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Grain storage

Storage infrastructure for grain value chains

Photo by Shutterstock

Storage infrastructure for grain value chains

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.
Brazil has a grain storage capacity deficit of 75 million tonnes
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
USD 1 million - USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9) No Poverty (SDG 1) Responsible Consumption and Production (SDG 12)

Business Model Description

Investment into field-side cold or non-cold sustainable silos used for storing export grains. Silos could be built/owned/operated, or built and leased by experienced operators

Expected Impact

Contribute to agricultural price stability by lowering transportation costs and food waste, increase food security and contribute to the income of the farming population

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: Mato Grosso do Sul
  • Brazil: Piauí
  • Brazil: Maranhão
  • Brazil: Bahia
  • Brazil: Tocantins
  • Brazil: Goiás
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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. (25)

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 (26)

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

Agricultural Products

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Pipeline Opportunity

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

Storage infrastructure for grain value chains

Business Model

Investment into field-side cold or non-cold sustainable silos used for storing export grains. Silos could be built/owned/operated, or built and leased by experienced operators

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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.

Brazil has a grain storage capacity deficit of 75 million tonnes

Indicative Return

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

10% - 15%

GPM
Describes an expected percentage of revenue (that is actual profit before adjusting for operating cost) from the IOA investment.

20% - 25%

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)

Commercializing Brazil made silos typically takes 6 months for steel, 12-18 months for concrete (15)

Ticket Size

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

USD 1 million - USD 10 million

Market Risks & Scale Obstacles

Business - Supply Chain Constraints

The growth of grain production has outpaced the supply of storage capacity

Capital - CapEx Intensive

Investors should consider relatively high capital expenditures, particularly for concrete silos, as well as strong subsector dependencies on global commodity markets

Capital - Limited Investor Interest

Agriculture investors have focused predominantly on the immediate value of sold yields rather than the near-term value of excess yields
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Impact Case

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

Sustainable Development Need

Brazil’s grain storage capacity of 84% is far below the FAO recommended 120% (16), creating systemic risk for farmers and cooperatives seeking to store bumper crops during low price periods, and exposing them to predatory freight pricing (40-70% trucking rate hikes) (17)

Gender & Marginalisation

Agribusiness is maintained largely by family farming and smallholder farming in Brazil. Women also provide a significant proportion of the agricultural workforce (25). Thus, the systemic risks of low storage capacity are borne by these groups.

Expected Development Outcome

Reduce transport costs by staggering commercialization, since freight costs are highest at harvest times (18)

Minimize the environmental impact of grain production, as better storage leads to a higher proportion of grain making it to markets

Gender & Marginalisation

Limit producer costs and risk, such as grain deterioration from inadequate storage conditions for the farming population including smallholder farmers and women (18)

Primary SDGs addressed

Zero Hunger (SDG 2)
2 - Zero Hunger

2.3.2 Average income of small-scale food producers, by sex and indigenous status

2.a.1 The agriculture orientation index for government expenditures

Current Value

Agriculture orientation index 0.18 (24)

Target Value

An AOI larger than 1 means the agriculture section receives a higher share of government spending relative to its economic value. An AOI smaller than 1 reflects a lower orientation to agriculture. (24)

Secondary SDGs addressed

Industry, Innovation and Infrastructure (SDG 9)
9 - Industry, Innovation and Infrastructure
No Poverty (SDG 1)
1 - No Poverty
Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production

Directly impacted stakeholders

Corporates

Small and mid-scale grain producers, cooperatives, and silo operators

Indirectly impacted stakeholders

People

Consumers will benefit from higher availability of grain at lower prices.

Planet

Environmental gains from reduced waste and resource overutilization

Corporates

Freight companies will benefit from more precise information about quality, quantity and timing of harvests.

