mobilizing capital to scale responsible expansion of crop livestock in brazil

BOSTON CONSULTING GROUP 15 An increase in catalytic financing is essential to bridge the gap in the short term and help establish a track record The Brazilian Government’s capacity to subsidize the ABC+ plan has its limitations, and other sources of financing are needed, including for small and medium producers. It is imperative to foster deeper and more strategic collaboration among the private sector, governments, and DFIs (Development Financial Institutions) to amplify private investments and help bridge the substantial gap. Catalytic capital is particularly vital, playing a crucial role in steering the journey towards sustainable economic development.To overcome these challenges and enhance both financing availability and credit uptake for investments in this agenda, there is a critical need to establish a robust track record and develop a convincing proof of concept. These efforts will demonstrate the viability and benefits of such investments, potentially leading to increased engagement and support from various stakeholders.4+ years faster to achieve peak soy yield:The annual yield of cattle ranching could increase by 3-5x, resulting in an additional 130-150 kg/ha1. Average meat production (kg/ha/year): The use of carbon credits for offsetting is not the most appropriate approach currently to make the recovery of degraded pastures financially viable, as robust methodologies for carbon accounting are still under development and not yet ready for adoption in this agenda.For a typical soy producer, converting pastureland is nearly as profitable as clearing forest when acquiring new area. Internal Rate of Return: These figures do not consider the land increase valuation. The gain in each of the three scenarios above depends on each region’s price dynamic and may favor one or the other options. In any case, there is an opportunity cost for not clearing area that needs to be addressed including by incentives for producers. Estimated Soy Yields3Cattle intensification Note on carbon creditsSoy expansion2 Degraded Intensified30 to 50 1. Finance for a Forest-Positive Future, 2022 – IFACC Report 2. Integrated Crop-Livestock Systems 3. Incentives for sustainable soy in the Cerrado (2019) – TNC Report.Tons/ha 1 5 3 9 7 2234 6 4 10years 8 Consolidated Over Pastureland Over Native Vegetation13.8% Acquired pasture14.3% Acquired native vegetation21.1% Owned native vegetation180