From Frontier to Powerhouse: The Rise of Brazil’s Central-West in Global Agribusiness

The growth of the Central-West as an agribusiness powerhouse is the result of a wide range of historical processes that transformed part of the Cerrado and the Legal Amazon (the nine Brazilian states that form the Amazon basin) into one of the most productive agricultural regions in the world.

Starting in the 1970s, public policies to incentivise the occupation of the territory, such as the so-called “March to the West”, encouraged production moving further inland and attracted producers from the south and southeast of Brazil seeking cheaper and larger tracts of land. During this same period, the creation of Embrapa Cerrados (to drive the uptake of technology in agriculture in the region) was decisive for technological incorporation, making it possible to adapt crops such as soy and corn to soils previously considered unsuitable for large-scale agriculture.

The advancement of logistics infrastructure, albeit inefficient, combined with access to rural credit and the influx of private investment, consolidated the expansion of the agricultural frontier.

At the turn of the century, growing international demand, especially from China for soy and beef, established the Central-West as the epicentre of Brazilian agribusiness, positioning it as one of the strategic hubs of global food security.

Along with expansion came numerous challenges to be faced on different fronts. Overall, the region faces the following macro issues: infrastructure problems, environmental concerns, conflict with Indigenous peoples, and land tenure uncertainties.

Structural deficiencies in the flow of production, dependent on precarious highways and logistics still insufficient for the volume generated by agribusiness, led to the creation of state infrastructure funds. These funds are highly questionable from both a legal and economic perspectives, but in practice became mechanisms for financing roads and works linked to the sector.

Moreover, since much of the region lies within the Amazon and Cerrado biomes, environmental issues have become increasingly evident. Flashpoints include tensions surrounding the creation of reserves and ecological parks, as well as debates about compliance with legal reserves and permanent preservation areas (APPs).

In this field, the Central-West faces challenges that go beyond simple compliance with forest legislation. The expansion of the agricultural frontier imposed the need to reconcile large-scale production with conservation policies, which translated into the creation of extractive reserves, ecological parks and APPs.

The advance of the agricultural frontier brought with it a dilemma: how to balance economic growth and sustainability, and it exposed the weaknesses of the current model.

Another central aspect of agricultural expansion concerns relations with Indigenous peoples. The presence of traditional communities in areas of strong agricultural expansion has given rise to conflicts over land ownership and use, resulting in lawsuits, social tensions and political clashes with significant national repercussions.

Thus, the development of the Central-West cannot be understood solely through the prism of economic production, but requires a critical analysis that considers the complex interaction between infrastructure, environment, land regularisation and Indigenous rights.

Land tenure problems also stand out, especially with regard to land titling. The region still has a large number of areas without definitive regularisation, which generates legal uncertainty for producers and makes access to credit and long-term investments more difficult.

Added to this is the border location, especially in Mato Grosso (with Bolivia) and Mato Grosso do Sul (with Bolivia and Paraguay), which involves sensitive issues of sovereignty, oversight and expropriation.

All these specificities have a direct impact on agricultural activity in the region, as detailed below. It is worth noting, however, that despite the structural, environmental, and land challenges mentioned, soil fertility, technological adaptation, and high productivity have allowed the Central-West to maintain a steady pace of expansion.

The region also has development incentive programmes, notably the Superintendência do Desenvolvimento da Amazônia (SUDAM) and Superintendência de Desenvolvimento do Centro-Oeste (SUDECO), which offer tax benefits, corporate income tax (IRPJ) reductions, and access to credit lines, aimed at attracting investment and stimulating production in the Central-West.

Although it faces numerous difficulties, make no mistake: the Central-West is today the fastest-growing region for Brazilian agribusiness. Year after year, production figures confirm this growth. According to data from the Ministry of Agriculture and Livestock (MAPA) and the National Supply Company (CONAB), this region accounts for about 35% of the country’s beef production, 45% of crops such as soy and corn, and 90% of national cotton production.

State funds

As mentioned, the difficulty of moving production is a constant in this region. The lack of roads or the precarious conditions of those that do exist are notorious. Thus, in order to solve these problems, a levy was created to improve roads. Over time, however, this purpose has sadly become distorted.

