Authors
The Soft Commodities Forum & André Guimarães, Executive Director of the Amazon Environmental Research Institute (IPAM)
Leia em português – Agricultura Positiva para Floresta na Produção Sustentável de Soja no Brasil: Entrevista com o IPAM
In this interview, the Executive Director of the Amazon Environmental Research Institute (IPAM), André Guimarães, provides a historical and legal context of Brazil’s agricultural system and explains the role that incentives can play in addressing unsustainable land use practices.
Q: Could you provide an overview of how Cerrado landscapes have evolved over the last 20 years, including a description of the key drivers of deforestation and land conversion?
Throughout the early- to mid-20th century, Brazil was a net importer of foods like fruit, grains, and meat. In the 1970s, the country shifted its interest toward expanding its agricultural production, particularly of coffee and cocoa. The government rapidly ramped up financial, technological, and legal incentives for farmers to establish their businesses, including a law that allows farmers to clear a certain percentage of their land, which still holds today [Brazil’s Forest Code determines that landowners in the Cerrado must maintain 35% of land as native vegetation]. At the start of this expansion, the Cerrado and Amazon rainforests were nearly completely intact. However, today, 50% of the Cerrado and 18% of the Amazon have since been cleared to allow the meeting of the country’s agricultural goals.
Brazil is one of the world’s largest agricultural exporters today, but the expansionist model that facilitated the advancement of its agricultural production cannot be sustainably maintained with the country’s current agricultural output. The agriculture and food sector make up approximately 40% of its total exports and support 1 in every 5 jobs in the country, directly or indirectly, but Brazilian farmers rely on forests for ecosystem services like rainwater and soil health that directly impact agricultural yields and the water that powers hydroelectric dams. The country also faces growing pressure from trading partners to stop land conversion.
Q: What incentives help combat deforestation and conversion, and how do they support producers in reducing the opportunity cost of land clearing?
Addressing deforestation and land conversion in the Cerrado requires a two-fold agenda through which farmers are incentivized to both relinquish their legal rights to clear land and produce in a manner that maintains the ecological integrity of forests. In light of existing legal barriers, financial and technical incentives can drive farmers to change their practices in favor of forest-positive production.
Financial incentives may include the use of carbon and water credits, private investments and remuneration for conservation practices. Technical assistance to manage soil health can support farmers in achieving higher yields through the adoption of sustainable practices.
These incentives have been successfully tested in Brazil before: the 20-year-old Plano Safra annually disburses over US$60 billion of taxpayer money toward government-subsidized loans for agriculture and livestock production across the country. This 2023/24 year, the Plano Safra is disbursing a record US$91.8 billion toward credit financing and improved agricultural infrastructure. The Plano Safra includes programs which require farmers to demonstrate their compliance with the program’s intent, such as responsible credit use that ensures environmental and social standards are upheld.
Q: How much have Cerrado producers embraced conservation efforts, and how appealing are they to them?
Given the traditional cultural practice in which Brazilian farmers have been encouraged to expand their land usage and intensify production for profit, it becomes critical to effectively demonstrate the great value of forest-positive agriculture. This knowledge-sharing is fundamental to advocating for public and market-based incentives. Tangible examples that connect farmers’ practices and the science of climate and land-use change can be leveraged to demonstrate the devastating impacts on farmers’ unsustainable businesses practices.
For example, in Rio Grande do Sul, an important agricultural state, human impacts caused US$3 billion in losses for the agribusiness sector a couple of year ago due to low precipitation, which relies on transpiration water from the Amazon rainforest (See also flying rivers). It is equally important to communicate to farmers how financial and technical incentives will ultimately reduce their vulnerability to the negative consequences of deforestation and conversion in an actionable way.
Ultimately, there is no one-size-fits-all solution for transforming an agricultural system that has long hinged on extensive consumption. However, through the concerted efforts of stakeholders across the agricultural value chain, including the financial community, there are reasons to hope for a brighter future for the Cerrado.
Q: What is the theory of change behind IPAM’s work? How do initiatives such as the Farmer First Clusters contribute to IPAM’s strategy?
Having benefitted from investments from the Norwegian and Dutch governments, IPAM is testing a hypothesis whereby ending deforestation could be incentivized in Mato Grosso, where 7 million acres of remaining native vegetation could be protected through financial compensation to rural producers. Since 2020 this experiment has led to the CONSERV project, which has so far protected 20,707 hectares of native vegetation and convened major stakeholders to advance its business model.
Unlocking similar transformations in the Cerrado poses different challenges. Whereas the Amazon rainforest is largely public and faces illegal deforestation and land-grabbing that the state must mediate, the Cerrado is composed mostly of private land, with entirely different legal restrictions. Since the state does not have the same jurisdiction over private territories, private producers must be approached through financial and technical incentives to change their traditional practices, rather than comply with a “command and control” approach used to regulate production in the Amazon. Private landowners likely already have an understanding of legal restrictions that apply to them, and this could be an advantage for a mechanism like IPAM’s CONSERV project.
Additionally, the Cerrado possesses different characteristics than the Amazon, with different soil composition and water supply, which must be factored into strategies to halt deforestation and land conversion. The Farmer First Clusters initiative helps drive change in a way that engages farmers toward intensified production, while incentivizing them to protect forests.
Q: What advice would you give SCF members, to address NGOs when disclosing their progress?
Scrutiny from NGOs and society at large is a significant enabler for achieving industry goals. This is why enhancing transparency regarding the challenges companies face in their efforts to end deforestation and conversion serves as a catalyst for effectively surmounting barriers that impede progress in ending land clearing, while protecting their reputation. This practice fosters an environment conducive to resolving these hurdles and invites stakeholders with a vested interest to collaborate for success.
Q: Looking ahead, how does IPAM’s solution work in the long-term?
In order to drive long-term transformation in forest conservation, scientific models must first be applied and observed at the local level.
While global institutions like the IPCC regularly release information on how climate and land use are evolving globally, farmers need to understand how these changes will affect their immediate environment – their farms, municipalities, and states. Even seemingly trivial changes, such as waning populations of species that feed off of large trees, which provide shade for smaller trees, can create a domino effect by threatening ground flora and stormwater irrigation, which are critical for agricultural production.
Forests and agriculture are highly interconnected, and understanding their dynamics and constant evolution at the local level will be fundamental to crafting solutions that address deforestation and conversion in the Cerrado over the long term.
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