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Almost half of all tropical deforestation between 2000 and 2012 resulted from the illegal conversion of forests for commercial agriculture. In Brazil, the Mapbiomas alert system found that in 2019, 99% of the deforestation was unauthorised.

Aside from the obvious environmental impacts, illegal deforestation can have social impacts through increased land conflict and violence, as well as economic impacts through damage to market relationships and through fines imposed on companies found to be linked to illegal activities. For example, in 2016 Santander bank was fined US$15 million for financing crops cultivated on illegally deforested land, and in 2018 some of Brazil’s largest soy traders

 were fined for purchasing soy linked to illegal deforestation.

Analysis published by Trase, Imaflora and ICV in June 2020 found that 97% of the total deforestation in Mato Grosso between 2012 and 2017 (1.7 million hectares) lacked a government deforestation license and was therefore illegal. A total of 380,000 ha of deforestation in Mato Grosso in 2017 was on farms that were growing soy – in both the Amazon

 biomes – of which 95% was illegal for the same reason.

However, 80% of the total illegal deforestation linked to soy production took place on just 400 farms, which represent just 2% of the total number of soy farms in the state. Almost three-quarters of these farms were large properties as determined by the Brazilian government (>825 ha). Soy from different farms is usually mixed for storage, processing and transportation, making it difficult to differentiate sustainably produced soy from soy linked to illegal deforestation. Without greater transparency in supply chains, even small quantities of soy from these farms contaminates the whole supply chain and could undermine the reputation of the whole soy sector in the state.

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It is estimated that 81% of the soy grown on farms where illegal deforestation took place in Mato Grosso was exported in 2018, with 21% of China´s imports from the state and 20% of the European Union’s imports likely linked to farms with illegal deforestation.

The fact that most of the illegal deforestation was linked to a small number of farms provides a concrete opportunity for effective intervention by companies and the government to address the issue and take action to end illegal deforestation, as a critical first step towards achieving zero-deforestation supply chains.