Paving the Amazon with Soy

By Sasha Lilley, CorpWatch. Posted December 21, 2004.

The sprawling state of Mato Grosso, in central west Brazil, could be thought a paradise of sorts, at least from a distance. The lush rainforest of the Amazon basin, often called the "lungs of the world," straddles the state, as does the grassy Brazilian savanna or cerrado. Parrots, jaguars and pumas are just a few of the abundant species found in the savanna, considered one of the most biodiverse in the world, along with endangered species like the maned wolf, anteater and river-dwelling giant otter.

The landscape, however, is rapidly being altered as vast fields of soybeans and cattle ranches replace grasslands and forests. Soy rules Mato Grosso and it's not the soy that much of the world associates with the ostensibly eco-friendly, vegetarian diet, either.

In the wake of the Mad Cow disease scare, soy producers have benefited from increased demand in affluent countries for meat from cows that are fed soy meal, rather than animal-based feed. This is only the latest in a series of factors that have allowed a company named the André Maggi Group to spearhead, along with the Brazilian government, the expansion of soy in Mato Grosso and adjacent states over the last two decades, with disturbing consequences.

"Soy – at this moment – is the most important driver for deforestation, directly and indirectly," says environmental analyst Jan Maarten Dros. "Directly because the cerrado is being converted from natural vegetation into soy fields. But indirectly, because in this region a lot of cattle farms are being replaced by soy farmers buying or renting land from cattle farmers." This means, according to Dros' 2003 WWF study on the impacts of soybean cultivation in Brazil, that the "cattle farmers tend to advance into new forest area, causing more deforestation."

The governor of the state of Mato Grosso is Blairo Maggi, the owner of the Maggi group, who is also known as the rei da soja – the Soybean King. In fact, the Maggi Group is the largest private soy producer in the world. The company grossed $600 million in sales this year, primarily managing the production, trade and processing of over 2 million tons of soy, most of it destined for livestock in Europe and Asia. Maggi has also been key in establishing transportation infrastructure that further opens the Amazon to development and deforestation.

In 2003, Maggi's first year as governor, the deforestation rate in Mato Grosso more than doubled. Last year when the New York Times pointed out that the destruction of the Amazon had risen by two-fifths, Blairo Maggi responded: "To me, a 40 percent increase in deforestation doesn't mean anything at all, and I don't feel the slightest guilt over what we are doing here. We are talking about an area larger than Europe that has barely been touched, so there is nothing at all to get worried about."

Despite the fragile ecosystem in which it operates, and the controversy around its practices, the Brazilian agribusiness giant has had little trouble getting bankrolled by private banks in Europe and Japan, and by public institutions like the International Finance Corporation (IFC), the private-lending arm of the World Bank. In 2002 the Maggi Group's soy production division, Amaggi Exportação e Importação Limitada, landed two back-to-back US $30 million loans from the IFC – one in 2002 and second that was granted in September of 2004.

World Bank Audits Loan to Amaggi

The Maggi Group, however, has encountered a bump in the road. Under pressure from NGOs in Brazil and abroad, World Bank president James Wolfensohn has called for an audit by the IFC's Office of the Compliance Advisor Ombudsman of the 2004 loan to Amaggi, stating in a letter to Brazilian NGOs that "the audit will provide an independent review of the issue and the results will be made public."

In the cases of both loans, the IFC assigned the projects a Category B social and environmental rating, meaning that "a limited number of specific environmental and/or social impacts may result which can be avoided or mitigated," according to Rachel Kyte, director of the IFC's Environmental and Social Development Department, although this classification may now be under review.

Sasha Lilley is a staff writer for CorpWatch and producer of Against the Grain on Pacifica Radio.

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