Mato Grosso-Pará Border Dispute Raises Agro-Economic Concerns

The Bottom Line

• A territorial dispute between Mato Grosso and Pará is impacting a significant agro-economic region, leading to increased costs and operational uncertainty.
• Producers face higher tax burdens, legal insecurity for rural properties, and logistical difficulties for agricultural output.
• The affected area is crucial for soybean, corn, and cattle production, with potential broader economic consequences for the region.

The Federation of Agriculture and Livestock of Mato Grosso (Famato) participated in a Supreme Federal Court (STF) hearing on June 10 regarding the territorial dispute between Mato Grosso and Pará. The issue is a significant concern for the productive sector due to observed impacts in the region, including increased tax burdens, legal uncertainty for rural properties, and logistical challenges for production outflow.

Famato highlighted several critical points to the STF during the conciliation hearing, including the heightened tax burden, legal insecurity for rural producers, logistical difficulties, and the impact on thousands of families reliant on public services from Mato Grosso. The Federation has been monitoring the discussion since its inception, aiming to demonstrate the concrete impacts of the territorial change on the productive sector and local communities.

A survey conducted by the Mato Grosso Institute of Agricultural Economics (Imea) underscores the significant economic relevance of the disputed area. The study identified 13.41 thousand hectares cultivated with soybeans, with an estimated production of 53.31 thousand tons. Additionally, 53.08 thousand tons of second-crop corn are projected for the 2024/25 harvest. In livestock, the region concentrates approximately 330 rural properties and a herd of about 248.19 thousand bovines, alongside sheep, goats, and swine.

Imea's analysis indicates that a primary detriment faced by producers is the increase in tax costs. Prior to the territorial alteration, operations were considered internal to Mato Grosso, benefiting from ICMS deferment, meaning producers primarily paid the Fethab tax. With the change, these operations are now classified differently, leading to a revised tax structure and higher overall costs for agricultural activities in the affected zone.