Agri3 Fund

GRUPO VILELA DE QUIEROZ LTDA – SUSTAINABLE CATTLE FARMING, BRAZIL

Key Facts

  • Investee: Elza Junqueira de Carvalho Dias (Lindolpho  Pio de Carvalho Dias group -LPCD)
  • Lender: Rabobank
  • Location: Mato Grosso, Brazil
  • Transaction size: USD 5 million
  • Term: 10-year loan
  • Instrument: Maturity Subordination Guarantee
  • AGRI3 Guarantee exposure: 40% of loan value
  • Main activities: pastureland renovation for cattle, forest protection and restoration, farmer training and livelihood improvement

Investee background

LPCD is a traditional Brazilian farm run by the Carvalho Dias family, who currently manage 48,1k ha of land in Mato Grosso state. 6,8k ha of this land is dedicated to their cattle operations, which is spread across three farms in the Cerrado Biome.
The group has three strategic divisions:

LPCD’s cattle business

Sugar cane production

Grains (soybean) and cotton production in partnership with Bom Futuro Group (owned by Eraí Maggi)

Project description

Rabobank is supporting LPCD’s ambition to improve the sustainability of their cattle operations over the coming years on three of the group’s cattle farms in Tangará da Serra in Mato Grosso State.

Activities associated with this loan focus primarily on:

Pastureland renovation for cattle intensification

Forest protection and reforestation to accelerate compliance with the forest code

Improved rural livelihoods by conducting farmer field days and developing a school / workers accommodation

Project activities and expected impacts

Forest protection

  • Investment in the preservation of 2.3k ha of native forest to accelerate compliance with the Brazilian Forest Code
  • Restoration of 265 ha of APP (Permanent Preserved Areas of Restoration) through isolation

Sustainable land use

  • Renovation of 1.2k ha of low-medium degraded pastureland to complement an intensified semi-confinement system
  • Intensification/renovation activity is expected to improve the total capacity to 53k heads by 2023 and improve the rearing capacity from 4 heads to 8 heads per ha
  • LPCD intends to maintain the quality and sustainability of the pastureland for the next 10 years. The three farms will be assessed and monitored against the Embrapa’s Standard, called Agrodimensões. This assessment will be carried out by technical consultants, Brasil Gap

Rural livelihoods

  • Rebuilding of a school with a nursery and elementary school in Mato Grosso state, all of which will be accessible for disabled children (capacity of about 32 children in year 1)
  • Conduct 3 farmer field days for other farmers that may have degraded pastureland to spread the system to other farms that may have degraded pasturelands (~30 farmers and stakeholders trained)

E&S considerations

LPCD is an established client of Rabobank Brazil, and the company’s performance has been regularly reviewed by the Rabobank sustainability team. AGRI3 was able to draw on Rabobank assessments as well as discussions with the client in conducting E&S due diligence. We identified a number of opportunities to enhance E&S performance.
An Environmental and Social Action Plan (ESAP) forms part of the contract with AGRI3. The ESAP includes actions to:
Develop systems for cattle & feed traceability
Improve in health and safety management and pollution control 
Ensure all activities included in the project have all required permits and authorisations
Develop corporate policies – including anti-bribery and corruption, equal opportunities and grievance mechanism 

Project KPIs

AGRI3 KPIs Transaction targets
1.1a Area of HCV/HCS forest (brought under active management for protection objectives)
265 ha forest of APP restored by isolation or reforestation
1.2.b Natural forestland under active management for replanting and/or restoration objectives
2316 ha of legal reserve actively managed – and acceleration with this protection from BAU
2.1a Area of degraded land restored by concessions of funded projects
1,200 ha of degraded pastureland restored in line with Embrapa guidelines
2.2b Additional tons per year per unit area, disaggregated by commodity and borrower type, sustainably produced by funded projects
4 heads to 8 heads per ha in rearing capacity in line with Embrapa guidelines
3.2b Farmers trained in, and technology transferred for, best management practices in sustainable agriculture/ forest protection
30 farmers trained through farmer days
Additional AGRI3 KPIs Transaction targets
Elementary school construction
1 elementary school able to accommodate 30 students rebuilt within 2 years