Outcome Risks

If not ventilated properly, silos can produce nitrogen and carbon dioxide, presenting environmental (emission) and physical (explosion) risk

Gender inequality and/or marginalization risk: There is a risk that smallholder farmers may be unable to afford the storage services and facilities

Impact Risks

Gender inequality and/or marginalization risk: Stakeholder participation risk- Smallholder farmers may be unable to or unwilling to store their crops in the silos

Impact Classification

C—Contribute to Solutions

What

The outcome is likely to be positive, important and intended because grain storage could increase farmer incomes

Who

Small and mid-scale grain producers are underserved due to a lack of grain storage facilities

Risk

The model is proven and technology for grain silos is readily available and affordable

Impact Thesis

Contribute to agricultural price stability by lowering transportation costs and food waste, increase food security and contribute to the income of the farming population

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Enabling Environment

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

Policy Environment

(Strategy for Openness, Expansion and Promotion of Brazilian Agribusiness in the International Market 2019-2022): has been established as an action plan by the Federal Government to increase Brazil competitiveness in the international agribusiness markets. (27)

Investment in grain storage benefits from growing political momentum, with Minister of Agriculture specifically calling for investment in storage in March 2019 (19)

Financial Environment

Financial incentives: Various credit lines such as the Program for Construction and Storage Facility Scaling from BNDES (PCA), with an interest rate of 5.25-6% (3) & Constitutional Funding Facility for the mid-West (FCO), with an interest rate of 7.5%. (21)

Financial incentives: Incentive Program for Technological Innovation of Agricultural and Livestock Production (INOVAGRO), with an interest rate of 6.5% in Mato Grosso (15) & Pronaf Mais Alimentos is a credit line by the Bank of Brazil, with an interest rate of 2.5-4.6% (21)

Financial incentives: Programa de Investimento em Logistica Phase 2 is starting in 2019, with US$ 30 billion in planned disbursements (22)

Regulatory Environment

(Law 9,973): Grain storage is highly regulated through Law 9,973 from 29 May 2000 and a 2013 amendment, detailing required characteristics of storage facilities such as sanitary, humidity and temperature to ensure produce quality (20)

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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 suchs as Banco Bradesco, Banco Votorantim and Safra. Corporations such as Kepler Weber and GSI. Comfrio is the main player in cold storage in Brazil

Government

The National Supply Company

Non-Profit

Organizations like SICREDI, the Financial Cooperatives initiative in Brazil

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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

Mato Grosso and Mato Grosso do Sul concentrate almost half of the 75M metric tons of missing grain storage facilities in Brazil (8),

Brazil: Mato Grosso do Sul

Mato Grosso and Mato Grosso do Sul concentrate almost half of the 75M metric tons of missing grain storage facilities in Brazil (8),

Brazil: Piauí

Large needs exist in frontier agricultural regions such as the confluence between Piauí, Maranhão, Bahia and Tocantins, where there is a total deficit of over 5M metric tons, and in Goiás, where there is a deficit of between 5-10M metric tons

Brazil: Maranhão

Large needs exist in frontier agricultural regions such as the confluence between Piauí, Maranhão, Bahia and Tocantins, where there is a total deficit of over 5M metric tons, and in Goiás, where there is a deficit of between 5-10M metric tons

Brazil: Bahia

Large needs exist in frontier agricultural regions such as the confluence between Piauí, Maranhão, Bahia and Tocantins, where there is a total deficit of over 5M metric tons, and in Goiás, where there is a deficit of between 5-10M metric tons

Brazil: Tocantins

Large needs exist in frontier agricultural regions such as the confluence between Piauí, Maranhão, Bahia and Tocantins, where there is a total deficit of over 5M metric tons, and in Goiás, where there is a deficit of between 5-10M metric tons

Brazil: Goiás

Large needs exist in frontier agricultural regions such as the confluence between Piauí, Maranhão, Bahia and Tocantins, where there is a total deficit of over 5M metric tons, and in Goiás, where there is a deficit of between 5-10M metric tons
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References

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