Currently in Brazil, there is an important opportunity of aligning agricultural growth with protection of natural resources. According to estimations, it is possible to more than double the country’s production in already available areas, that is, with no necessity of deforestation and suppression of native vegetation. The combination of public policies, such as Rural Credit and the new Forest Code, can bring substantial benefits to both rural modernization and climate change mitigation, at no additional costs and without causing ruptures in the current credit system. In a complex fiscal context and at a moment in which the government plans on implementing important reforms, aligning these two policies has the potential of helping correct distortions in Brazil’s rural credit policy, which is outdated. This document, which was elaborated by Climate Policy Initiative/Pontifícia Universidade Católica do Rio de Janeiro (CPI/PUC-Rio), recommends the association between Rural Credit and the Forest Code to be put in practice in the next Plano Safra (2019/2020) – which is Brazilian annual agricultural plan.

The new Forest Code goes beyond the protection of remaining forest areas. On the one hand, enforcing the code guarantees that Brazil’s production is in compliance with sensible environmental legislation – a condition that has been increasingly valued in international trade. On the other hand, by establishing restrictions to the expansion of areas designated to agriculture in rural establishments, the law fosters productivity increases in place of area expansion, accelerating the modernization of production.


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