Agri3 Fund

VERNI K. WEHRMANN – DEGRADED PASTURELAND RENOVATION, BRAZIL

Key Facts

  • Investee: Verni K. Wehrmann
  • Lender: Rabobank
  • Location: Goías State, Brazil
  • Transaction size: USD 13 million
  • Term: 10-year loan
  • Instrument: Maturity Subordination Guarantee
  • AGRI3 Guarantee exposure: 50% of loan value
  • Main activities: degraded pastureland renovation, crop production, accelerated forest code compliance, preservation of native vegetation, farmer training and livelihood improvement

Investee background

Grupo Wehrmann is an established producer of vegetables, soybean and maize and in addition activities in development and trading of soy and maize seeds for the Brazilian and exports markets.

In total the group has an existing production of soybean, and maize seeds as well as vegetables on 6,267 hectares of land.

In order to expand its production to a second location, the group has acquired a property of 8,375 hectares in Sitio d'Abadia.

This area is former pastureland that has been degraded due to an intensive use during the past 20 years in an extractive way with low technology and low productivity.

Transaction description

Rabobank providing a:

USD 13 million loan to Grupo Wehrmann

Supported by a 50% Maturity Subordination guarantee from AGRI3.

The project aims to transform degraded land into high intensive and productive crop land, whilst maintaining over 50% of the area as forest and natural vegetation.

Their agricultural production will be based on modern agricultural principles, including precision agriculture and intelligent irrigation.

Critically, half of the area of the new property will be maintained as reserve, of which 20% is the minimum legal reserve required
for the forest code, 5% is APP
and 25% is excess reserve

  • The preservation activity is part of the Group’s ‘Agri1para1’ philosophy. This means that for every productive hectare also a hectare of national vegetation (both forest and savannah) is preserved.
  • The group intends to restore some of the existing reserve areas in order to optimize the organization of productive and reserve areas and will also invest in improvement of APP areas.
  • For this a native species nursery will be set-up. It is also an objective of the project to develop environmentally related educational activities at the local schools.

Project activities and expected impacts

Forest protection and restoration

  • The project is targeting to protect and restore 419 ha of area under permanent protection (5%).
  • The project is targeting to protect 1,675 ha Legal Reserve (20% of the total area).
  • The project is targeting to protect 2,095 ha of additional Cerrado vegetation (25% of the total area).

Sustainable land use

  • A total area of 4,187 ha of degraded pasture will be converted into high yield soybean and corn seed production, onions and potato crops using good agronomic practices. The onions and potatoes will be certified to GlobalGap.

Rural livelihoods

  • On the farm 194 new jobs will be created for the first 3 years until the irrigation works are completed. Thereafter, 134 extra jobs will be created on the farm and with the additional vegetable production is expected to create 50 extra jobs in the packing plant.

Project KPIs

AGRI3 KPIs Transaction targets
Natural forest under management
for protection.
419 ha of area under permanent protection
plus 1,675 ha of legal reserve.
Area of Natural habitats under management for protection.
2,095 ha of voluntary additional natural reserve protected above Forest Code requirements.
Natural forest under management for restoration objectives.
Yet to be defined how many ha to be restored.
Area of degraded land rehabilitated.
4,187 ha of former pastureland renovated.
Agricultural area under sustainable management.
4,187 ha of new productive area under sustainable management.
Number of participant reporting increased income, which can be disaggregated by gender and local communities for reporting purposes.
Percentage of income increase to be determined and to be developed by external consultant with support from AGRI3.
Number of farmers trained in, and technology transferred for, best management practices in sustainable agriculture/forest protection.
Number of employees trained on production techniques. The specific target is not yet decided.