Sustainable Agriculture Finance Facility

About

Overview
The Sustainable Agriculture Finance Facility enhances the adoption of sustainable agricultural technologies (SATs) in Brazil by creating a credit facility for farmers who pass a Sustainable Agriculture Certification. SATs are proven to increase sustainability efforts and crop yields but often include large upfront costs and require qualified technical assistance. As part of the certification and lending process, the Sustainable Agriculture Finance Facility will provide assistance to enhance successful technology adaptation and reduce default risk, and facilitate market access for participants.

The Problem
Sustainable agriculture can advance both Brazil’s economic and climate goals by limiting deforestation while growing the economy, but farmers often lack access to finance to adopt the latest sustainable agriculture technologies. Although subsidized rural credit lines exist for the implementation of sustainable technologies, uptake is insufficient to catalyze transformation at the necessary scale, especially among small and medium-sized farmers. There is insufficient expertise on evaluating credit applications for SATs within the banking system and technical assistants lack training to support implementation. Farmers may be incapable of navigating bureaucratic processes and meeting required levels of guarantees to back loans. Furthermore, credit lines often don’t allow repayment flexibility.

The Solution
The Sustainable Agriculture Finance Facility provides long-term, low-cost, flexible financial and technical resources for farmers to implement sustainable agricultural technologies (SATs), creating socio-economic and environmental benefits. The Facility contains an AgFintech company created to provide finance and technical assistance to farmers and a non-profit association (Rede ILPF) to provide certification. In order to qualify for credit, farmers must have begun the Sustainable Agriculture Certification process, guaranteeing best practices and environmental and social quality.

Target Impact
The proponents, Rede ILPF and the Brazilian Institute of Development and Sustainability, aim to run a pilot of six to twelve months during the initial proof of concept phase, initially targeting 30 small or medium-sized farmers. Three thousand more farmers would be added in the following 18 months, eventually reaching 30,000 farmer-facility agreements in five years.