The soy moratorium agreement bars signatories from buying soybeans grown on Amazonian farms deforested after July 2008.

In an announcement on Monday, Mato Grosso Governor Mauro Mendes said lobby group Abiove informed the state government officially that the association and major traders were leaving the pact. A tax law change on January 1 is a key factor.

Abiove, which includes ADM, Bunge, Cargill, Cofco and Louis Dreyfus among members, confirmed in a subsequent statement it had “initiated talks” to exit the pact, which is backed by the federal government and conservation groups.

The group and about two-thirds of the companies that formerly participated no longer appeared on Monday on the moratorium agreement’s website.

Conservation groups condemn the move

WWF said in a statement that the decision was an environmental setback.

Departure of the firms from the pact “weakens one of the most effective instruments for combating deforestation in the country,” and it exposes farmers to increasing climate risks, WWF said.

Greenpeace also criticized the move, saying it would violate promises made to investors and international markets.

The moratorium is credited with slowing the destruction of the world’s largest rainforest. However, as Reuters reported last week, some of the world’s largest soybean traders were preparing to withdraw from the deal to preserve tax benefits in Mato Grosso, where a new law eliminating the benefits for moratorium participants took force at the start of 2026.

Aprosoja-MT, an association representing farmers in Mato Grosso that had pressured companies for years to end the pact, welcomed the Abiove announcement.

The farmer group called the decision a victory, claiming the moratorium agreement is illegal and unfair to those who comply with the Brazilian Forest Code.

Abiove said companies will be individually responsible for fulfilling their own conservation commitments. “The legacy of monitoring and the expertise acquired over nearly 20 years will not be lost,” it said.

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The firms exiting the so-called Amazon Soy Moratorium, which has saved millions of acres of tropical forest over nearly two decades, are looking to shield themselves from a new state law in Mato Grosso, the sources said on condition of anonymity.

Starting in January, the state will strip tax incentives from companies taking part in the conservation program. Mato Grosso grew some 51 million metric tons of soybeans in 2025, more than Argentina.

A preliminary report from state auditors in April found that grains traders had benefited from tax incentives worth about 4.7 billion reais (C$1.15 billion) between 2019 and 2024.

ADM and Bunge were the top beneficiaries of tax incentives, receiving about 1.5 billion reais (C$368.6 million) each, said Sergio Ricardo, head of the Mato Grosso state audit court.

U.S.-based ADM, Bunge and Cargill, as well as China’s Cofco and Brazil’s Amaggi, are signatories of the pact with facilities in Mato Grosso that have benefited from state tax incentives. It was not clear which of the firms would break immediately from the moratorium.

Cargill referred questions to industry group Abiove, which did not respond to requests for comment. ADM, Bunge, Cofco, Amaggi and grain exporter group Anec did not respond to questions.

“Most companies will choose not to lose the tax incentives and will withdraw from the agreement,” said one of the sources, adding that the departures would effectively end a pact signed in 2006 with the federal government and conservation groups.

‘Dangerous precedent’

The moratorium is considered one of the most important forces slowing deforestation rates in the Brazilian Amazon over the past two decades as it bars signatories from buying soybeans from farmers who plant on land deforested after July 2008.

Researchers estimate that an area of the rainforest the size of Ireland would have been lost to soy farms in Brazil without the moratorium and related conservation efforts, compared to the pace of expansion in neighboring countries such as Bolivia.

The Mato Grosso law, which lawmakers passed in 2023, is the latest example of a global retreat from pacts and policies to curb climate change, even as temperatures break records, driven by rising fossil fuel use and deforestation.

Critics of the soy moratorium say that the pact restricts the market and hurts farmers. Farming groups in Mato Grosso say the protocol reduces the income and economic development of the state.

“Companies could choose to keep their zero-deforestation commitments,” said Cristiane Mazzetti, who oversees the moratorium for Greenpeace. “It’s a dangerous precedent, and it’s not what we need in a moment of climate emergency,” she added.

Brazil’s federal government has argued in court against the new Mato Grosso law stripping tax breaks from traders due to their environmental commitments.

“If the Mato Grosso government really removes those incentives, we have heard that some, or many, companies will in fact abandon the moratorium for economic reasons,” said Andre Lima, a senior Environment Ministry official tasked with combating deforestation. He added that firms had not officially informed the ministry of their plans.

