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Livestock

Integrated sourcing from smallholder livestock producers

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Integrated sourcing from smallholder livestock producers

Compare IOA
Country
Brazil
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
One third of Brazil's cattle hers is found in the Amazon biome
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) No Poverty (SDG 1) Reduced Inequalities (SDG 10)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Responsible Consumption and Production (SDG 12) Gender Equality (SDG 5)

Business Model Description

Integrated sourcing from smallholder livestock producers Scale-up the integration and intensification of smallholder / cooperative livestock farming through supply chain structures that provide services such as training, access to inputs, finance and shared processing facilities to farmers

Expected Impact

Integrate farmers into large-scale agricultural value chains, improve productivity and reduce the deforestation caused by meat production

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Brazil
Region
  • Brazil: Mato Grosso
  • Brazil: Pará
  • Brazil: Rondônia
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Food and Beverage

Development need
Sustainability Development Report 2019: score of 62.1 on SDG 2 (Zero Hunger), of 60.9 on SDG 15 (Life on Land), and of 91.7 on SDG 13 (Climate Action), with 'Significant challenges remaining' subscores prevalent across indicators (1)

Policy priority
The current administration has made supporting the agriculture sector and boosting its export competitiveness a key government priority (2) (3). Increasing the grain storage capacity, irrigation projects, environmental preservation and empowering agribusinesses have been marked as priorities.

Gender inequalities and marginalization issues
For some crops, smallholder farmers constitute 70% of the food market in Brazil. A large proportion of this is family farming, which can support poverty reduction and food security. Within this outlook, women provide a significant proportion of the agricultural workforce. Approximately 30% of the total rural workforce in Brazil is female. (26)

Investment opportunities introduction
There are various credit lines and incentive programs at discounted interest rates to support investments in agriculture. The participation of foreign entrants was also facilitated through a recent policy announcement (4) (5)

Key bottlenecks introduction
Infrastructural deficiencies, especially in logistics, negatively impacting the competitiveness of freight costs, low levels of land-use efficiency and dependence on imported fertilizers (27)

Sub Sector

Food and Agriculture

Development need
Although agribusiness represents 22% of Brazil’s GDP, 1/3 of all employment and 40% of exports (6), it is also responsible for the consumption of approx. 70% of the water in rivers, lakes and aquifers in Brazil. (7) Despite Brazil’s NDC commitment to restore and reforest 12M ha of forests by 2030, unsustainable livestock production is a key driver of deforestation (8) (9)

Industry

Meat, Poultry and Dairy

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Integrated sourcing from smallholder livestock producers

Business Model

Integrated sourcing from smallholder livestock producers Scale-up the integration and intensification of smallholder / cooperative livestock farming through supply chain structures that provide services such as training, access to inputs, finance and shared processing facilities to farmers

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

One third of Brazil's cattle hers is found in the Amazon biome

Nearly one third (29%) of the Brazilian cattle herd, the second largest in the world, is found in the Amazon biome (10)

Dairy cattle make up only ~4% of all cattle in the Amazon biome, which is responsible for 6-9% of Brazilian milk production (10)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

10% - 15%

Benchmark investors with funds focused on this model (particularly swine processing and aquaculture) have achieved returns at approximately 15% (11)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

Payback times can start as early as 2.5 years after the start of the operation, with some benchmark investees surveyed breaking even as early as three years after the start of operations (10)

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

< USD 500,000

Market Risks & Scale Obstacles

Business - Business Model Unproven

Model hasn't been proven at sufficient scale to calculate viable economics (and assess potential environmental benefits), until deployed by Kaete Investimentos

Business - Supply Chain Constraints

Complex logistics networks to be able to distribute the produce from the facility onwards in the supply chain
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Livestock production contributes heavily to deforestation and land degradation

Farms that earn less than 10 minimum salaries (approximately 3.9 million farms, representing 88.6% of the total) account for only 3.3% of the gross value of agriculture sector production (1)

This is underpinned by unproductive and largely unsustainable pasture farming, keeping margins low and limiting the potential to escape poverty (1)

Gender & Marginalisation

Farms that earn less than 10 minimum salaries (approximately 3.9 million farms, representing 88.6% of the total) account for only 3.3% of the gross value of agriculture sector production (12)

This is underpinned by unproductive and largely unsustainable pasture farming, keeping margins low and limiting the potential to escape poverty (12)

Expected Development Outcome

Reduce amount of forest land cleared to raise livestock due to intensification of livestock production

Gender & Marginalisation

Integrate smallholder farmers into large-scale agricultural value chains by linking them directly with input suppliers and offtakers (often the same actor)

Improve farmer productivity thanks to availability of inputs and extension services provided by offtakers. Farms participating in sustainable livestock intensification have shown improvements in productivity by 30-490% (10)

Primary SDGs addressed

Zero Hunger (SDG 2)
2 - Zero Hunger

2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size

Current Value

$12,413.78 (agricultural value added per worker) (25)

Target Value

General SDG Target: By 2030 double the average productivity of food producers.

