On 1 July, online environmental publication Mongabay reported the approval of a $200 million loan by the International Finance Corporation (IFC), the World Bank’s private sector lending arm, to “industrial agricultural producer Louis Dreyfus Company (LDC) for monoculture soy and corn production in Brazil’s Cerrado, a grassland biome that has lost nearly 80% of its habitat cover.”

The decision was heavily criticised by local human rights and environmental protection organisations. The loan was approved despite a 31 May letter signed by over 200 Brazilian, Latin American and international civil society organisations, including Amigos da Terra – Brasil and Haki Nawiri Afrika, calling on the executive board to reject the loan. The letter argued that LDC would use the proceeds from the IFC loan to purchase commodities from the “heavily threatened Cerrado biome of Brazil, the world’s most biodiverse savanna that has already lost roughly half of its native vegetation to agribusiness.”

The letter also highlighted the risk of human rights violations and land conflicts, deforestation and environmental degradation in the sensitive Cerrado, and noted that the corn and soy would be principally used for animal feed in damaging industrial farming operations. It is concerning that the IFC chose to support agricultural production being used for animal feed. Given the evolving food crisis, the orgins of which are rooted in the financialisation of food systems and predate the war in Ukraine (see Observer Summer 2022, Spring 2020), the use of the resources for animal feed is nonetheless a concern in light of the current context. Additionally, the letter noted that, “LDC lacks a full traceability system and its zero deforestation policy does not fully apply until the end of 2025.”

The letter cited research that alleges that LDC and its subsidiaries have contributed to deforestation and land conflicts and stressed that the loan is inconsistent with the World Bank’s climate commitments (see Observer Summer 2021).