A newly published paper exploring the role played by “tax havens” in global environmental degradation blames Brazilian agriculture and particularly the beef and soya sectors in the country for driving deforestation. It also links Ireland to money that was transferred into Brazil at the time.

The paper was published on 13 August in the Nature Ecology and Evolution journal and relates to the years 2000 to 2011. This research, which was conducted by Swedish and Dutch researchers, into the role of what they call “tax havens” have in the support of economic activities with potentially detrimental environmental consequences.

Along with places such as the Cayman Islands, the Bahamas, and the British Virgin Islands, Ireland was classified by the researchers as one such tax haven. They classified Ireland as having zero or low taxes, a lack of effective exchange of information, a lack of transparency and no requirement of substantial activity. One estimate puts the losses of tax revenue due to tax havens in the region of €175bn.

The report identified beef and soya as two sectors that were key drivers of deforestation in the Brazilian Amazon and as such were considered to have detrimental effects on the environment.

Lands cleared for pasture were estimated to make up 60% of the total deforested area. There are, however, established links showing the expansion of beef is driven by soya production claiming cleared land and pushing cattle into the rainforest.

The report acknowledges that, while the Brazilian companies themselves were not generally involved in forest clearance, they did form part of the drivers that incentivised deforestation

They identified nine focal companies in the soya and beef sectors in the Brazilian Amazon based on their market share. Upon analysing the figures provided by the Brazilian Central Bank, they found that between October 2000 and August 2011 over €16bn of investigated foreign capital was transferred through one or several tax havens.

This accounted for 68% of all foreign capital for these focal companies during that period. Among this money were loans provided by Dawn Farm Foods to Minerva, a joint venture partner of Dawn Farm Foods at the time.

In addition to Minerva, Bertin, JBS and Marfrig were the other beef processors included in the analysis.

The report acknowledges that, while the Brazilian companies themselves were not generally involved in forest clearance, they did form part of the drivers that incentivised deforestation.

It said the role of individual companies was not easy to establish, but the growing export markets they accessed likely incentivised production in nearby locations.

The foreign capital transferred to the main beef companies came from the Cayman Islands €1.998bn, the Bahamas (€357m), Netherlands Antilles (€258m), Panama (€26m) and Ireland (€3.3m).

Dawn Minerva

In 2007 Dawn Farm Foods, the Kildare-based cooked meat ingredients company, which is part of the privately owned Queally group announced it was partnering with Minerva Sao Paulo, one of Brazil’s largest beef producers and exporters, as part of a €30m joint venture.

Minerva Dawn Farms was a cooked meat ingredient facility in Brazil utilising Brazilian beef, chicken and pork to produce product for export. In 2012, Minerva Foods took full control of the business, renaming it Minerva Fine Foods.

Comment

While this report highlights the inward flow of investment to Brazil from what they term “tax havens”, the money from Ireland was after corporation tax had been paid here. Furthermore, at just shy of €3.3m, the overall amount of loans from Ireland identified was small.

Brazil only became self-sufficient in food in 1990. From then the government saw agriculture as a means to drive the rural economy and incentivised the expansion of farming in the new frontiers of the country such as Mata Grosso and Mata Piba. This policy saw deforestation rise sharply in the 1990s and early 2000s in Brazil.

The rise in the Brazilian economy also lead to an explosion in local consumption of meat while consolidation of the three big beef processors (JBS, Marfrig and BRF) encouraged a race for the supply of cattle. It is only in the last ten years, that Brazil’s government has made efforts to curb deforestation. These factors more than any inward foreign direct investment from countries like Ireland were the driving force behind deforestation. – Eoin Lowry

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