AgTech Funding and Investments

July 31, 2024 - JBS announced this Tuesday (21) the contribution of R$10.2 million in a new CRA backed by the “JUNTOS: Pessoas+Floresta+Amazônia” program . The CRA, issued by the nature-based company Rio Capim Agrossilvipastoril, will be structured by Vox Capital and foresees a total issuance of R$100 million, with the first this week, for R$50 million, and the second, in 2025, for the same amount. The expectation of the JUNTOS program, launched last year by the JBS Fund for the Amazon, is that more than R$900 million will be leveraged via blended finance over this period, with an improvement in the risk and return profile of the operation and an increase in the attractiveness of the private sector. The share assumed by JBS is the portion of capital with the lowest return priority – known in English as first-loss capital.

In 2023, JBS allocated R$10 million to the program, via the JBS Fund for the Amazon, to enable the structuring of JUNTOS. “ This project is absolutely disruptive and has transformational power for Brazilian livestock farming. Focusing on productivity to increase sustainability is what will ensure engagement in this transformation process ,” says Gilberto Tomazoni, global CEO of JBS . “ Why don’t rural producers invest in genetics and soil management? Because they don’t have the capital or technical assistance. That’s where the Juntos program comes in. We believe so much in this socio-environmental development model that we will take the highest risk to prove that being sustainable is more profitable ,” he adds.

The funds will be used to assist 3,500 small cattle ranchers operating in the Legal Amazon region, offering consultancy on land use, increasing profitability and curbing illegal deforestation in the biome. “We are making the operation viable to generate a positive impact through businesses that are inclusive and environmentally sustainable for the Amazon, and at the same time that generate financial returns. We want Faria Lima to see a return on its investment in small producers with all the necessary security, within a new standard of business model,” says Andrea Azevedo, executive director of the JBS Fund for the Amazon.

The CRA has a unique feature that is considered rare in the financial market: the existence of a risk and impact committee. The committee will be formed by Vox, Rio Capim and an independent member whose role is to monitor operational issues made possible by the “JUNTOS” program. The committee will verify the results of the mitigations achieved and inform interested investors.

“Investors and small producers operating in the Legal Amazon lack initiatives with technical and financial viability that support regenerative livestock farming in an integrated manner. The JUNTOS program, now through the CRA with an accountability committee, will meet the demands of both ends” , explains Valmir Ortega, CEO of Rio Capim .

CRA's approach is through blended finance , with resources from concessionary and private funds and focused on the “JUNTOS” regenerative agriculture project. The JBS Fund estimates that it will invest up to R$100 million over the next ten years, leveraging more than R$900 million between resources from Pronaf (National Program for Strengthening Family Farming), commercial funds and donations – in addition to various types of financial instruments, such as guarantee funds and blended finance funds, for example, which can generate financial security and help increase scale in this initial phase of the program.

“Blended finance allows both the issuer and the borrower to obtain a very competitive rate. From this basis, the issuer can leverage its own business, honor its commitment, and at the same time create a structure that allows it to offer a more attractive rate to the market. It is a win-win operation” , explains Daniel Brandão, director of nature-based solutions at Vox Capital.

The Rio Capim company was the first company to receive seed money from the “JUNTOS: Pessoas+Floresta+Amazônia” program. The project is in its initial phase. Rio Capim’s goal is to serve 150 families in Pará this year and 250 from 2025 onwards. In ten years, the goal is to reach 3,500 families. The idea, together with the JBS Fund for the Amazon, is to implement business hubs that support small producers in all the necessary stages for low-carbon livestock farming in the Legal Amazon, with support for the implementation of animal traceability from the beginning of the cattle’s life. The project also encourages the socio-environmental standardization of the property, when necessary.

Source: https://www.mediaroom.jbs.com/