SAO PAULO, July 14 (Reuters) - Brazil's government has sent Congress a bill to shrink the boundaries of a national forest in the Amazonian state of Pará, according a statement from the Environment Ministry on Friday, a move environmentalists said would speed deforestation of the area.
The government proposed the bill as a comprise measure after local residents, who see the Jamanxim national forest as a source of livelihood, blocked a key grains exporting highway in response to President Michel Temer's veto of similar legislation to reduce its protected area.
The government's bill, if approved, would create a new protection area (APA) near the town of Novo Progresso, which is on the edge of the forest around 790 miles (1,270 kms) northwest of the capital Brasilia. The measure would convert 349,086 hectares, or 27 percent of the national forest into an APA, the ministry said.
The government said the APA would discipline land occupation, promoting the sustainable use of the rainforest and conservation of its water resources.
Environmentalists denounced the measure as an official stimulus to land-grabbing, which in turn leads to illegal logging, clear-cutting and mining in one of the hotspots of deforestation of the Amazon biome.
"The bill is seen as an amnesty for illegal occupation of the conservancy unit," said Observatório do Clima on its website, adding the government "yielded to pressure" from the rural lobby.
The bill followed blockades this month of the BR-163 highway, which runs next to the 1.3 million-hectare national forest. The highway links grain producing regions in Mato Grosso state to waterways connected to key Northern ports.
Protesters suspended the blockades, which began on July 3, after Temer sent the bill to Congress, according to a statement from the Sociedade Civil Organizada group on Friday.
Earlier in the day, Brazil's federal highway police said the BR-163 highway was cleared in the Southwest of Pará after almost two weeks of protests.
Carlos Xavier, president of a group in Pará lobbying to reduce the size of the Jamanxim forest, said the APA would bring economic progress to the region.
The BR-163 protests were preventing trucks from unloading grains at the riverside hub of Miritituba, the departure point for barges carrying crops to the Northern ports before hitting export markets.
Brazilian private ports association ATP said this week it expected $47 million in losses this month as a result of the protests. (Reporting by Ana Mano and José Roberto Gomes; Editing by Matthew Lewis and Andrew Hay)