Credit of US$ 401.4 Million for the Recovery of Degraded Pastures in Brazil

“Brazil has 101 million hectares of degraded areas…”

Luis Eduardo Rebolo Lapo is the chief risk officer at Traive, an agricultural credit fintech, founder and board member of Tudo Certo Agro, agricultural engineer from Unicamp.

Traive is considering disbursing US$ 401.4 million in credit to farmers who want to recover degraded pastures or transform them into crops.

Luis Eduardo Lapo, chief risk officer at Traive

AgriBrasilis – What is the size of the area of degraded pastures in Brazil?

Luis Lapo – Brazil has 101 million hectares of degraded areas. Of this amount, it is understood that we have 40 million hectares with high agricultural and livestock aptitude.

AgriBrasilis – Traive has developed a credit risk model for degraded pasture conversion. How does this modeling work?

Luis Lapo – The company has developed the delimitation conditions for cash flow projections for up to 10 years, to evaluate the economic and financial viability of projects to convert degraded areas into pasture or cropland. In addition, Traive is a technology company that can automatically obtain various data points to make this analysis faster and more accurate.

AgriBrasilis – Why disburse US$ 401.4 million in credit for the conversion of degraded pastures?

Luis Lapo – The main objective is to continue positioning Brazil as the main global player in the food and biofuels production, increasing production but without increasing deforestation.

To recover 40 million hectares, about US$ 40.1 billion would be necessary. The US$ 401.4 million mentioned are related to the beginning of a project with great potential for expansion.

“Despite having one of the most sustainable agriculture on the planet, our international reputation is still very poor…”

AgriBrasilis – What does the National Program for the Conversion of Degraded Pastures consist of?

Luis Lapo – This program was launched by the federal government and seeks to create measures to deal with the financing of the recovery of degraded areas through specific lines. Traive may enter the project in the future, supporting, for example, banks such as BNDES in the origination and qualification of farmers for the project.

Traive is not directly participating in the National Program for the Conversion of Degraded Pastures.

AgriBrasilis – What is the profile of the farmer who should receive these resources and why?

Luis Lapo – Each financing project will have its specific credit policy, but Traive believes that competitive financing can serve as a catalyst for change. The profile of the farmer should be: one committed to good social and environmental practices, demonstrating that, in addition to complying with all legislation, they are also doing something else. In the case of livestock, for example, there is still no law that requires individualized identification of animals and traceability, but in all the projects we are participating in, this becomes a condition for the farmer to participate.

AgriBrasilis – What are the procedures for converting degraded pastures and what is the cost per hectare?

Luis Lapo – Costs start at US$ 702.5/ha for the conversion of a degraded area into pasture, and can reach US$ 3,211.6 for the conversion of degraded area into soybean crops, for example.

AgriBrasilis – Do you believe that a “revolution” is taking place in rural credit, with a greater focus on sustainability?

Luis Lapo – For some years, I have been commenting that the financing matrix of Brazilian agriculture is outdated and needs to change. This is due to the costs for interest rate equalization in rural credit operations, and even due to the scarcity of resources within Brazil to finance our agriculture.

Since 2020, with the new agribusiness laws, the Government has been concerned with creating an institutional environment seeking to enable the expansion of international fundraising for direct investments in the sector. To bring in resources from abroad, we need to give the investor a good reader of the “risk x return” for making a decision to invest in Brazil instead of other markets, which is precisely Traive’s core business.

Despite having one of the most sustainable agriculture on the planet, our international reputation is still very poor, making additional mechanisms necessary, such as audits and certifications to assure foreign investors that resources are being applied correctly. At Traive, we have already received some international awards for our track record in green operations, for example.

The same rationale applies to the domestic market, in subsidized rural credit lines, for example, where the logic that dictates that “the first mover takes the resources” will be applied less and less. What we are experiencing now is a turning point for all sources of funding: the best farmers, from a credit and ESG point of view, will have access to the best lines of financing, whether in reais, dollars, controlled or free resources.



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