Cerrado Programme 1 delivers its first 42,000 tonnes of verified DCF soy

The environmental impact of the first year of the RCF Cerrado Programme 1 has been calculated, independently verified and published in the first Annual Report. The inaugural programme delivered 42,400 tonnes of verified deforestation and conversion free soy into the Brazilian supply chain from the 32 participating farms. 8,541 ha of native vegetation was conserved, 2,145 ha in excess of the legal reserve requirement. This sequestered 2.9 MtCO2 carbon stocks in native vegetation and 0 tCO2e land use change emissions occurred.

Landowners committed to forgo their right to legally convert the remaining vegetation in their farms (in excess of legal minimum requirements), and adhere to other social and environmental requirements, as defined in RCF’s Eligibility Criteria, in order to participate in the programme. The 32 farms were then able to benefit from the $11million invested by UK supermarkets Tesco, Sainsbury’s and Waitrose distributed as low interest loans. The initiative is financed through a first of its kind approach: dollar-denominated green bonds (CRAs – Certificates of Receivables from the Agribusiness) registered in the Vienna Bourse.

At the end of the first year of this four-year programme;

      • 100% of the funds invested were disbursed to eligible farmers selected on multiple criteria, including the farms’ location and deforestation risk, area of excess legal reserve, and credit history. 

      • No participating farmers deforested or converted natural vegetation.

      • All farmers successfully harvested their soy crop.

    Monitoring of environmental obligations and impacts was conducted by the teams at SIM and BVRio, and independently verified by EarthDaily Agro. The RCF Environmental Committee has reviewed the methodologies used for impact quantification and monitoring reports. The committee comprises The Nature Conservancy, Conservation International, WWF Brasil, UN Environment, IPAM, Proforest, and BVRio, which provides the secretariat. 

    SIM Director, Pedro Moura Costa, commented, “We are pleased to announce these results.  The programme has worked as designed, and the concept has been proven. We need to rapidly scale up to deliver greater environmental protection to the Cerrado, which is under increasing pressure due to additional legislation being placed elsewhere in Brazil. International soy buyers want DCF soy in their supply chains, and this mechanism can deliver that at scale.”

    The Cerrado Programme 1 now rolls forward to its second year, with investors committed to a four year programme.

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    Eligibility Criteria for Cerrado Programme 1

    The following eligibility criteria are required for participation in the Responsible Commodities Facility for Cerrado Programme 1 (see full description here):

    Land use

    The area of cultivation must not have had any deforestation and conversion of native vegetation since 1 Jan 2020*. Preference will be given to areas converted from abandoned pasture land to soy cultivation after 2008.

    Forest Code Compliance

    Farm land must be registered with the Cadastro Ambiental Rural (CAR). The farm must contain and maintain areas of native vegetation equivalent to those required for Legal Reserve and Areas of Permanent Protection (APPs) determined by the Forest code or have formally adhered to a Programme of Environmental Regularization (PRA) established by the state environmental agency**. The farm area must not overlap with public protected areas, indigenous lands and other traditional people and community lands (including ‘quilombolas territories’).

    Land title

    Farmers must have unquestionable right to use the land, be it as land title, land lease agreement, or another legally recognised form of land tenure (e.g., ‘posse’)

    Legal Compliance

    Farmers must demonstrate that they and their farms do not contravene any environmental or legal requirements, such as embargoes, environmental irregularities, contraventions of the labour legislation (including slave and child labour), non-compliance with the Soy Moratorium (if applicable), and internationally-accepted rules for the use of agrochemicals.

    *Farmers occasionally request the conversion of small areas of native vegetation to conduct farm improvements (building storage areas, water reservoirs, etc.). Provided that these areas are small and not for the purpose of expansion of the agricultural area, RCF analyses and considers them eligible. In order to do so, RCF uses the concept of Minimal Level (of deforestation or conversion) as defined by the Accountability Framework Initiative Terms and Definitions, which states “To be considered consistent with no-deforestation or no-conversion commitments, minimal levels must generally meet the following conditions: Not exceed cumulative thresholds that are small both in absolute terms (e.g., no more than a few hectares) and relative to the area in question (e.g., no more than a small proportion of the site).”

    **The RCF analyses Forest Code compliance by looking at single farms (defined as the area covered by a CAR) or bundles of individual CARs that, in combination, result in the desired area of native vegetation put under the protective status of the RCF.  This bundling should not be understood as a means of compliance with the Forest Code requirements and is not intended to release the farmer of the regularization process committed under the Forest Code rules (enrolment in the CAR, engagement in a PRA, etc.). In order to differentiate its metrics from those of the Forest Code, the RCF refers to areas of Excess Native Vegetation (ENV) as opposed to Excess Legal Reserve, to avoid confusion with areas legally categorised under the Forest Code.