mainly the high international prices and the devaluation of the native currency, the Real – that has yielded high levels of deforestation taking place between 2001 and 2004, adding 75 thousand square kilometres to the devastated total. The grand total for the deforestation calculations during Lula’s mandate would certainly have been smaller than the previous four years, if that situation was not taken into account. According to Xico Graziano, this conjunction of elements should not take place again in the next few years.

"Would it be correct then to say that the 2001-2004 bonanza is what has propitiated unheard of increases in deforestation rates, instead of stating that it was the subsequent crisis that determined the reduction of the latest indices? Or would we be authorised to state that the expressive reduction in the deforestation in the last two years would be directly related to the end of a favourable moment for agribusiness, associated to the beginning of the impacts of the actions of the government’s plan to prevent and control deforestation?” questions André Lima of ISA. For him, what really matters is not the comparison in absolute values with previous governments. “It must be clear that the trend in deforestation rates has been reverted, at least for now. From then on, we need to urgently understand its relationship with the government’s actions, which are no doubt new.”

Conceived with the support and participation of civil society organisations and social movements, the plan against deforestation began to be implemented only after the second semester of 2003. “Its first reflections started off from 2004 onwards, in the harvests subsequent to the crisis. Collected data point at relationships that need to be studied in depth so as to guide the next initiatives by the government in the direction of the maintenance of the downward trend of deforestation. Specially if the obsession with GDP growth continues.

The scenario sketched by many analysts for the near future is one of greater demand for grains. The growth in the markets of national and international biodiesel and the Chinese economic expansion point at an increase in the pressure for more agricultural land in the Amazon region. The role played by agribusiness will be increasingly more determinant for the sustainability of the Amazonian biome, independently from the strategies that the sector may come to take up in the next few years, be it the opening of new areas for the seeding of grain, the introduction of cultures associated to biodiesel (sugar cane and soya, among others) in already opened areas or the occupation of grazing land with grain (and the consequent displacement of cattle out to new frontiers).

For André Lima, the biggest challenge for Lula’s government in the struggle against deforestation and the production of sustainable agribusiness will be the effective protagonism of the Ministry of Agriculture in the debate. “Taking  responsibility, evaluating the impacts of the government’s actions, announcing its actions and programmes for a definite turning of tables towards sustainable production in the Amazon region”

Great deforestations decrease

A recent survey carried out by ISA points at the 40% reduction in deforestation involving areas over 100 hectares (medium to large) in Mato Grosso, between 2003 and 2005, which can confirm the effects of the agricultural crisis on the decline in the felling rates. The felling of areas over 1000 hectares, which represented 22% of the total in the state, between 2002 and 2003, got down to 12% between 2004 and 2005. In other words, the large-scale deforestation decreased both in absolute and relative terms. The important piece of information is that the opening of large areas features a bigger participation in the calculations of total deforestation, especially in the growth years. In the Legal Amazon, the total deforestation over 100 hectares decreased from 1.25 million hectares in 2002-2003, down to 910 thousand hectares in 2004-2005, a 27% fall. Mato Grosso was responsible for 58% in the decrease in deforestation above 100 hectares in the whole of the region, between 2002 and 2005. 

Between 2003 and 2005, the participation of agribusiness in Brazilian exports fell from 41.9% down to 36.8% and from 30.6% down to 27.9% in relation to GDP. The national grain crop fell from 123.2 million tons, between 2002 and 2003, down to 113.5million, between 2004 and 2005.

According to another survey published by ISA at the beginning of 2005, the unheard of high in soy bean prices and in the exchange rates between 2002 and 2003 was responsible also for the direct conversion of forest into soy cultivation, in the space of two or three years, in some points of Mato Grosso. In the Amazon, in general, after being deforested, the land undergoes another preparation period, with the planting of rice crops or pasture, that usually last from two to four years, before it is used in the cultivation of the oleaginous grain (check the study out).

A team of American and Brazilian scientists specialised in remote sensing, led by Douglas Morton at Maryland University, arrived at similar conclusions. The study was grounded on the crossing of satellite images with field surveys, and has estimated in 5.4 thousand square kilometres the total of rainforest directly converted into grain in Mato Grosso, from 2001 to 2004. According to the study, in the year of 2003, when the price of the soy bean in the international market had reached its peak, the direct conversion into cropland represented nearly a fourth of all that was deforested in the state. During this period, Mato Grosso has deforested 38 thousand square kilometres, 40% of all that has been lost of the Amazon region rainforest, the equivalent of 3.5 times the territory of Jamaica. 

"One also has to consider that the agriculturists, notably those who produce for the external market, have been aware of the fact that their environmental passives can hinder their competitiveness”, recalls Márcio Santilli of ISA. “One of the great challenges of the next government will be precisely to develop an agriculture policy with economic instruments, such as differentiated credit and fiscal incentives, to stimulate rural producers to conserve the forest”. 

Deforestation in the XINGU WATERSHED IN THE PERIOD BETWEEN 2002 AND 2005