Brazil Supreme Court vote affirms soy moratorium's legality, traders' group says

By Roberto Samora

SAO PAULO, Nov 4 (Reuters) - A vote by Brazil's Supreme Court on Monday recognising the legality of the soy moratorium, a corporate pact under investigation by Brazil's antitrust body, confirms the moratorium's legitimacy and effectiveness, said grain traders' group Abiove.

WHY IT'S IMPORTANT

The ruling, led by Supreme Court Justice Flavio Dino, supports a long-standing corporate environmental agreement that bars soybean traders from buying from farmers who cleared land in the Amazon rainforest after July 2008, and shapes soy trading practices in Brazil, the world's largest soybean exporter.

CONTEXT

The soy moratorium was designed to curb deforestation in the Amazon by restricting soy purchases from newly deforested areas, but it has faced opposition from soy producers who argue the pact acts as a cartel and negatively affects small and medium farmers.

The Supreme Court ruling was part of a case about the legality of a state law in Mato Grosso, a major soy producing state, that denies tax benefits to soy traders and processors participating in the soy moratorium. The Supreme Court's opinion about the moratorium's legitimacy raises questions about whether recent challenges to the pact in Brazil's antitrust agency will succeed.

KEY QUOTES

Justice Dino said the soy moratorium "strengthened Brazil's credibility in fulfilling international environmental commitments."

Abiove said: "A decision of this magnitude confirms that the multi-sector pact is a legitimate, effective initiative aligned with constitutional principles, while recognising its positive environmental and agribusiness impacts."