Fostering private investments into halting the major driver of deforestation in the Amazon

While there is a heated debate about the number of fires in the Amazon and the Cerrado and who is to blame, IDH continues to develop solutions to halt deforestation in Brazil. In the Mato Grosso we jointly work with the government, soy and beef producers and their off takers to intensify cattle ranching, mainstream responsible soy production and increase sustainable market demand. On September 13th, we’ve signed a MoU with Marfrig, to drive sustainable calves production as part of the USD 500 million Sustainable Transition Bond issued by the company last month. Daan Wensing, Global Landscape Director: ‘Our aim is to half the land use for cattle ranching, and free up millions of hectares for agricultural production, and halt the major driver of deforestation and land degradation in Brazil.’

Our aim is to half the land use for cattle ranching, and free up millions of hectares for agricultural production, and halt the major driver of deforestation and land degradation in Brazil.

Daan Wensing, Global Director of Sustainable Landscapes at IDH

A little bit more than one cow per hectare*. That is the average density of traditional cattle ranching in Brazil. In the Netherlands it’s four. If we can bring it to two cows per hectare, then we can free up millions of ha of arable land. Cattle ranching takes up about 42% of the total area under rural properties in Mato Grosso, while the agriculture occupies only 18%**. By intensifying the cattle ranching, we half that the land for agricultural production doubles without one ha of deforestation.

The beef industry in Brazil is committed to zero-deforestation targets for more than 10-years, and it has established very accurate monitoring systems for the Tier 1 of the supply chain (fattening farms direct suppliers), excluding those who don’t met their socio-environmental criteria. This strategy has decreased the deforestation risk from beef industry but was not effective enough to solve the deforestation risks from the territories. Under this context, Marfrig has issued in August 2019 a USD 500 million Sustainable Transition Bond to invest in the next 10-years period in the purchasing of cattle from the Amazon biome, expanding the socio-environmental policy to the Tier 2 and Tier 3 of the supply chain, reaching the calves producers.

An important next step last week was the signing of an MoU between IDH and Marfrig Global Foods, a leading global beef producers, for the support in the commitments made under the Bond issued, through the development of a long-term rural program for beef production Mato Grosso, Pará and Rondônia. The program will focus over the next 12 months on: (1) structuring of technical assistance networking to improve the productivity and environmental compliance; (2) development of innovative financial mechanisms at the farm level with focus on Forest Code implementation, cattle intensification and integration with other crops and forestry, payment for ecosystems services and maintenance of the zero deforestation commitments; and (3) design additional monitoring system that covers all the value chain from calves to industry and indicators on landscapes´ improvement.

To develop a landscape solution that supports the establishment of a long term program for sustainable production of calves and cattle and forest protection in the Amazon Biome IDH is convening the beef industry, cattle producers (from smallholders to big farmers) and the financial sector in Mato Grosso State through the Sustainable Production of Calves Program, cu-funded by IDH and Carrefour Foundation. The partnership with Marfrig will give scale to the solutions that are being pilot by the Program.

“We are working side-by-side with the state of Mato Grosso and with partners of the state’s Produce, Conserve and Included (PCI) strategy. We are building Verified Sourcing Area pilots to link sustainable beef production to off-takers like Carrefour. The next step is to work on forging and scaling new partnerships and striking a balance between production, conservation and inclusion through investment, coordination with markets and government support,” said Daan Wensing, Global Director of Sustainable Landscapes at IDH.

The Memorandum of Understanding was signed on the morning of Sept. 13 in the presence of representatives from Marfrig Global Foods and from IDH, as well as from eight financial institutions and investment funds.

* 1.32 head/ha according to ABIEC – Page 13 – http://www.brazilianbeef.org.br/download/sumarioingles2019.pdf

** According to data from IBGE at “Censo Agro 2017” – https://censoagro2017.ibge.gov.br/templates/censo_agro/resultadosagro/pdf/MT.pdf

 

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