MercoPress. South Atlantic News Agency

Brazilian banks will deny credit to meatpackers that buy cattle from deforested areas

The sustainability standard requires slaughterhouses to adopt a tracking system to monitor its entire supply chain in the Amazon and Maranhao by December 2025. Photo: JOAO LAET/AFP

International measures on illegal deforestation are beginning to put pressure on Brazil, where banks have agreed to deny credit to meat packers that purchase cattle from such areas, according to the Brazilian Federation of Banks (Febraban).

The group said the move is tied to rules approved by its self-regulation council to foster “sustainable finance” in Brazil, which has become the world's biggest beef exporter.

The sustainability standard requires slaughterhouses to adopt a tracking system to monitor its entire supply chain in the Amazon region and Maranhao state by December 2025. The requirement applies to both direct and indirect suppliers.

Leading meatpackers JBS SA and Marfrig Global Foods SA have commitments to stop buying cattle from indirect suppliers linked to Amazon illegal deforestation by 2025. The same companies already ban direct purchases from areas illegally cleared.

However the group representing Brazil beef exporters, known as Abiec, objected to what it says is a double standard by the banks, noting that landowners do not face the same requirements for financing.

“It is important that banks adopt the same environmental requirements for all account holders, including owners of rural areas,” the group said in an emailed statement.

The group added that beef producers have banned more than 20,000 ranchers from selling cattle to members due to illegal environmental practices.

So far, 21 banks have signed the protocol, including Itau Unibanco, Banco do Brasil, Bradesco, Santander and Caixa Economica Federal. Funding activities linked to deforestation can raise credit, reputation and operational risks, Febraban said.

In December, the EU parliament required exporters to prove agricultural commodities, including beef, soy and coffee, did not contribute to deforestation.

In the event of non-compliance with the regulations, banks will be subject to administrative sanctions that may result in the payment of a fine or exclusion from Febraban's self-regulation system, the group said.