mobilizing capital to scale responsible expansion of crop livestock in brazil

12 1. Government estimates announced at COP28. 4. USD 120B is needed for transition, with the agenda gaining momentum among engaged stakeholders Key messages A B C D The main source of financing today is through the government- subsidized loans of the ABC+ Plan (Low- Carbon Agriculture Plan), but the amount is insufficient given the scale of the agendaPrivate capital is crucial for bridging the USD 120 billion financing gapInvesting in the responsible recovery of degraded pastures for soy expansion and intensification of cattle ranching is profitable and generates sufficient capacity for debt repaymentBut today, limited private capital is available due to the perceived high credit risk associated with rural producers with loan tenors of 7-10 years, as well as the challenge of scaling transactions To promote the responsible recovery of degraded pastures, Brazil needs approximately USD 120 billion over the next 10+ years Pasture restoration can be achieved through direct methods such as reform, recovery, or renovation, as well as indirect solutions. The appropriate solution should be determined based on multiple factors, including the level of degradation, geographic location, and the availability of financial resources. In Brazil, the Government launched in December 2023, an ambitious plan to recover and convert degraded pastures for agriculture and cattle intensification. The plan has the following target: of degraded pastures that the government is planning to recover and convert for agriculture – mostly soy – and cattle ranching intensification over the next 10 years1 as the average cost per hectare for recovery estimated by the government1. This figure depends on the level of degradation, the biome, the level of technical assistance, among other factors40 Mha USD 3,000 This results in an agenda requiring capital in the order of approximately USD 120 billion over the next 10 years. These numbers are an estimate and depends on various factors that are evolving through time. The projection of hectares is dependent on market demand and the cost of recovery is fluctuating depending on fertilizers prices, which for example have sharply increase in the last two years. In any case, the financing gap is of several dozen USD billions. The same is true about the time horizon of 10 years; it is an ambitious target that we should use as a guideline but that will depend on the speed of the development and adoption of new financing models by the market.