The Fund, created by the United Nations Environment Program (UNEP) and by Rabobank, in partnership with the IDH and supported by the FMO, the Dutch business development bank for sustainable operations, shall mitigate climate change and help in the transition to more sustainable agriculture.
The fund acts as a mixed financing means, boosting collaboration between public and private parties. The initiative is intended to unlock $1 billion in capital to boost investment in rural properties that pursue more sustainable practices. “We want to encourage food producers to make the necessary improvements in sustainability,” says Hans Loth, global head of the partnership between UNEP and Rabobank. “The intention is that these investments serve as an example for banks, other financial institutions, and the entire value chain. Together with our partners in the AGRI3 Fund, we intend to expand adherence to sustainable practices in the agricultural and financial sectors.”
Brazil: Carvalho Dias Group
“Recently, around 50% of the pasture in Brazil has suffered some type of degradation,” says Thaís Fontes, CSR manager, at Rabobank Brasil. "There is a huge opportunity to improve yield on already degraded land.” The new AGRI3 transaction in Brazil will do just that. By connecting funding for pasture renewal with forest protection, it will allow the Carvalho Dias Group, a large cattle farm in Mato Grosso, to grow sustainably.
The $ 5 million loan paid back over ten years will enable investment in 2,581 hectares of forest protection or reforestation projects, and the recovery of 1,200 hectares of degraded pasture, contributing to increasing yield without opening up new areas.
The company sees the partnership as an opportunity for the sustainable development of its production in the long term. “With the commitment to conserve and preserve our forests in line with the need to recover and maintain our pastures sustainably, we identified the need for more capital per hectare. AGRI3 can meet this demand and Rabobank was vital to the conclusion of the transaction. From the beginning, the team spared no effort to close this deal and we are glad to be part of this unique operation in Brazil,” say Weslei Maio Ramos and Edson da Silva, Managers, at the Carvalho Dias Group.
The initiative’s goal is to increase client profitability and, at the same time, accelerate compliance with the strict Forest Code in Brazil. This innovative framework—which includes risk reduction over a longer payback period— provides a replicable model for financing sustainable investments in non-cash-generating activities such as forest protection.
“In the last two years, Brazil was the first country to implement AGRI3 pilot operations to develop the financial structure necessary for other Rabobank clients in the world to be able to replicate in their production models”, says Fabiana Alves, Corporate executive director at Rabobank Brasil. "Having yet another AGRI3 operation in Brazil is a result of Rabobank's commitment to the country’s sustainable development and the long-term partnership with our customers."
More details about the Chinese operation
China ($ 10 million, 3 years). Sustainable pepper farming in the greater Chongqing region.
By providing access to superior financing, training, and inputs, and a guaranteed selling price, this loan helps achieve the project's mission of enabling 80,000 farmers to shift from low-yielding crops to more profitable and sustainable pepper farming, increasing their income.
About the AGRI3 Fund
The AGRI3 Fund is a partnership between Rabobank, the United Nations Environment Program (UNEP), the Sustainable Trade Initiative (IDH), and FMO (a Dutch business development bank). The Investment Advisers are Mirova Althelia, FOUNT, and Cardano Development.
In 2019, Usina São Manoel was part of the pilot operation and was loaned R$ 50 million through the AGRI3 Fund to finance projects that bring together sustainable agriculture and forest protection with the reduction of CO2 emissions, and which contribute to the social development of rural properties and their surroundings.
For more information go to: agri3.com