Therefore, it is necessary to analyse one of the singularities of the Brazilian system: the existence of so-called state funds, also present in the Central-West. Although legally labelled as voluntary contributions, in practice they are a real condition for the commercialisation and transportation of agricultural production.

In this context, rural producers are compelled to collect these amounts, which, from an economic and legal perspective, are close to taxes, even though they were not expressly provided for by the Constitution.

Before the Tax Reform, approved in December 2023, the legitimacy of funds such as FETHAB (Mato Grosso), FUNDERSUL (Mato Grosso do Sul), and FUNPRODUZIR (Goiás) was intensely debated. A recurring criticism was that they functioned as disguised taxes, linked to the circulation of agricultural production without proper constitutional support.

With Constitutional Amendment 132/2023, specifically Article 82, this controversy was resolved, and not to the benefit of agricultural producers. The new text explicitly provided for the possibility of creating and maintaining these funds, giving them constitutional backing. The amendment reinforced the mandatory nature of the contributions and increased the costs for agribusiness, which now bears a charge formally legitimised by the constitutional text itself.

The FETHAB (MT), created in 2000, was established with the justification of financing road infrastructure and social housing, but it has consolidated as a mandatory levy on the production of soy, maize, cotton, cattle and timber, charged as a condition for issuing tax documents.

Similarly, the FUNDERSUL (MS), in existence since 1999, was designed to fund the maintenance of state roads, essential for the transportation of agricultural production. In practice, however, it imposed on producers the obligation to pay amounts levied on the commercialisation of cattle, grains, and inputs, functioning as a parallel exaction to ICMS (state VAT).

The FUNPRODUZIR (GO), created in 2000, was structured under the logic of promoting industrialisation, operating through the allocation of part of ICMS revenue to incentivised companies, including those in the agro-industrial sector. Although different in that it does not constitute a direct levy on producers, it also lacked explicit constitutional provision, which made its legitimacy subject to criticism.

These funds existed long before the 2023 Tax Reform, and were therefore constantly challenged on the grounds of unconstitutionality. The constitutional change did not eliminate the financial burden they represented; it merely conferred a legal backing that previously did not exist.

This reality highlights a particular feature of the Brazilian system: taxation cannot be fully understood solely through the Constitution and tax laws in the strict sense. It is essential to consider the peculiarities of each region, especially the Central-West, where agribusiness sustains the local economy. The existence of state funds demonstrates how, in practice, charges are created that significantly affect rural production, even if they were formally outside the classic tax framework.

More than mere development instruments, these funds reveal a tendency of states to resort to alternative revenue mechanisms, reinforcing the complexity and legal uncertainty of the regulatory environment. For producers, this means that, in addition to dealing with a tax system already considered among the most burdensome in the world, they must understand and bear region-specific levies, which vary according to each state’s economic and fiscal policies.

Environmental issues

In addition to mandatory contributions aimed at financing infrastructure improvements, as mentioned above, producers in the region must also deal with environmental requirements specific to the Cerrado and the Legal Amazon. Compliance with legal reserves and APPs, as well as the creation of new conservation units imposes additional costs and increases legal uncertainty, making agricultural activity a constant exercise in adapting to regulatory demands.

In the Central-West, the percentages of Legal Reserve (ie, the portion of rural property that cannot be used) vary depending on the biome in which the property is located, following the parameters set out in the Forest Code (Law 12,651/2012).

In Mato Grosso, which encompasses areas of the Amazon rainforest, Cerrado, and Campos Gerais, the requirement may reach 80% of the property area when located in the Legal Amazon (forest), reduced to 35% in Cerrado sections within the Legal Amazon, and to 20% in Campos Gerais areas.

In Mato Grosso do Sul, where the Cerrado and Pantanal predominate, the requirement is 20%, the same rule applied to Goiás and the Federal District, both entirely within the Cerrado biome.

Due to its geographical location, the Central-West also faces a series of environmental challenges that directly affect legal certainty and the attractiveness of the region for investment. Tensions surrounding the creation of reserves and ecological parks, combined with debates on the proper observance of legal reserves and APPs, create an environment of constant uncertainty for rural producers.

The difficulty in clearly delimiting which areas can or cannot be exploited, coupled with pressure from regulatory agencies and overlapping environmental regulations, generates additional compliance costs and reduces the predictability necessary for long-term investment. Moreover, the constant threat of legislative changes or new restrictions arising from international sustainability commitments intensifies regulatory risk, deterring capital and discouraging planned production expansion.