Far-reaching consequences

President Luiz Inacio Lula da Silva has vowed an “ecological transformation” of the Brazilian economy, capped off with the United Nations climate summit hosted in the Amazon last month.

But in domestic politics, his leftist government is often fighting a rearguard battle to protect the world’s largest rainforest from a farm lobby with the upper hand in Congress.

The unraveling of the Amazon Soy Moratorium is likely to embolden those rural powerbrokers and their allies. This year the farm lobby has successfully gutted environmental permitting laws and stripped some protections from Indigenous lands.

The trend has caught the attention of farmer groups in Europe arguing to block a free trade agreement between the European Union and South America’s Mercosur due to the impact of Brazilian agribusiness on vital ecosystems.

Brazil’s Supreme Court has barred some but not all of the farm lobby’s agenda in Congress, based on constitutional protections for the environment and Indigenous peoples.

Environmentalists warn that the end of the soy moratorium could pave the way to dismantle other environmental protections in the world’s largest soybean producer, including part of Brazil’s forestry code restricting farmers from felling trees on 80 per cent of their properties in the Amazon.

Lawsuits

In recent years, soybean farmers pushed state lawmakers in Mato Grosso, Rondonia and Maranhao to strip tax benefits from companies taking part in environmental pacts more restrictive than Brazilian law.

It remains unclear which environmental commitments outside the soy moratorium will trigger those new state laws, which could threaten a range of other companies, including cellulose producers and meatpackers.

Brazilian antitrust agency CADE has separately opened an investigation of the soy moratorium for a potential breach of competition rules. For nearly two decades, trading firms have shared the cost of monitoring soy farms in the Amazon to avoid buying from those planting on newly deforested land.

Starting in January, CADE has ordered traders “to refrain from collecting, storing, sharing, or disseminating commercial information related to the sale, production, or acquisition of soybeans.”

Soy farmers in Mato Grosso have also sued grain traders for roughly $180 million over their role in the pact.

In temporary rulings, Supreme Court Justice Flavio Dino stopped the antitrust investigation, but let the Mato Grosso law take effect. Environmental groups are still trying to block the state law ahead of a final court ruling on the issue.

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While some say Justin Trudeau’s government had a much more hands-on approach to environmental issues, appearing to favour deterrents over incentives, the Carney government’s strategy may be more restrained and integrated with its economic agenda.

No mandate for agriculture, environment?

On May 21, the Prime Minister’s office released a mandate letter, which listed seven priorities for the new government. The priorities focused mainly on building Canada’s economy and protecting sovereignty. It contained no mention of agriculture or environmental issues.

Tyler McCann, managing director of the Canadian Agri-Food Policy Institute (CAPI) said this lack of eco messaging doesn’t necessarily mean the government is ignoring the environmental file.

“To say that environment’s not that high of a priority because it’s not there, or that agriculture’s not that high of a priority because it’s not there, is, I think, to misread the approach that Prime Minister Carney and the government are taking.”

“Carney’s mandate letter is much more straightforward than the Trudeau mandate letters that could be quite flowery,” McCann said, “but it still has aspirational language, like the need to build a Canada worthy of our children and grandchildren.”

The speech from the throne, written by the Carney government delivered by King Charles, referred to nature as “core to Canada’s identity,” signalling the government is still attentive to environmental issues.

Poor communication

Some of the Trudeau Liberals’ ambitious environmental policy garnered controversy among farmers.

One of the Trudeau government’s main pitfalls on green policy was its communication, said Tristan Skolrud, associate professor of agricultural and resource economics at the University of Saskatchewan.

It was easy for farmers to see pieces of greenhouse gas policy and “expand that into something that wasn’t really the point of the policy,” he added.

“But the Trudeau Government wasn’t strong enough to come out and say, ‘Okay, no, this isn’t quite the right interpretation.’”

Despite polarization in the sector, many farmers have an appetite for the types of climate solutions the Trudeau government invested in, like the On-Farm Climate Action Fund (OFCAF), said Geneviève Grossenbacher, a Quebec vegetable farmer and director of policy for Farmers for Climate Solutions.

