SAO PAULO, Aug 11 (Reuters) - Cattle ranching has become the biggest environmental challenge for Brazil's Mato Grosso state, which has launched a "cattle moratorium" to combat Amazon destruction, the state's governor said on Tuesday.

Mato Grosso is calling on meatpackers to stop buying cattle raised in newly cleared areas of the world's largest rain forest. Environmental activists have cited ranching as a prime driver of Amazon degradation.

Meatpacker Marfrig (MRFG3.SA) has joined the initiative, based on a similar accord launched by the soybean sector in 2006.

"The soy moratorium worked so well that I called some meatpackers to do something similar and Marfrig accepted the challenge," said Mato Grosso Governor Blairo Maggi, a major soy magnate, on the sidelines of a seminar in Sao Paulo.

The pact is not mandatory but companies not participating could miss market opportunities, the governor said.

Environmental group Greenpeace this year released a report linking the beef business with illegal deforestation, leading key Brazilian retailers to say they would halt purchases from some suppliers.

Mato Grosso will use satellite images to map cattle ranches, allowing meatpackers to identify farms with recent deforestation and stop buying cattle from them.

The state has the biggest cattle herd in Brazil and has been one of the most affected by Amazon deforestation.

Brazilian prosecutors have recommended retailers suspend buying cattle from certain areas of Para state, north of Mato Grosso, due to evidence of deforestation.

The destruction of tropical rain forests accounts for around 20 percent of global greenhouse gas emissions, which makes Brazil the world's fourth-largest climate polluter, according to Greenpeace.

"I think we can create value for our company by signing this moratorium," said Ocimar de Camargo Vilella, sustainability director at Marfrig, one of Brazil's biggest beef exporters.

Maggi said the government is pushing beef producers to reduce areas being ranched to make more land available for agriculture without destroying forest.

"Around 25 million hectares, or 26 percent of our territory, is used for cattle production. It's expansive cattle production, almost a tragedy, an animal per hectare," he said.

The state's aim is to halve the areas being ranched while leaving herds unchanged and doubling the area available for agriculture. Maggi said some farms have already begun improving profit margins by doing so.