SAO PAULO, Brazil (Reuters) — Commodities trader Bunge Inc., bank Banco Santander Brasil and conservation group the Nature Conservancy are promoting a plan to finance Brazilian farmers who commit to preserve virgin land, they said Aug. 30.
The program expects to make available $50 million in loans starting in September that will be repaid in 10 years, they said in a news conference in São Paulo.
The first lines of credit are expected to fund three or four farmers undertaking preservation projects, with no current plans to expand it beyond a pilot scheme, according to Bunge and Santander representatives.
Read Also
Land crash warning rejected
A technical analyst believes that Saskatchewan land values could be due for a correction, but land owners and FCC say supply/demand fundamentals drive land prices – not mathematical models
The initiative suggests grain handlers may be responding to pressure to support conservation efforts as China’s appetite for soybeans drives acreage and production growth in Brazil.
The loans are targeted at farm operations based in Brazil’s Cerrado, a vast tropical savanna where more than 105,000 sq. kilometres of wild vegetation have been destroyed since 2008, according to government figures.
The Cerrado is one of the fastest-growing soybean regions in Brazil, the world’s second-largest producer and biggest exporter of the oilseeds.
Santander will provide 65 percent of the funding, with Bunge accounting for 30 percent and the Nature Conservancy for five percent.
Farmers are forecast to expand the country’s soybean planted area for the 12th consecutive year, to just almost 90 million acres, amid strong demand from buyers in Asia in the 2018-19 cycle that kicks off in September.
In May, grain trading houses including Bunge and Cargill and dozens of farm operations were fined a total of $34 million for activities in the Cerrado including buying soy produced in areas off-limits to farming under environmental rules.