She said polls her organization carried out indicated issues like climate change and soil health were key issues to most farmers.

“It’s not that farmers don’t care about those issues,” Grossenbacher said. “It’s quite the contrary.”

However, the government needs to have the right approach, tone and tools, and should treat farmers like partners.

“Farmers often felt like they were more part of the problem than part of the solution,” Grossenbacher said. “They were investing, but farmers felt still that … It felt a bit more like a stick than a carrot.”

Measures like carbon pricing are supposed to be a deterrent for less sustainable practices. McCann said he hopes and expects to see fewer sticks and more carrots under the new government’s approach.

Informed by corporate world

Carney’s government, informed by the PM’s own experience in the corporate world, could take what Skolrud called a “dramatically different approach” to Trudeau’s.

“If we think back to the last 20 years of Carney’s career, it’s been about leading enormous economies through struggle,” he said. “He led Canada through the Great Recession in 2008 and then went over to the Bank of England just in time for Brexit.”

McCann said he envisions an approach more focused around an environmental, social and governance (ESG) and corporate responsibility model.

“If you look at Mark Carney’s history, there is a large focus on that,” he said. “If you look at the Liberal Party platform, there (were) certain pieces of that.”

With a focus on spending less on government operations, Carney’s administration could take a more focused approach that empowers companies to do more, McCann said.

Skolrud said while he doesn’t expect Carney to actively roll back environmental protections, he also doesn’t foresee much focus on green policy. He predicted the government may apply a macroeconomic lens to many issues. For instance, using that lense to choose priorities for the agriculture sector

“I don’t think that the environment is going to get into the top ten,” Skolrud said.

He said he anticipates a more “market-based” approach that would look to improve farmer income through sequestering carbon, mitigating emissions and establishing extra carbon markets.

This could signal an integration between climate and trade. Skolrud pointed to Carney’s previous suggestions that Canada could try to trade with countries who recognize our reductions in emissions.

Sustainability as an economic incentive

Grossenbacher said she hoped to see on-farm resilience and sustainability become an economic incentive.

“What we’ve seen on the ground is that … when programs support farmers in investing their farm resilience, it actually really pays off.”

In the light of current trade uncertainty, Farmers for Climate Solutions thinks sustainability could be a competative advantage, she added.

She said she hopes to see these partnerships between farmers and government grow. Early signs have suggested this could become a reality.

“There (were) hints in the speech from the throne that … this government will really seize the opportunity to work in partnership with the sector and see the farming sector as really key to a strong Canadian economy.”

Integration between economic files, agriculture and environment could be a part of the new government’s approach, signalled by the inclusion of new Minister of Agriculture and Agri-Food Heath MacDonald on several cabinet committees, including the Build Canada committee, which is meant to tackle issues of economic growth.

‘Hit the reset button’

McCann said he expects Carney to “hit the reset button … not just on fertilizer targets or the environmental agenda, (but) on everything the government does.”

“We’re going to see a reset on the ag trade agenda,” he said. “The language that he’s using is really quite ambitious when it comes to change.”

Yves Millette, CEO of Farm Business Consultants (FBC), says he expects a new green agenda to be implemented in a more practical, measured way.

“As much as we’d all love to have everyone on an electric vehicle, we don’t have the charging stations, we don’t have the transmission capacity, we just don’t have enough to really make that happen overnight,” he said.

“If we … exploit our natural resources and at the same time invest in green energy, we have the opportunity to be the leader, frankly, when it comes to that.”

With new efforts and a different approach, the government could work to win back producers’ trust on eco policy.

Skolrud says he doesn’t expect the Carney government to make the same missteps as its predecessor.

“As far as gaining back gaining back trust, I think that’s going to be a long road,” he said. “But honestly, I looked at some of the things that he’s done, and I really, really don’t see a high likelihood that he’s going to impose any environmental changes.”

“He might provide subsidies for best management practices or some sort of incentive to encourage the adoption of things that might improve the environment,” Skolrud added.

“For years and years, the environmental was pitted against the economic argument,” said Grossenbacher. “It was, ‘you can have the environment or the economy.”

“I actually think the Carney government really does understand that actually, they really are not … magnets that work repel each other. They actually work really strongly together.”

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