In-depth | Behind the 'Consumption' of the Amazon: The Dual Curse of Soy and Cattle in an Era of Globalization

4. 'Squandering' the Rainforest: How to Resolve the Land Speculation Crisis? In other words, cattle ranching has consistently been the largest driver behind deforestation in the Amazon—and land speculation remains its original, unchanging impetus. The signing of the 'Amazon Soy Moratorium Agreement' is often perceived as a pivotal moment for curbing rainforest destruction. Yet data shows that between 2006 and 2008, deforestation in the Amazon remained above 10,000 square kilometers per year—its decline was even smaller than in 2005, the year before the agreement took effect—and the rate fluctuated repeatedly during this period. The decisive drop occurred in 2009, when deforestation in the Amazon plummeted by 73%. This dramatic shift resulted from Resolution No. 3545, issued by Brazil’s Central Bank and effective as of July 2008. This regulation prohibited all branches of Brazilian banks from extending loans to any individual or entity engaged in deforestation in the Amazon region; it also required borrowers to present formal land-title documentation proving ownership of agricultural land [35], thereby cutting off land speculators’ financial leverage at the source and limiting the scale of land-clearing activities undertaken by any single individual or entity. Brazilian economist Juliano Assunção and his team estimated that this new policy led to $290 million less in agricultural lending in the Amazon between 2009 and 2011 [36]. Notably, the World Bank—led by the United States—played a relatively critical role in shaping this policy. In 2008, Brazil’s five major state-owned banks joined the World Bank’s 'Sustainable Banking Network' to qualify for World Bank loans, obligating them to adjust their environmental finance policies in accordance with the network’s requirements and standards. These lending conditions were subsequently relaxed multiple times over the following years. In June this year, amid widespread opposition, President Bolsonaro issued a 'provisional presidential decree' forcibly transferring authority over demarcating protected areas in the Amazon rainforest from the 'National Indian Foundation' (FUNAI) to the Ministry of Agriculture—and pledged low-interest agricultural loans totaling up to USD 57.7 billion to rural regions, effectively rendering Resolution No. 3545 a dead letter. Some may ask: Won’t such stringent lending conditions as those stipulated in Resolution 3545 cut off livelihoods for local residents seeking to earn a living through cattle ranching? Contrary to popular assumptions of 'economic necessity' or 'local livelihoods,' cattle ranching in the Amazon is actually an industry dominated by a relatively small elite. Its defining features are low capital investment, low labor input, low output, and extremely high land-use intensity. Beef production per hectare in the Amazon is less than 10.5% of Europe’s average; income per hectare from cattle ranching amounts to only 11% of that from fruit or vegetable cultivation in the same region, and just 21% of that from grain farming. Moreover, on an average cleared area of 3,000 mu (approx. 200 hectares), fewer than 2.65 workers are employed [32]. So how do ranchers manage to acquire (or occupy) most of the land in the region—and yet fail to operate it more efficiently—despite such meager returns? Scholars suggest the answer lies in asset-based income and financial leverage [42]. For these developers, ranches function much like speculative real estate: flipping land for profit is the ultimate goal, while cattle-rearing income serves merely as incidental rent to supplement daily expenses. This explains why researchers found, during field investigations, a strong negative correlation between the amount of remaining forest cover on a given tract of land and the 'happiness level' of its Amazonian rancher: the more uncleared forest remaining, the harder it is to sell the land at a good price—and the smaller the portion available for leasing out.

The Brazilian presidential election will proceed to a second round. What are the key variables, and how do Lula and Flávio Bolsonaro differ on critical policy issues—including economics?

Under the strong influence of Trump’s revived 'Western Hemisphere' policy, Latin America’s traditional 'left-wing bloc' is undergoing a domino-like realignment. Meanwhile, under the impact of Milei—the so-called 'Latin American reform pioneer'—South America appears to have found some direction in tackling its long-standing economic problems of 'high fiscal deficits and high welfare spending.' Against the broader backdrop of Venezuela’s political shift, Cuba’s deepening crisis, and the successive re-election of pro-U.S. governments in Colombia, Ecuador, and Peru, Brazil’s 'Lula administration' has, to some extent, become 'the last beacon of South American leftism.' Currently, because no candidate secured over 50% of valid votes in the first round of Brazil’s presidential election, the top two vote-getters—former President Bolsonaro’s son, Flávio Bolsonaro (47.04%), and Lula (45.15%)—will face off in the second round on October 25. Beyond traditional differences in economic and foreign policy, their core divergence centers on relations with the United States; additionally, regional support patterns—north versus south—also constitute a distinctive feature of this electoral contest. I. Key Variables Before entering the second round, both Bolsonaro and Lula must first secure endorsements from candidates eliminated in the first round, aiming to attract their supporters to switch allegiance. Although the vote shares of all other candidates fell below 3%, their supporters remain potentially decisive 'kingmakers' in a tightly contested race where polls show near parity between the two leading candidates. Indeed, the first-round polling data—which proved markedly inaccurate—signals extreme uncertainty heading into the runoff. In simulated head-to-head matchups conducted by multiple polling institutes, Lula and Flávio Bolsonaro trail each other by a mere 0.1 percentage point—a statistical tie. Under such conditions, it becomes highly plausible that supporters of a defeated faction could swing the election outcome. External interference also grows likelier: Argentine President Milei and Israeli Prime Minister Netanyahu have already publicly endorsed Bolsonaro; the U.S. White House, meanwhile, is all but openly backing him—meaning capital markets have already placed their bets on Flávio Bolsonaro! Nonetheless, Lula remains the incumbent president. Brazil’s Federal Attorney General’s Office has launched an investigation into alleged U.S. government funding intended to interfere in Brazil’s election. Lula’s campaign team has further requested that the suspension of in-person consular services at U.S. diplomatic missions in Brazil be included in the probe into foreign interference. II. Economics At the foundational economic level, the central divergence between the two candidates concerns the relationship between 'government and market.' Lula advocates gradual fiscal adjustment, positioning public investment and social programs as engines of economic growth; he promotes progressive tax reform—including higher taxation on high-income earners and dividend income—to partially offset fiscal shortfalls, prioritizes job creation, and maintains the strategic role of state-owned enterprises. By 2025, Lula had succeeded in exempting approximately 25 million Brazilian workers from income tax; Brazil’s unemployment rate had fallen to a historic low; worker incomes rose by roughly 20%; poverty rates declined; around five million families exited the 'Bolsa Família' (Family Grant) program; and he reversed Bolsonaro-era laissez-faire policies toward Amazon deforestation. Flávio, by contrast, proposes 'scissors-style reforms,' pledging immediate cuts to public spending upon taking office—including abolishing at least ten ministries and reducing administrative positions—lowering tax burdens, and replacing current fiscal rules with a new framework tied directly to debt levels. His plan targets a fiscal adjustment equivalent to 1.5% of GDP, stipulating that actual expenditure growth can fall to zero once government debt exceeds 80% of GDP. This approach clearly draws inspiration from Argentina’s Milei—and thus his economic platform is expected to grant markets significantly greater leeway, with markedly less state intervention than Lula’s.

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