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ESG Agro

Feeding the planet with social and environmentally-responsible soybean

Photo of Rodrigo Tavares
6 2

Written by

Lead Applicant Organization Name

Granito Group

Lead Applicant Organization Type

  • Investment-based Organization

If part of a multi-stakeholder entity (i.e. team), provide the names of other organizations and types of stakeholders collaborating with you.

Serez Capital is a Brazilian company with extensive expertise in all stages of the agribusiness value chain. Serez Capital’s partners have managed roughly 170.000 hectares of farms concentrated in the production of grains, livestock, citrus and sugarcane and successfully exited these assets. 3J Group is a Sao Paulo-based Investment Manager and Advisor established in 2017 regulated by the U.S. Securities and Exchange Commission (SEC) and by the Brazilian Security and Exchange Commission (CVM). 3J partners have an individual track record of over US$ 1bln in AUM. 3J currently manages US$ 250mm and aims to reach US$ 1bln by 2025. The Granito Group, founded in 2015, is a boutique financial group with the mission to transform the global economy into an impact economy by offering strategic consulting, investment banking and policy & research. It operates from London and Sao Paulo.

Website of Legally Registered Entity

www.granito.group

How long have you / your team been working on this Vision?

  • Under 1 year

Lead Applicant: In what city or town are you located?

Sao Paulo

Lead Applicant: In what country are you located?

Brazil

Your Selected Place: what’s the name of the Place you’re developing a Vision for?

The Cerrado region of Brazil

What country is your selected Place located in?

Brazil

Describe your relationship to the place you’ve selected.

The Cerrado is the largest savanna region in South America and the continent’s second largest biome after the Amazon, stretching to the east and south of the Amazon. It covers the states of Goiás, Mato Grosso do Sul, Mato Grosso, Tocantins and Minas Gerais in Brazil. The Cerrado is one of the most threatened and over-exploited regions in Brazil. Unsustainable agricultural activities, particularly soy production and cattle ranching, as well as burning of vegetation for charcoal, continue to pose a major threat to the Cerrado's biodiversity (WWF, 2020). Our Vision targets 1,000 km2 of the Cerrado region.

Describe the People and Place: Provide information that would be helpful for an outsider who has never been there and may have no context about this Place to better understand the area.

The Cerrado offers a unique grouping of favorable conditions – an established and well regulated grains industry, high quality crops, presence of key infrastructure, favorable land condition (ability to convert cattle pasture into agricultural land), low farmland prices and availability of farmland investment opportunities – that is not available anywhere else in the world. The Cerrado’s deep-rooted plants and trees and its soils sequester large amounts of carbon, making the region’s preservation key to curbing climate change. Our Vision is shaped in awareness of the biodiversity pedigree of the region and conscious of the need to find the right balance between agricultural development and environmental preservation.

What is the approximate size of your Place, in square kilometers? (New question, not required)

500000

What is the estimated population (current 2020) in your Place?

1000

Challenges: Describe the current (2020) and the future (2050) challenges that your food system faces.

Our Vision aims to provide a local solution to global challenges such as (1) world population growth to around 10 billion people in the next three decades and average daily energy consumption to reach 3050 kcal per person by 2050, (2) soy consumption will escalate significantly in the coming decades. Soy is a fundamental crop in today’s global agriculture marketplace and in the global food chain, affecting millions of lives globally. Soybeans produce more protein per hectare than any other plant and is one of the most profitable agricultural products, (3) the acceleration in agriculture and agricultural land investments driven by institutional investors such as pension funds, government funds, university funds and large family offices looking for competitive long-term yields and aiming at balancing risk and return - but these investments only rarely factor in ESG criteria. From 2008 to 2018, 130 agriculture/farmland-focused funds globally have successfully raised capital from investors, securing an aggregate US$ 26 billion.

Address the Challenges: Describe how your Vision will address the challenges described in the previous question.

Our Vision is predicated on the establishment of the Agro ESG Brazil Fund I, Brazil’s first ESG grain fund. Agricultural investment funds are experiencing significant growth in numbers and volume as demand for food and other agricultural products is expected to continue to increase. Population growth and longer life expectancies, as well as increases in the purchasing power of the population in many emerging economies will contribute to this growing demand. In addition, the global growth of sustainable investments has also drawn attention to agricultural funds due to their capacity to unlock both financial returns and development impact. The Agro ESG Brazil Fund I is an unlisted agricultural investment fund with a focus on Brazilian grain assets. The Fund maximizes financial value by producing grains in alignment with environmental, social, and fair governance (ESG) principles. It has a first close target size of US$200M and a target IRR of 12% over the life of the fund. The target IRR is informed by historical performance of the sector composed by return on agricultural productivity and land valuation. Unlike other agricultural funds, the Fund will leverage the expertise of the farm manager and industry expert Serez Capital to select and efficiently operate its portfolio of agricultural land investments. With a professional team experienced in farm management, market research and grain trading, Serez is uniquely qualified to handle all elements in the Brazilian grain supply chain.

High Level Vision: With these challenges addressed, now provide a high level description of how the Place and the lives of its People will be different than they are now.