No Poverty (SDG 1)
1 - No Poverty
Reduced Inequalities (SDG 10)
10 - Reduced Inequalities

Secondary SDGs addressed

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production
Gender Equality (SDG 5)
5 - Gender Equality

Directly impacted stakeholders

People

Mid-sized livestock farmers or smallholder farmers participating in cooperatives, to an aggregated minimum of ~400 hectares (13)

Indirectly impacted stakeholders

People

Livestock value chain actors and end-consumers: intensification improves operational productivity and could bring unit costs down over time

Outcome Risks

Animal welfare is severely reduced from breeding animals in confined spaces

Risk of spread of disease increases exponentially from intensive protein production, particularly for livestock species such as poultry and pigs

Physical infrastructure required for processing facilities may cause a loss in biodiversity in the area, as well as a destruction of natural habitats and rural landscapes

Gender inequality and/or marginalization risk: The risk of pushing the non-beneficiary farmers out of the market vis-a-vis the ones who increase their productivity through this IOA

Impact Risks

Unexpected impact risk: Environmental risks such as the spread of diseases or the loss of biodiversity may be accrued if this model is not administered sustainably

Gender inequality and/or marginalization risk: Stakeholder participation risk if the experience and the expectations of local communities are not taken into account

Impact Classification

B—Benefit Stakeholders

What

Intensification of livestock farming could raise farmer incomes while reducing environmental impact of expansive cattle ranching

Who

Small and mid-scale farmers are relatively underserved as extensive ranching lowers productivity

Risk

The model is proven, but complex logistics networks to connect the operation to markets may limit breadth of impact

Impact Thesis

Integrate farmers into large-scale agricultural value chains, improve productivity and reduce the deforestation caused by meat production

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

(Plano Safra): The Plano Safra provides resources for improving the commercialization and industrialization of the sector (US$ 45 billion), for making direct investments (US$ 12 billion), improving access to rural credit (US$ 250 million) and technical support (US$ 500 million) (16)

(National Program for Strengthening Family Agriculture): Smallholder farmers who are participants of the National Program for the Strengthening of Family Agriculture have been allocated US$ 8 billion in resources, with some funds earmarked for the recovery of degraded land (17) (18)

This recent policy announcement also facilitates the participation of foreign entrants, with agriculture credits to be emitted in US$ (19) (20)

The current administration has made supporting the agriculture sector and boosting its export competitiveness a key government priority (14) (15)

Financial Environment

Financial incentives: Federal credit lines for defrayment, commercialization and industrialization for smallholder farmers have been set at rates of 3%, and 4.6% for Pronaf participants (22)

Regulatory Environment

The smallholder sector is overseen by the Ministry of Agriculture, which chairs the Commission on Agriculture and Agrarian Reform, oversees the deployment and implementation of Pronaf, and maintains a register on Pronaf recipients (crossed with other federal databases) (21)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Investors such as Kaete Investimentos, SP Ventures. Corporations such as Instituto Sabin, Alianza del Pastizal, Carne Organica do Pantanal (ABPO), PECSA, Dom Porquito and Peixes da Amazônia

Non-Profit

Confederação Nacional dos Agricultores Familiares (Conafer), Confederação Nacional dos Trabalhadores na Agricultura (Contag), Sitawi Finanças do Bem, Alimi Impact Ventures

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map

Brazil: Mato Grosso

These states concentrate the highest density of small-scale deforestation in Brazil (2) as well as where there are the highest numbers of cattle in Brazil (25% of total heads) (5) and where there is the highest concentration of cattle intensification projects (63, raising 60K cattle on 35K hectares of land) (3)

Brazil: Pará

These states concentrate the highest density of small-scale deforestation in Brazil (2) as well as where there are the highest numbers of cattle in Brazil (25% of total heads) (5) and where there is the highest concentration of cattle intensification projects (63, raising 60K cattle on 35K hectares of land) (3)

Brazil: Rondônia

These states concentrate the highest density of small-scale deforestation in Brazil (2) as well as where there are the highest numbers of cattle in Brazil (25% of total heads) (5) and where there is the highest concentration of cattle intensification projects (63, raising 60K cattle on 35K hectares of land) (3)
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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