Brazilian banks released funding for a farm in Brazil where environmental authorities identified illegal deforestation

BANCO DO BRASIL and credit cooperative Sicredi released financing for a property in the state of Piauí, Brazil, where Ibama, the Brazilian Institute of the Environment and Renewable Natural Resources, identified the unauthorised clearance of 1,800 hectares of native Cerrado biome vegetation — an area equivalent to almost 2,000 football pitches.

The environmental agency detected the violation on 1 August 2024 at Três Santos farm in Uruçuí, Piauí, but the formal notice of violation was not completed until October that year. In the meantime, on 21 August, Sicredi approved a R$600,000 (119 thousand dollars) publicly funded financing for soil improvement on the same property.

Nine months after the notice was issued, in July 2025, Banco do Brasil released a R$ 3 million (595 thousand dollars) funding to grow soy on the farm. In addition, by the time Ibama issued the notice, soya farmer Luciano Márcio Curioni, the property’s owner, had already received R$ 4.9 million (972 thousand dollars) in financing for soil improvement there, arranged through the same financial institution.

Ibama also imposed an environmental embargo on the area, a penalty intended to halt activities at sites where violations have been identified.

:: Read also: Bunge, Cofco, ADM and CHS traded soybeans with farmer cited for deforestation in Brazil 

In November 2024, however, a court suspended the measure following a lawsuit filed by the farmer. In December 2025, a new court ruling reinstated the embargo, but its effects were suspended again the following month after Curioni appealed.

In September and October this year, two court rulings once again lifted the suspension. However, the embargo had yet to reappear in the environmental agency’s system when this report was published.

The case remains pending in federal court. The farmer argues that Ibama wrongly classified the conversion of pasture into cropland as deforestation (see further details below).

After Ibama issued the notice of violation, the farmer traded his crops with Bunge, Cofco, ADM do Brasil and CHS Agronegócio, a report by Repórter Brasil shows.

In their responses, however, the companies said they had not traded with Curioni while the embargo was in force — Brazilian law imposes fines on those who purchase raw materials from embargoed areas — or that they had not purchased grain grown specifically at Três Santos farm after the notice was issued.

Rural Credit should not encourage deforestation, expert says

The financing granted to the soya farmer and his wife for the farm cited by Ibama used Rural Credit funds, Brazil’s main public policy for financing agribusiness.

“It makes no sense for the state to encourage activities that run counter to the commitments the country has made on the international climate agenda, such as ending deforestation. It is inconsistent to use increasingly scarce resources to encourage these practices,” warns Paulo Camuri, climate science and data intelligence manager at the organisation Imaflora.

Scientific studies show that deforestation is Brazil’s leading source of greenhouse gas emissions.

The funding arranged through Sicredi, due to mature in August 2029, was taken out in the name of Elizeth Rodrigues Guimarães Curioni, the wife of the farmer cited by Ibama. The other two loans, provided by Banco do Brasil, were taken out by Curioni. The R$ 4.9 million (972 thousand dollars) funding is due to mature in July 2030, while the R$ 3 million (595 thousand dollars) funding matured in June 2026.

Asked for comment, the financial institutions said they had found no issues that would have prevented the fundings from being granted. “The bank strictly complies with the social and environmental requirements set out in the Rural Credit Manual [which brings together the rules governing this financing instrument] and conducts its assessments using information from official data sources,” Banco do Brasil said.

The bank added that assessments are conducted before or during the term of the contract, taking into account “applicable legislation and regulations, as well as any court rulings”.

Sicredi also said that the loan granted to the Curionis “complied with applicable legislation and regulations”. It added that it had carried out “the appropriate assessments as soon as the competent environmental agency made public the information concerning the area cited for violations”, but that “the irregularities had been ruled out”.

Regarding the recent court rulings lifting the suspension of the environmental embargo at Três Santos farm, the financial institution said that “so far, no changes have been identified in the official Ibama and federal Sicar databases”, which it uses for its social and environmental monitoring.

Also asked for comment, Brazil’s Central Bank replied that “financial institutions are responsible for taking appropriate action when irregularities are identified” and that it may request any necessary information and clarification from them.

Read the full responses from Banco do Brasil, Sicredi and the Central Bank here.

Manual prohibits the granting of public funds for properties subject to active environmental embargoes

The Rural Credit Manual (MCR), which brings together the National Monetary Council’s rules for agricultural financing, prohibits funding for properties with environmental embargoes in force. Since January 2025, it has also required contracts using public funds to provide for the possibility of a loan losing its Rural Credit status if breaches of environmental obligations are identified on the rural property during the financing period.

These breaches include environmental embargoes on financed properties. The rules, however, do not specify what procedure should be followed when such a penalty has been suspended by a court ruling in an ongoing case, as happened with Curioni.

The Central Bank was also asked what guidance should be followed in this situation and whether it would request action in the cases identified by the report. It had not responded to these questions by the time of publication.

