CONQUISTA DO OESTE, Brazil (Reuters) - The savannah scrubland where Chief João Ponce once hunted deer and wild boar in Brazil has given way to neat rows of soy and corn that a tractor sprays with herbicide. In the next field, silver grain silos shimmer in the hot sun.
Ponce is head of the Uirapuru indigenous community which has allowed local farmers to produce crops on one-third of its 44,500-acre (18,000-hectare) reservation in southwestern Mato Grosso state.
The one-tenth or less share of the harvests has helped the Pareci natives to buy cars and smartphones, replace hammocks with beds and equip their thatched huts with widescreen TVs, freezers and broadband Internet antennas.
"We're surrounded by farmers. We can't live off hunting anymore. The animals are gone," he said, sitting in a hammock in his thatched hut.
But the partnership with non-native farmers, fueled by an insatiable demand for Brazilian soy in China and other markets, is illegal and has alarmed environmentalists.
Brazil's environmental regulator Ibama this week fined six native communities and a dozen farmers on reservation land for using genetically modified crops (GMO) and engaging in large-scale mechanized agriculture. Both are banned on reservation land.
The unprecedented fines totaling 129 million reais ($33 million) mark an unexpected escalation in a dispute between rival federal agencies, environmentalists, farmers and native advocacy groups over Indian tribes getting into commercial agriculture in Brazil's rapidly expanding farm belt.
"We are not targeting the Indian. He has been besieged, co-opted. He's a victim, and the environment of the reservations is being hurt by this pressure for land," said René de Oliveira, the agency's main enforcer.
He said the use of GMO soy was the worst crime because nobody knows the environmental impact such crops can have on the biodiversity of protected areas like reservations.
The crackdown could mean trouble for major grain trading firms such as ADM, Cargill and Bunge if they are caught buying soy grown on native land.
"The companies can be fined, because the Indians are not allowed to grow GMO crops and traders are not allowed to buy from reservations," Oliveira said.
Cargill said in an emailed statement that it only bought products originating from properties in compliance with Brazilian law and verified their status before any commercial transaction. ADM did not immediately respond to a request for comment. Bunge directed a request to soy processor association Abiove.
Five grain trading houses, including Cargill and Bunge, were recently fined 24.6 million reais for buying crops grown on illegally deforested land in the Amazon.
Local farmers said it was very hard to trace the origin of grains because traders only need to ask for the seller's tax ID and not the location or size of the plantation.
That has made it easier for tribes looking to cash in on an agribusiness boom, turning their coveted savannah into fertile farmland with the know-how of white farmers.
Ibama fined communities of the Pareci, Nambikwara and Manoki tribes and embargoed 40,000 acres of their land that were being used for large-scale GMO plantations in the municipalities of Campo Novo do Parecis and Conquista do Oeste, or "Conquest of the West," near the border with Bolivia.
The tribes are pressing to change environmental and Indian laws so that they can keep their plantations and sell their harvests legally. The issue has put Ibama at odds with the Indian affairs agency Funai, which wants to allow the tribes to become farmers.
"We want to be able to sell to Bunge, Amaggi, Cargill, Dreyfus, so we can buy our own machinery. But without licensing that shows the origin, our soy has to go out clandestinely," said Arnaldo Zunizakae, who manages farming on the vast Pareci reservation of 3 million acres (1.2 million hectares).
DEMAND FOR LAND
China's appetite for Brazilian soybeans has driven up land values in Mato Grosso, the country's biggest soy state. Eager for more access to reservation lands, farm and mining lobbies in Brasilia are exploiting divisions between Ibama and Funai.
Fault lines have also opened within the tribes between traditionalists and opportunists at odds over how to manage ancestral lands and preserve native customs and culture.
Brazilian law prohibits the arrangement under which the tribes have allowed farmers to develop industrial-scale production of commodity crops in return for a share of the harvest. The farmers cover the costs and hire crop dusters to spray fields with herbicide for GMO crops.
Funai said in an email that it was seeking a formula that allowed native peoples to choose their own development path. But federal prosecutors dealing with native issues said GMO crops or partnerships with non-natives would not be permitted.
"We won't be able to sow this year's crop. Conventional crops are more costly to store and harder to sell. We'd be pushed back into primitive 20th century agriculture," said Zunizakae, climbing combine harvester bought by his tribe.
UNEXPECTED ALLIES
The neighboring Nambikwara tribe has taken to blocking the road through its reservation to press for the right to engage in commercial agriculture. With their faces painted, Nambikwaras have demanded a toll from truck drivers moving soy for export. The grains are trucked to barges on the Madeira river and loaded onto ships in the Amazon for China and other countries.
Brazil's powerful farm lobby, a traditional foe of native communities in disputes over their ancestral lands, seized on the cause of the Indians involved in commercial agriculture.
"I totally support the Indian's right to employ his free initiative to overcome poverty and not depend on handouts from the government," said Nilson Leitão, a congressman from Mato Grosso and leaders of the farm states caucus.
The prospect of allowing commercial farming on reservations galls environmentalists and anthropologists who warn it will destroy native cultures and lead to exploitation of the Indians.
Not so, say Pareci elders, who point to advances made by their 1,800-strong tribe due to agricultural income, including better schools, health care and university grants for Parecis.
"If it were not for this, we would be dying," said Chief Narciso Kazoizax, wearing a jaguar skin over his shoulders and a headdress of red and blue macaw feathers. Eighty percent of his tribe speak their native Aruak language, a sure sign of a strong culture, he said.
Infant mortality among the Parecis has fallen dramatically from 24 deaths in 2015 to only one last year and the community has been able to afford expensive surgeries that Funai's medical service can no longer provide.
"We do have a better life thanks to the plantations," said Zeferino, a shaman who sat weaving a basket as he watched Liverpool defeat Roma in the European soccer Champions League.
"We don't want to become rich like white men. We just want to survive better," he said with a smile, revealing perfect dentures.
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(Reporting by Anthony Boadle; photography by Ueslei Marcelino; editing by Diane Craft)
