IDB and Marfrig end talks on $200 million sustainability loan

SAO PAULO (Reuters) -The Inter-American Development Bank (IDB) and Brazilian meatpacker Marfrig Global Foods SA, owner of U.S. brand National Beef, have broken off talks over a $200 million loan tied to environmental targets, the IDB said on Wednesday.

The failed proposal highlights an uphill battle for Brazil's beef industry, the world's No. 1 exporter, to overcome concerns that it is contributing to deforestation of the Amazon rainforest through its opaque and poorly regulated network of suppliers.

In a statement, IDB said it had carried out due diligence last year on Marfrig's "Verde+" program, which is designed to improve sustainability of its Brazilian beef supply chain.

IDB said as part of its internal review process, Marfrig and the lender came to "a mutual agreement that the conditions were not ideal to move forward with the loan."

Marfrig said the suspension of the talks regarding the IDB loan was due to "a disagreement between the parties on the proposed financial conditions."

Brazil has one of the world's biggest cattle herds, which has grown dramatically in the Amazon region in recent years as ranchers expand on illegally deforested land, enabled by weaker environmental enforcement under President Jair Bolsonaro.

Meatpackers such as Marfrig have stepped up vetting of their direct suppliers to be sure they comply with environmental laws, but it has proven harder to track the status of the "indirect suppliers" providing cattle to those ranches.

(Reporting by Ana Mano and Jake Spring in Sao Paulo; Editing by Matthew Lewis and Kenneth Maxwell)