In this context, market initiatives have begun to impose additional restrictions. The Soy Moratorium, an agreement signed between traders, NGOs and civil society, prohibits the sale of grains from areas deforested after 2008 in the Amazon, creating trade barriers even for producers compliant with national law. More recently, the European Union Deforestation Regulation (EUDR), approved in 2023, mandates that only products proven to be deforestation-free may enter the European market, directly affecting supply chains such as soy and beef in the Central-West.

Although relevant for environmental protection and Brazil’s international image, such measures increase compliance costs and intensify conflicts over land use, highlighting the delicate balance between economic development and socio-environmental sustainability.

Indigenous peoples

In the Central-West, environmental issues are intertwined with land conflicts involving Indigenous peoples. Even properties with regular titles may, due to the merely declaratory nature of demarcation, be recognised as Indigenous lands in the future, subjecting producers to potential loss of land and lengthy compensation processes, thereby reinforcing the region’s legal uncertainty.

Mato Grosso has been inhabited by Indigenous peoples since time immemorial. As the Constitution stipulates, Indigenous lands belong to the Union and can be demarcated even when there is existing private occupation, since the act of demarcation merely recognises a pre-existing right.

These areas are inalienable and imprescriptible, meaning they cannot be sold, transferred, or lost over time. Therefore, public authorities cannot certify a farm located on Indigenous territory as regular, highlighting the importance of georeferencing to provide greater clarity on land tenure.

During colonisation, errors occurred in the titling of these lands; in some cases, Indigenous settlements and border zones were not properly respected. Compensation for affected property owners was intensely debated but gained clearer parameters with the Supreme Federal Court ruling in RE 1,017,365 (Topic 1031). In this judgment, in addition to rejecting the “temporal framework” thesis, the STF established a 13-point guideline now used in all similar disputes.

It is important to note that the 1988 Constitution enshrined the so-called “Indigenous Theory” (teoria do Indigenato), under which Indigenous land rights are original, not granted by the State. This means that traditional occupation goes beyond mere habitation and can include areas of cultural, spiritual and subsistence value.

Compensation must cover improvements made to the property and also include the bare land, provided the occupant proves they acquired the title in good faith. In such cases, the Union may recover the amount from the state that granted the improper title.

In practice, this recognises both the historical rights of Indigenous peoples and the State’s error in granting titles to areas that could not be acquired. This ensures that those who invested believing they were in a regular situation are not left without financial compensation.

The same reasoning should apply to border areas, but it has not.

Land ownership issues

Owners of land in border areas who were expropriated also fared poorly. Even with valid titles granted by the colonising state, many families lost their properties and were only recognised for compensation for improvements, with no restitution for the loss of possession.

Indeed, the Indigenous issue is not the only source of land insecurity in the Central-West, particularly in Mato Grosso, which is part of the so-called Central Arc of the Border Zone, alongside Rondônia and Mato Grosso do Sul. Article 20, Section 2 of the Federal Constitution defines that a strip of up to 150 kilometres along Brazil’s land borders is considered fundamental for national defence and, therefore, under Union ownership.

Historically, this definition evolved: initially, the strip was 66 kilometres; in 1934, the concept of a “national security zone” was created; and in 1937 the extension was consolidated at 150 kilometres, although for a long time both measures coexisted. Legally, it remains a public good for special use by the Union, unavailable and linked to territorial defence.

The occupation and use of these lands are regulated by Law 6,634/1979, which conditions the alienation and concession of properties in the border zone on prior approval by the National Security Council, under penalty of nullity of acts performed. In other words, even if a private party acquires a title, ownership is considered precarious, as the land originally belongs to the Union.

To attempt to correct this and protect good-faith purchasers, Law 13,178/2015 established the land ratification process. This mechanism seeks, on one hand, to reaffirm Union ownership of the border zone and, on the other, to recognise the possession of private parties acting in good faith. Ratification is not automatic and depends on a specific administrative procedure.

The Court of Justice of Mato Grosso even issued guidance booklets for the regularisation of properties in the border zone, stressing that without proper ratification, areas would be incorporated into public assets, with consequent exclusion of compensation rights for occupants.