The Fund expresses 3J, Serez Capital International and Granito Group’s intent to go beyond applicable laws and regulations and integrate sustainability into business and farming practices by addressing their economic, social and environmental impact. It is 3J, Serez Capital International and Granito Group’s conviction that the global demand for more sustainable soybeans will accelerate in the coming years compelling producing companies to revisit their business models. By pursuing sustainability practices in large-scale farming, 3J and Serez Capital International wish to be one step ahead in the reshaping of the global soybeans industry. Through our Vision, we will demonstrate that it is possible to produce soybean in the largest possible scale and export it globally, in respect to the environment and society. 

Full Vision: How do you describe your Vision for a regenerative and nourishing food future for your Place and People for 2050?

Brazil is the world’s ninth-largest economy with a GDP of USD 1,9 trillion in 2018 and is expected to be the fifth-biggest by 2050 (IMF, 2019). It has the fifth largest population (210 million) and is expected to have 230 million inhabitants in 2050 (UN, 2020). The country is the world’s largest producer of soybean, sugar, coffee, and orange juice. The agro sector accounts for 21,6 percent of Brazil’s GDP (in 2018) and makes an important contribution to the country’s trade balance. By 2050 the country’s agricultural sector will still play an important role in underpinning Brazil’s economic performance with total agricultural output to double in volume compared to 2020 and livestock production will almost triple, primarily on the basis of productivity improvements. Yet, for Brazil to remain an agricultural powerhouse, its sustainability agricultural credentials need to be perfected. The first phase of our Vision, with capital allocations of US$200M through the Agro ESG Brazil Fund, targets 1,000 km2 of the Cerrado region. This will be the country’s first Social and Environmentally-Responsible Soybeans Production Fund. If successful from a financial and environmental perspective, the Vision could be easily scaled up and reach 500,000 km2 by 2050 - the full extent of arable land available for grain production in the Cerrado region. A successful solution to produce soybean will be gradually mimicked by local farmers. And the Cerrado will then become the world’s largest sustainable food production region. 

Our Vision is carried out in perfect balance with Cerrado communities and stakeholders. This includes: (1) To respect land use right, including the principle of free, prior and informed consent of both quilombolas communities (communities of runaway slave descendants) and indigenous groups located in the states where the farms invested in by the Agro ESG Brazil Fund are located; (2) To protect the rights of all farm workers, their freedom of association, health and safety in compliance with federal, state, and municipal laws and applicable international conventions; (3) to prohibit child labor, forced labor discrimination and harassment in compliance with federal, state, and municipal laws and applicable international conventions; (4) To maintain participatory and structured communication with farm workers and adopt processes for effectively addressing complaints; (5) To maintain an open and consistent dialogue with the local communities regarding the impacts of the soy farming operation and adopt mechanisms for resolving complaints and grievances; and (6) To promote the social and economic development of local communities by using the farms invested in by the Agro ESG Brazil Fund as local hubs of economic development and poverty reduction.

From a political perspective, we envision the adoption of a ’Cerrado Soy Moratorium’, an agreement to ensure that soy production in the Cerrado region only occurs on existing converted agricultural land and not through deforestation of native vegetation. The Cerrado Moratorium will build on the ‘Amazon Soy Moratorium’ signed in 2006 by a coalition of investment institutions and global corporates.

Technology is an important component of our Vision. High tech farming is quickly becoming the standard thanks to agricultural drones and sensors, but we will take a step further by applying solutions such as Precision Farming & Smart Agriculture, IoT, Agricultural Sensors, and Farming Drones.

To provide a 360o perspective and a detailed account of our Vision, we are attaching:

1. Teaser on the Agro ESG Brazil Fund I, with key indicators

2. Soy Sustainability Policy and Action Plan, which includes 10 guiding principles and 36 targets in areas such as Certification and Validation, Forests and Native Vegetation, Responsible Production, Human Rights, Business Governance, ESG Asset Management, Monitoring and Reporting, and Multi-Stakeholder Platforms. The Nature Conservancy (TNC) has acknowledged that this Policy and Action Plan fulfills all criteria of TNC's Environmental Framework (gold standard) for agricultural production in the Brazilian Cerrado region

3. Global Soybeans Market, with detailed information on the global economic and dietary profile of grain production.

4. Farm Profile and Operation, with detailed information on the land selection process. 

How did you hear about the Food System Vision Prize?

  • Website

6 comments

Join the conversation:

Comment
Photo of Juliana Gonzalez Campos
Team

Hi @Rodrigo Tavares, welcome to the Food System Vision Prize Community!
You have a very clear scene supported by data from different resources, that's something we definitely encourage, but following the guidelines of the Prize, let’s bring now your Vision to a truly forecasted 2050.
Taking into account the information you already have, can we use that to imagine or address what would life in The Cerrado look like in 2050?
How might your work at Granito Group today look like in 2050 if you were to upset the current trends and build a new trajectory for the future that inspires others around you to collaborate? To help you speculate what your future Vision could look like, you can find some guiding principles on Future Casting and inspiration in the Vision Prize Toolkit in Chapter 3 under Tools of Transformation.
Here is the link to the Prize Toolkit: http://bit.ly/2X4ZxQk
Look forward to seeing your Vision evolve through the coming days.
All the best for you!
Juliana

Photo of Rodrigo Tavares
Team

legal, obrigado. Já revisamos o texto

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