Securing agro and Amazon markets: Brazil’s challenges in the world in 2022

It is always reckless to talk about the future, and the pandemic reminded us painfully. That said, 2022 tends to be a year marked, from the point of view of Brazilian interests, by the strengthening of the link between the environment and trade.

The siege is closing on Amazon deforestation, with negative repercussions on the only competitive sector of the Brazilian economy: agribusiness.

On the table of the European Commission is a proposal for a resolution that prevents the importation of commodities associated with deforestation — whether legal or illegal.

This proposal will be analyzed by the Council of Ministers, in which the 27 countries are represented, and by the European Parliament.

The Council will be chaired in the first half of the year by France, historically the leader in agricultural protectionism in Europe. The country, in turn, will still be under the presidency of Emmanuel Macron, who is genuinely disgusted by Jair Bolsonaro.

The Brazilian president endorsed a sexist tweet from a follower, who compared the appearance of the first ladies of France and Brazil, with a sarcastic remark: “Don’t humiliate dear. Hahahahaha”.

The trigger for the animosity between the two was precisely the Amazon. In early August 2019, French Chancellor Jean-Yves Le Drian came to Brazil, met with environmentalists and said he would charge Bolsonaro for the fires, which peaked in the dry season.

Bolsonaro criticized the meeting. Three days later, at the last minute, he canceled a meeting with Le Drian, and posted a video on Facebook about cutting his hair, at the same time the meeting was scheduled.

At the end of that same month, Macron tweeted a photo of the Amazon from the previous year with the text: “Our house is on fire. Literally”. Bolsonaro accused him of using a fake photo and adopting a “sensationalist tone”.

Macron faces elections in May. The environmental and protectionist card will certainly be useful for him.

The European Parliament, in turn, has a noisy left-wing and environmentalist caucus, which has also repeatedly expressed its rejection of Bolsonaro, for human rights issues and also for the deforestation of the Amazon.

PHOTOS – The environment in 2021

Growing deforestation and increased awareness of environmental issues hampered the ratification, by European Parliaments, of the free trade agreement between Mercosur and the European Union, signed in 2019, and announced as a great achievement by Bolsonaro.

Europeans want an additional clause on human rights and the environment. This creates a vicious circle for Brazil: it postpones the industry’s exposure to international competition and perpetuates its dependence on agribusiness as a source of hard currency.

The interests of protecting the environment and agricultural markets mix and feed back.

Traditionally, the governments of Germany and the United Kingdom, less politically dependent on national agribusiness, served as a counterbalance to French protectionism in the European Union.

The United Kingdom left the bloc and Germany now has the Greens in its government, whose main flag is the environmental issue.

The new German coalition, led by the Social Democrats, is the first European government of the ESG era — which stands for Environmental, Social and Governance. It is the result of an agreement between the Greens and the Liberal Democrats, who represent German business, with a contemporary view that there is not necessarily a conflict between environmental preservation and profits.

At the same time, in the US Congress, a bill is being processed that, in very similar terms, prohibits the import of products originating from deforestation.

It is also an election year in the United States, which will renew the entire House of Representatives and a third of the Senate.

A defense of the environment that does not directly affect Americans’ lifestyles and the country’s productive sectors, and on top of that protects local agribusiness, also seems to be an electorally convenient flag.

Bolsonaro has felt external and internal pressures, including from Brazilian agribusiness, which fears these trade reprisals.

It increased the budget for inspection from R$228 billion to R$498 billion, authorized the hiring of 739 inspectors and the mobilization of 700 police officers from the National Force.

From August 2020 to July 2021, deforestation in the Amazon increased 22% from the previous year. But this period does not reflect, let us say, the conversion of the Brazilian government, after the Climate Summit promoted by US President Joe Biden, in April.

In July and August, deforestation decreased 10% and 32%, respectively, compared to the same months last year.

In September and October, it rose again, but at a much slower pace, although the base for 2020 is very high: 2% and 5%, respectively. In November, it dropped 19% again. The data are from Inpe’s Deter alert system.

Fires in the Amazon also dropped 35% in November, compared to the same month last year. It was also the smallest area burned since the beginning of the historical series in 2015. From January to November, the reduction was 26%.

According to the Ministry of the Environment, this is the result of the Guardians of the Biome operation, which mobilizes 9,000 police officers from the National Force. More than 17 thousand fires were fought and 1,100 animals were rescued in 3 biomes: Amazon, Pantanal and Cerrado.

Fires from January to November also decreased by 63% in the Pantanal and 1% in the Cerrado. The operation seized 5,000 m² of wood and 32 machines, and imposed more than 1,500 fines, according to the ministry.

The president’s poor international image, combined with deforestation and still high burning in the Amazon, still outweigh these results.

Brazil is in a race against time to preserve its agribusiness market share, and the scenario is not good.

China’s rigor with Brazil

In addition, China, Brazil’s largest trade partner, has adopted unprecedented rigor in the health sphere.

The embargo on Brazilian beef in October caused a 43% drop in the volume of exports of the product compared to the same month in 2020.

It began on September 4, after Brazil, complying with a protocol signed between the two countries, reported two atypical — that is, non-contagious — cases of mad cow disease.

Chinese Customs announced the end of the embargo on December 15 — 102 days later. It was the biggest trade crisis between China and Brazil in 47 years of bilateral relations.

The government should not continue to fantasize that China or any other country “needs Brazil more” than the other way around.

There is a big homework to be done, to secure the markets hard won by agribusiness, to expose Brazilian industry to competition and to transform the Amazon not into a vulnerability, but into an environmentally sustainable source of wealth.

In this sense, the regulation of the global carbon market, at COP26, in November, opens a historic opportunity for Brazil to sell credits for capturing greenhouse gases and invest this money in reforestation projects and so many others that reduce emissions . Exits exist. The biggest challenge is timing.

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