However, one of the greatest obstacles to legal certainty in the Central-West lies in the fragility of the rural property ownership chain. In many cases, titles reaching producers do not have a clear origin or suffer from irregularities in the registration sequence. This occurs, for example, in areas historically occupied by squatters, in devolved lands improperly transferred as private, or in cases of land-grabbing (grilagem), where falsified documents gave a veneer of legality to transactions that should never have occurred.

This reality generates numerous judicial and administrative disputes, hindering access to credit and deterring potential investors who require security regarding land ownership before allocating resources. Even good-faith agricultural producers are subject to the risk of having their titles challenged, as any nullities at the origin of the title affect the entire subsequent chain. Thus, the absence of an effective land regularisation policy makes titling a genuine obstacle to sustainable regional development.

Incentive programmes

Despite land and environmental challenges, the Central-West also benefits from public policies promoting regional development. These include SUDAM and SUDECO, federal agencies created specifically to reduce inequalities and encourage productive activities in strategic regions.

These institutions offer significant tax benefits, especially for companies that establish or expand activities in the region. The most notable is a reduction of up to 75% in corporate income tax (IRPJ) for a set period, in addition to the possibility of reinvesting part of the tax due in modernisation projects.

Thus, they aim to attract productive capital, encourage industrialisation and reduce dependence on primary activities. Of particular note for SUDECO is the administration of the FCO (Constitutional Financing Fund for the Central-West), established by the 1988 Constitution.

The fund provides credit lines with differentiated conditions for rural producers, co-operatives and companies, serving as one of the region’s main financial support instruments. In many cases, the FCO enables investments in agricultural technology, renewable energy, logistics and agro-industrialisation – sectors that would otherwise struggle to access market-rate credit.

Additionally, each state maintains local incentive programmes, such as PRODEIC in Mato Grosso and Produzir in Goiás, which use ICMS credit mechanisms to attract industries and stimulate production chains linked to agribusiness. While these do not eliminate structural obstacles, they act as a counterbalance, enhancing the region’s attractiveness for new ventures.

These mechanisms do not fully resolve structural issues but function as strategic incentives that help explain why the region continues to attract investment and consolidate its status as a leading force in national agribusiness.

Land for foreigners

Another point of ongoing debate, not only in the Central-West, concerns foreign acquisition of land. Brazilian law, particularly Law 5,709/1971, imposes strict restrictions on the purchase of rural properties by foreign individuals and entities, setting area limits and, in some cases, requiring congressional authorisation. The central argument is the preservation of national sovereignty over strategic territories, particularly relevant in border regions and areas within the Legal Amazon, both present in the Central-West.

In practice, these restrictions create an environment of uncertainty for international investors. Large-scale projects are often realised through leases, joint ventures, or complex corporate structures, which frequently obscure actual land ownership and increase legal risk. This deters foreign capital that could be directed to sensitive regional areas, such as logistics, technological modernisation, and agro-industrialisation.

The issue is currently under consideration at the Supreme Federal Court, where actions ADPF 342 and ACO 2,463 will address the possibility of foreign acquisition of land.

Thus, the debate over foreign land ownership reinforces the perception that legal certainty is a scarce resource vital for the growth of the Central-West.

Conclusion

The growth of the Central-West as an agribusiness powerhouse results from a trajectory marked by productive achievements and structural obstacles. Over recent decades, the region has consolidated its role as a driver of Brazilian and global food security, yet it faces challenges involving infrastructure, environment, Indigenous peoples, land titling, and restrictions on foreign investors. This mosaic of factors makes the analysis of the region more complex than a mere reading of production figures or incentive policies.

Discussions on state funds and environmental issues, disputes over Indigenous demarcation, and concerns over the limits of land ownership chains demonstrate that the Central-West is at the core of the contemporary debates surrounding Brazilian agribusiness. Simultaneously, the presence of development instruments highlights efforts to create an environment that is at least somewhat attractive to investment, despite pervasive uncertainties.

In this context, trends indicate a region that will continue expanding production, but under strong pressure to reconcile economic growth with environmental sustainability, land regularisation and legal security. The future of agribusiness in the Central-West, therefore, depends not only on the productivity of its land but on how these debates will unfold.