mobilizing capital to scale responsible expansion of crop livestock in brazil

22 6. Brazil is well-positioned to offer relevant risk mitigation factors Key messages A B C D E Offering technical assistance and expertise, along with implementation support, plays a crucial role in mitigating the performance risks faced by producers and in scaling the agenda, as well as ensuring best practices adoptionImproving the commercial conditions around production through market instruments and longer off-take agreements can provide less risky scenarios for investors and producersThe maturity of Brazilian capital markets in agricultural financial instruments can mitigate the credit risk, especially through securitization mechanisms available to provide a high level of diversificationThe existing pioneering satellite monitoring system, combined with transparent rural credit data, can be leveraged to ensure proper credit and socio- environmental assessment and monitoringBrazil’s vast size allows for geographical diversification, hence reducing climate-related risks Risks Mitigants Financial risk: small and medium producers do not have the financial structure to support a long-term loanLarge diversification through a securitization-like mechanism can switch the approach from a stand- alone risk approach toward a portfolio approach Developing longer tenor with commercial partners (input providers and off-takers) will provide a more predictable cashflow for small and medium-sized producers Climatic event riskThe size of Brazil with different climate dynamics enables a geographical diversification to mitigate climate risk. Insurance is also an option Performance risk due to improper implementation of new practicesThe Brazilian agribusiness is among the most advanced in terms of technical knowledge. Leveraging this know-how to provide individualized technical assistance to producers will maximize the chances of a successful implementation of new agri-practicesKey risks and mitigants for lenders 22