SAO PAULO, May 14 (Reuters) - A settlement involving

federal prosecutors and Brazilian meat packers has helped wean

much of the country's beef supply chain from links to Amazon

rainforest destruction, according to company audits of their

cattle purchases in six states that prosecutors unveiled on

Wednesday.

The settlement, called TAC da Carne, requires meatpackers to

audit their cattle purchases to determine whether the animals

are being raised in areas that are protected, were illegally

deforested, or have other irregularities. The initiative does

not cover indirect cattle suppliers, which remain a big part of

the beef industry's supply chain.

Brazil is the world's biggest beef exporter, but most of its

herd is in the Amazon, the world's largest and most biodiverse

rainforest. Research shows cattle ranching there is a major

driver of deforestation.

Last year, deforestation in the Brazilian Amazon

reached6,288 square km, an area larger than the U.S. state of

Delaware. It was the lowest level since 2015.

Daniel Azeredo, one of the federal prosecutors overseeing

the settlement, said the data showed the program made huge

contributions to curbing deforestation. Still, he added, animals

raised on illegally deforested farms continue to enter

companies' supply chains through illegal schemes. He called for

closer monitoring of indirect cattle suppliers.

"We must recognize challenges remain," he said.

Overall, 4% of the Amazon cattle supply of meatpackers

audited as part of the settlement showed signs of irregularities

between January and December 2022. But companies that did not

audit purchases had a record 52% of non-compliance. The

disparity, federal prosecutors said, highlighted the impact of

the settlement.

JBS, the world's largest meatpacker, and rivals

Minerva and Marfrig all hired independent

auditors to monitor their cattle purchases, as have multiple

privately owned beef packers.

JBS cattle purchases reached 98.2% of conformity in Mato

Grosso, home to Brazil's biggest cattle herd, compared with 100%

compliance for its two main listed competitors, according to

data presented by the prosecutors.

In Para, home to Brazil's second largest cattle herd, JBS

showed 3% of non-conformity in cattle purchases, a steady

improvement since a 2020 audit found 32% of its supply came from

irregular farms.

In a statement, JBS celebrated the audit results and said it

is closer to its goal of 100% compliance.