IFC: Cowboys in the Amazon

2 April 2007

versión en español

In March the IFC approved $90 million towards a $424 million expansion and modernisation programme for Brazil’s leading beef and leather processor Bertin Ltda. Reports from Brazilian and international NGOs find that the project, approved despite a groundswell of opposition, fails to meet numerous IFC and World Bank Group safeguard policies, is likely to exacerbate Amazon deforestation leading to increased green house gas emissions and endorses a company currently under investigation for fraud. The IFC sees the project as an opportunity to “engage a leading private sector company in tackling the most serious environmental and social issues facing the Brazilian Amazon”.

A letter in March from over 30 NGOs and social movements of the Brazilian Forum of NGOs and Social movements (FBOMs), pointed out that according to studies used by the IFC, the projected annual increase in cattle from Bertin’s Marabá slaughterhouse — the only one subject to an environmental assessment — would lead to deforestation of between 270,000 and 320,000 hectares of forest. This would violate both national law and the federal government’s Sustainable Forestry Directive, launched in February 2007. Roberto Smeraldi of FBOMs added “If this increased demand is accomplished via a business-as-usual expansion of pasture, without effective controls it would lead to deforestation of an area roughly equivalent to Jamaica.”

business-as-usual expansion of pasture

A report by US NGO, the Sierra Club submitted to the IFC’s board at end February and endorsed by 12 international environment and development NGOs referred to the project as “a high-risk project with outputs — beef, leather, pet food and dog toys — that do not warrant its high levels of environmental and social risks and impacts”. NGOs reminded the IFC of its responsibility to ensure that its investment decisions are consistent with the World Bank’s interests in combating green house gas emissions and climate change and urged the IFC to finance less risky agricultural projects, particularly those that support small-scale farmers. They recommended that the IFC commission a study to be carried out by either the World Bank’s Compliance Advisor Ombudsman or its Independent Evaluation Group to look at the impacts of the livestock sector on climate change and their implications for the the IFC’s investment in agribusiness. Further findings included:

  • the IFC has ignored its own requirements for projects that generate 100,000 tons or more CO2 equivalent per year, given Bertin’s projected emissions of 9,360,000 tons CO2 equivalent per year;
  • the information disclosed in the environmental and social impact assessment (ESIA) by Bertin is highly inadequate. The ESIA underestimates the project’s deforestation risk and fails to lay out the necessary mitigation measures. Bertin has only assessed the environmental and social impacts for a small part of the overall project;
  • Bertin, under prosecution for price fixing by the Brazilian government, may have violated new rules on fraud and corruption adopted by the IFC in January;
  • Bertin is not required to comply with the IFC’s performance standards until some time after the loan disbursement; and
  • the project directly contradicts the World Bank’s investment of approximately US$1.4 billion in 19 Amazon conservation and biodiversity projects.

Following project approval, a letter to the IFC from FBOMs pointed out serious inconsistencies between the IFC’s technical briefing for the board on 8 March, and the official project document, made public on 1 March. These inconsistencies were in relation to time frames for minimum legal compliance from the company, and the number of slaughterhouses and by-product processing plants that the company operates in the Amazon which have been significantly reduced in the technical briefing. The briefing, upon which IFC approval was based, states that the affected area in the Amazon would be roughly half of that implied by the project document. It states that the company runs “one slaughterhouse and two bi-product processing plants in the Amazon”. However official project documents refer to six facilities in critical areas in the Amazon, including three tanneries (Cacoal in Rondônia, Redenção and Conceição do Araguaia in Pará), two slaughterhouses (Marabá in Pará and Água Boa in Mato Grosso) and one unspecified operation in Campo Novo dos Parecis (Mato Grosso).