Announced in August 2022, the Cerrado Programme 1 provides financial incentives to farmers that meet its Eligibility Criteria with a focus on the protection of native vegetation in addition to legal requirements.
To be eligible for the Programme, farmers must follow the Forest Code, have an unquestionable right to use the land, and demonstrate that they and their farms do not contravene environmental or legal requirements. Alongside this, the cultivation area to be financed must have been cleared before 1 January 2020 and must have native vegetation in excess of the levels required by the Forest Code for Legal Reserves and Areas of Permanent Protection (APPs).
This first phase of the programme was designed to demonstrate this approach and provide the basis for scaling it up to protect vast tracts of native Cerrado vegetation in Brazil (see Annual Report Year 1). For the 2023:24 growing season, the RCF attracted additional investors (Rabobank, Santander, and AGRI3), and significantly scaled up its operations (see Annual Report Year 2).
Implementation of the programme reduces conversion of Cerrado habitats, conserves carbon stocks and biodiversity and supports the production of deforestation and conversion-free soy.
Impacts of the RCF are monitored by SIM and independent monitoring is conducted by EarthDaily (see monitoring methodologies here).
The RCF Cerrado Programme 1 is financed through the issuance of Green CRAs (Certificates of Receivables from the Agribusiness), registered in the Vienna Stock Exchange and B3 Brazilian Stock Exchange. The RCF CRAs received a Second Party Opinion from ERM-NINT and considered to be in alignment with the Green Bond Principles and Green Loan Principles, and with international and national best practices for issuing green bonds and loans (see report here).
The Cerrado Programme 1 is expected to generate the following impacts, over a four year period:
1 million tonnes of deforestation- and conversion-free soy produced.
150,000 ha of native vegetation conserved, including 30,000 ha of Excess Native Vegetation that could, otherwise, be legally deforested
20 million tonnes of CO2e stored in forests maintained by the programme
The RCF operates in areas of high risk of deforestation, so that its impacts have the maximum additionality. By operating in these areas, however, the RCF also has a higher risk of events of deforestation involving its farms or participants.
It is important to note, also, that the RCF does not require all the farms of the producer`s group to be included in the Cerrado Programme. Participation in the RCF is voluntary and farmers are allowed to participate with one or more of the group`s farms. As the RCF does not provide any consideration for farmers to commit with the Environmental Criteria beyond the Programme Areas, it is also not entitled to require these other farms to comply with its criteria, nor to appropriate itself of any environmental impact on these farms.
The Cerrado Programme 1 has the financial support of the following companies:
Programme 1 sponsors:
Blended Finance support:
The Cerrado Programme 1 was structured by the following organisations:
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.
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’).
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’)
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.