Through his lawyer, Curioni told Repórter Brasil that “there was no illegal deforestation, and all interventions in the area were carried out with prior authorisation from the State Environment Department, which attests to the property’s compliance”. He added that, “out of a duty of confidentiality and respect for our business partners, we do not comment publicly on commercial contracts, financial instruments, insurance transactions or private business relationships with third parties” (read the full response here).

New rules bar financing for unauthorised deforestation

“If a court has suspended the effects of an embargo, there is no restriction on access to credit. At present, access is blocked only where an embargo is in force,” explains André Lima, extraordinary secretary for deforestation control at Brazil’s Ministry of the Environment and Climate Change (MMA).

He stresses, however, that Rural Credit rules will change from 2027 for medium and large properties. “If these rules were already in force, a court-ordered suspension of an embargo might make no difference, because if deforestation has occurred without a vegetation clearance permit, the farmer will not be able to access credit,” he explains.

Under the new rule, banks will have to check whether illegal deforestation has occurred on the financed property after 31 July 2019. Checks must use satellite data made available by the ministry and vegetation clearance permits submitted by farmers.

“Public investment must increasingly be directed towards sustainable productive economic activities that generate jobs, income, work opportunities, prosperity and environmental quality,” Lima argues.

Soya production pledged as collateral

Soya production at Três Santos farm from the 2026/2027 to the 2031/2032 harvests was among the assets Curioni pledged as collateral for an Agribusiness Receivables Certificate (CRA) issued on 23 June 2026, which raised R$55 million (11 million dollars) on the financial market.

The security was issued by Canal Companhia de Securitização, with Oliveira Trust acting as trustee, responsible for representing investors’ interests and monitoring compliance with the obligations under the transaction.

A CRA is an investment security that allows farmers and securitisation companies to turn receivables from future sales into a market instrument that investors can purchase. To secure the transaction, Curioni provided additional collateral, including rural properties and fiduciary security over soya and maize plantings and harvests, including production linked to Três Santos farm.

Under this arrangement, the farmer retains possession of the pledged assets, but they remain tied to repayment of the debt. In practice, Curioni can continue farming, but if the debt is not repaid, creditors can enforce their security over those assets to recover the outstanding amounts.

The security’s original Securitisation Agreement, however, did not mention the environmental notice of violation issued against Curioni or the embargo imposed by Ibama on the property. Only on 3 July 2026, the scheduled date for the offering’s launch and settlement — when investors could purchase the securities — did Canal Companhia de Securitização and Oliveira Trust sign an amendment that, among other changes, listed the penalties among the transaction’s risks.

Resolution 160/2022 of Brazil’s Securities and Exchange Commission (CVM) requires offering information to be “accurate” and not to “mislead investors”. It also makes the offeror responsible for ensuring that information provided to the market is sufficient, truthful, accurate, consistent and up to date.

Meanwhile, CVM Resolution 60/2021, which regulates securitisation companies, requires disclosure of material acts or facts relating to securities issues and their underlying assets — in other words, any information that could influence an investor’s decision to “buy, sell or hold the securities”.

The amendment states that the territorial scope of the notice of violation and the embargo “has yet to be defined”, even though Ibama’s public documents refer to unauthorised deforestation across 1,800 hectares. The amendment also provides no further details on the environmental issue.

Maria Eduarda Senna Mury, co-founder and strategy director at DADOS, the Institute for Law and Socio-Environmental Data Analysis, says the case raises “significant questions” about the depth of the transaction’s due diligence and the adequacy of the social and environmental information presented to investors.

“Simply mentioning an environmental risk in general terms is not enough. Proper due diligence should assess the scale of that risk and its specific relationship to the activity being financed,” she says. In her view, the Securitisation Agreement should identify the exact area under embargo, provide an updated account of the embargo and court proceedings, and, above all, explain whether the area cited for violations is connected to the farms, soya production or future sales receivables backing the CRA.

Harvests pledged amid court proceedings

Pledging the harvests from Três Santos farm increases the transaction’s risks, Mury says, because the collateral could be affected if the farm’s embargo comes back into force. “In that scenario, we are not just talking about reputational or environmental risk. There is also legal and credit risk.”

In the agreement pledging the harvests, signed by Curioni, the borrower declares that he complies with environmental legislation and does not grow soya or maize in “areas where any agricultural or livestock activity is prohibited”, or in breach of environmental permits and legislation.

“In public offerings, the information provided to the market must be sufficient, truthful, accurate, consistent and up to date to enable an informed investment decision,” she stresses.

Asked for comment, Canal Securitizadora said it had carried out “all relevant due diligence, with support from independent external advisers specialising in securitisation”, and that “the risks identified during due diligence were reflected in the offering documents”. It added that investors had been able to “adequately” assess the transaction’s risks. Regarding the recent court rulings reinstating the environmental embargo at Três Santos farm, the company said it had “requested clarification from the borrower, in accordance with the transaction documents” (read the full response here).

The Securities and Exchange Commission, the institution responsible for overseeing, regulating, supervising and developing Brazil’s securities market, said only that it “monitors and analyses information and activity in the Brazilian securities market, taking appropriate measures whenever necessary”, and that it does not comment on specific cases. Oliveira Trust had not responded by the time of publication.

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