July 4 | Amazon Fund could end soon, say Norway and Germany

Good morning! The pension reform bill could finally be voted on by a House Special Committee. The possible end of the Amazon Fund. The federal budget facing another round of cuts. Brazil’s new commodity to China. And more.

Brazil’s Environment Minister Ricardo Salles met with diplomats from Norway and Germany to discuss the Amazon Fund. The two countries are the main donors of the fund created to foster anti-deforestation initiatives, and they wanted to discuss the standoff created by the Brazilian government’s decision to change how the fund is run—a stalemate that could mean the end of the fund altogether. The rift started in May, after Mr. Salles said he wanted to use part of the fund to compensate landowners in conservation areas—which both Norway and Germany oppose. Plus, the government recently cut several decision-making boards in the federal administration, and the committee to decide how Amazon Fund resources will be spent was given the ax. Mr. Salles wants to take control of it himself. The Amazon Fund is the largest project of international cooperation to save the rainforest. In 10 years, it has received USD 1.3bn in donations from Norway and Germany. The money is managed by the National Development Bank, and transferred to state and municipal administrations, universities, and NGOs. Amazon deforestation has spiked at alarming rates in Brazil. Between August 2018 and June 2019, it reached 4,565 sq km, a 15% bump from the previous 12 months. But while the numbers are produced by government agencies, often using satellites, the Bolsonaro administration is skeptical about them. General Augusto Heleno, one of the president’s closest advisors, said “the deforestation numbers are manipulated.” <ul> <li>Go deeper: <a href="https://brazilian.report/society/2019/06/05/amazon-rainforest-at-the-crossroads/">Amazon rainforest at the crossroads</a></li> </ul> <hr /> <h2>Pension reform: is today the day?</h2> In a sitting that lasted until the early hours of this morning, the Special House Committee on the pension reform knocked down the opposition’s attempts to postpone the vote on the bill. Barring any surprises, the reform should be voted on by the committee is a session scheduled for 9 am. But there might not be enough time to move things along to the House floor debates today. After voting on the bill, lawmakers will have to analyze 25 amendments proposed by caucuses—and 99 by individual congressmen. Only then can Speaker Rodrigo Maia present the reform to the floor. The goal is to approve the bill (in two rounds, with a minimum 60% support) by July 17, just before Congress’ July vacations. President Jair Bolsonaro has been a source of insecurity for the reform. He has been disengaged about the whole ordeal—and when he stepped in yesterday, it was actually to defend looser rules for cops, going against the money-saving goal of the reform. Besides, there are many lingering uncertainties about the level of support the reform will eventually have once reaching the House floor. That’s because lawmakers don’t trust the government’s promises to green light projects sponsored by members of Congress who support the bill. The administration made the same promise when it needed to raise the debt ceiling, and has yet to fulfill it. <ul> <li>Go deeper: <a href="https://brazilian.report/power/2019/06/14/brazil-pension-reform-report/">The latest version of Brazil’s pension reform</a></li> </ul> <hr /> <h2>Coffee: Brazil’s new hot commodity to China</h2> Despite being Brazil’s outright main trading partner, China remains a “new frontier” for coffee producers. The traditionally tea-drinking country has quickly become the most promising market for java—as hanging out in coffee shops is now hip in Chinese urban centers. Between January and May 2019, coffee exports to China rose 23% when compared to last year. Per the U.S. Department of Agriculture, China should buy 900,000 bags of the 2018–2019 harvest—a 20% bump. In the 2019–2020 harvest, the number should surpass 1m. But while Brazil is by far the world’s top coffee producer, the Chinese market is dominated by Vietnam (the supplier of half of China’s consumption) and Indonesia. The average Chinese consumer drinks only 0.004 cups of coffee per day—in Brazil, the average is 2 per day. If they go from consuming 140 grams per year to 1 kilo, that would create a demand for 23m coffee bags every year. But it is hard to know when—and if—China’s taste for java will reach that point. <script src="https://www.buzzsprout.com/299876/1078940-57-how-should-brazil-deal-with-china.js?player=small" type="text/javascript" charset="utf-8"></script> <ul> <li>Go deeper: <a href="https://brazilian.report/money/2018/10/24/research-origin-seals-gourmet-products/">Research and origin seals key for gourmet Brazilian products</a></li> </ul> <hr /> <h2>Also noteworthy</h2> Stocks. Bank of America Merrill Lynch has labeled Petrobras as a “buy,” citing the company’s remarkable financial recovery since hitting rock-bottom a few years ago, which allows the company to move forward on its business plan without being smothered by the weight of high debts. The bank does mention a few risks, such as the volatility of oil prices and the firm’s capacity to sustain prices pegged at international levels. Fake news 1. Senate President Davi Alcolumbre authorized the creation of an investigation hearings committee into the spreading of false information (sometimes through fake profiles) on social media during the 2018 election. Fake news 2. Parties both to the left and the right have supported the initiative—but for different reasons. The left wants to investigate the illegal strategy of sending millions of messages on WhatsApp during the election to favor Jair Bolsonaro (no relation to his campaign has been proven, however), while the right wants to investigate <a href="https://theintercept.com/brasil/">The Intercept</a>—which is leaking private messages of Car Wash prosecutors. Wine. Agriculture Minister Tereza Cristina announced the creation of a BRL 150m fund to “enhance the competitiveness” of <a href="https://brazilian.report/money/2019/03/17/brazilian-wine-foreign-markets/">Brazil’s wine industry</a>. The sector is expected to be one of the worst-impacted by the Mercosur-EU deal—as French wine would become much more accessible to Brazilians in a few years. The idea is to give producers tools to improve their product and prepare themselves for a zero-tariff situation. Trump. During July 4 celebrations at the American Embassy in Brasília, President Bolsonaro compared himself to Donald Trump, and said the U.S. President could come to South America this year—to visit countries which have “abandoned the left.” The Brazilian leader took the stage to the sound of Bruce Springsteen’s Born in the U.S.A.

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