STF Allows Mato Grosso to Withdraw Tax Incentives from Soya Moratorium Participants

The Supreme Court of Brazil has ruled in favor of Mato Grosso state, allowing it to withdraw incentives for participants in the Soja Moratória, a voluntary agreement to reduce deforestation in the Amazon. The decision may weaken the Moratória da Soja, a initiative to reduce damage to the world's largest tropical forest. Mato Grosso had passed a law in 2022 to withdraw tax benefits from participants in the Moratória da Soja. The Supreme Court had suspended the law's application pending a decision on its constitutionality.

The Supreme Court of Brazil has ruled in favor of Mato Grosso state, allowing it to withdraw tax incentives from participants in the Soja Moratória, a voluntary agreement aimed at reducing deforestation in the Amazon rainforest. The decision, handed down on Monday, may weaken the initiative, which has been praised by conservationists for its role in preserving the world's largest tropical forest [1].

Mato Grosso, Brazil's largest soybean producer, had passed a law in 2022 to withdraw tax benefits from participants in the Soja Moratória. The Supreme Court had provisionally suspended the law's application pending a ruling on its constitutionality. In the decision, Justice Flavio Dino acknowledged the moratorium as an important conservation tool but stated that it cannot be used to constrain the actions of the state [1].

The ruling must now be confirmed by a panel of Supreme Court justices before it can be enforced from January 1, 2026. Abiove, which represents soybean traders, did not have an immediate comment on the ruling but had previously stated that the case gave the soy industry a chance to improve the moratorium [1].

The Soja Moratória bars soy purchases from farms that include areas deforested since 2008. The current agreement is under growing pressure from farmers' lobbies interested in expanding plantings to meet rising demand for soy from Brazil, the leading global producer. A potential change could allow more flexibility by drawing a distinction between individual soy fields [1].

Meanwhile, Brazil's government is taking steps to raise $2 billion in financing for sustainable projects through a new auction as part of the Eco Invest Brazil program. The auction, expected to be announced on Monday, will focus on initiatives to recover degraded pastures [2].

The new auction is part of the "blended finance" line of the Eco Invest program, which combines public and private capital to reduce financing costs and stimulate sustainable initiatives in the private sector. The auction is expected to provide around $1 billion in catalytic capital from the Climate Fund, with a requirement for leverage of at least one and a half times [2].

The ruling by the Supreme Court and the upcoming auction highlight the ongoing efforts to balance economic growth with environmental conservation in Brazil.

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3R70JP:0-brazil-s-supreme-court-deals-blow-to-amazon-soy-moratorium/
[2] https://www.usnews.com/news/top-news/articles/2025-04-28/brazils-government-aims-to-raise-2-billion-in-financing-with-new-eco-invest-auction