Big farmers driving economic growth and biotechnology firms like Monsanto Co. supplying the seeds were seen as gaining from the controversial legislation awaiting Lula's signature into law.

The legislation, which also cleared the way for research involving human embryonic stem cells, was cheered by many Brazilians who saw it as a step toward a modern Brazil.

But environmentalists said the rain forest and small-scale farmers were the losers.

"Brazil is just building up agribusiness. It's an enormous threat to our forests," said Gabriela Couto of Greenpeace's campaign against GMO crops.

Lula's own environment minister, Marina Silva, said in a statement, "The Environment Ministry feels obliged to point out to Brazilian society the potential environmental risks involved in the project that was approved."

For the past decade, Silva and other members of Lula's Workers Party opposed initiatives in Congress to approve bioengineered crops. Environmental and consumer groups won legal cases against seed firms, scientists and the government.

Environmentalists fear GMO crops for their potential to wipe out native plant species, disrupt food chains and allow crops to move into new areas -- such as cleared Amazon jungle.

Destruction of the world's largest rain forest hit its second-highest level in the past two years. Last year, an area of jungle the size of New Jersey was destroyed -- about 9,000 square miles (23,300 square km).

Environmentalists say commercial farming is driving deforestation as grain farmers create fields out of savannah and rain forest cleared by loggers and ranchers.

Agribusiness won an unexpected ally when Lula took office in 2003.

With a weak economy forcing the government to cut social spending to reassure investors, Lula sought ways to boost growth and keep his political plans alive.

Agriculture Minister Roberto Rodrigues urged Lula to promote agribusiness rather than the family farmers and landless whom Lula promised to help on the campaign trail.