Brazilian banks to verify satellite deforestation data for rural credit

SAO PAULO (AP) — Brazil’s banks will be required to verify official satellite deforestation data before approving rural credit beginning on Wednesday in the South American country.

Under the new rule, financial institutions must check whether a property appears in a government registry of areas with potential illegal deforestation after July 31, 2019. The database, maintained by the Ministry of Environment and Climate Change, is based on satellite data from Brazil’s National Institute for Space Research, or INPE.

If a property is flagged, farmers may challenge the designation by demonstrating that the deforestation was legal. They can submit authorization documents, restoration plans for altered or degraded areas, or a technical remote‑sensing report.

When the resolution was approved in December, the Finance Ministry said that the new requirements were intended to align rural credit with conservation and sustainability policies.

Brazil is a global agribusiness powerhouse. The country is the world’s largest exporter of beef and the biggest soybean producer. Agriculture, however, is the leading driver of deforestation across all of Brazil’s biomes, including the Amazon rainforest. The Amazon plays a critical role in regulating the global climate, and scientists warn that continued forest loss could accelerate global warming.

The new rule represents a significant step in integrating agricultural policy, the financial system and sustainability, said Paulo Camuri, climate and territorial intelligence manager at Imaflora, a nonprofit that tracks deforestation.

Linking access to credit to environmental requirements, Camuri added, encourages more sustainable production and strengthens the agribusiness sector’s environmental responsibility.

“It is an intelligent incentive mechanism that uses credit — the main driver of agribusiness development — as a lever for good practices,” he said.

The Confederation of Agriculture and Livestock of Brazil, or CNA, the country’s main farm lobby, said that the measure adds a new verification step to rural lending, but doesn’t automatically distinguish between legal and illegal deforestation.

“This scenario may create uncertainty in the credit analysis process and increase the risk of restricting access to financing for producers who comply with environmental legislation,” the group said. CNA is now backing legislation in Congress to block the measures.

The Brazilian Federation of Banks said that the country’s financial institutions made needed adaptations.

“The overall assessment is that the measure strengthens governance and ensures the proper allocation of rural credit based on technical and publicly available information,” the banking body said. In case there is an alert, they said, loans can proceed upon proof of compliance by farmers. “The flow of credit granting will continue, with the necessary adjustments to ensure socio-environmental compliance and legal certainty,” they said.

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