Commodity production in Brazil: Combining zero deforestation and zero illegalityCommodity

This article documents the degree of noncompliance of soy producers in the Amazon portion of Mato Grosso with Brazil's Forest Code and addresses the importance of market demands in shifting agricultural production and land occupation towards zero deforestation. By using a sample composed of the boundaries of 9,113 properties (72.5% of soy in the region) we assessed: a) compliance with Forest Code legal reserve requirements (a percentage of the property must have its original vegetation kept undisturbed); and-compared it to b) compliance with the zero deforestation criterion of the soy moratorium. We found that 82% of the sampled properties have not deforested since 2008, thus complying with the soy moratorium. However, approximately 65% out of these 82% are noncompliant with Forest Code legal reserve requirements. This situation is even worse in the Cerrado portion of Mato Grosso. Even though the soy moratorium criterion is only applicable to the Amazon biome, the Forest Code is applicable nationwide. Despite legal reserve requirements being much lower (35% of the property in the Cerrado, as opposed to 80% in the Amazon), almost 70% of sampled properties were noncompliant with the Forest Code. From this analysis we concluded that while there was a role for consumer-driven market demand for zero deforestation soy production, there is still a need (and opportunity) to implement purchasing and financing criteria to promote compliance with Forest Code requirements in regards to legal reserve deficits. We believe that if this succeeds, it will drive a process of restoration and compensation of Forest Code deficits, strengthening public policy as well as-reducing economic distortions between those who have and have not complied with Forest Code requirements.