A loan to a dairy co-op in Brazil will mark the beginning of a collaboration to improve Brazilian smallholder livelihoods. The initiative by Sicredi and Rabobank Foundation is part of our Kickstart Earth program.
“At five liters a day, the average yield per cow in Brazil is still very low compared to other countries,” says Cristieny de Souza Paiva, an agribusiness development consultant at Sicredi. Sicredi is one of the largest cooperative financial institutions in Brazil, and is mainly active in the agricultural sector.
In 2017 Rabobank Foundation signed a Letter of Intent with Sicredi to join forces and support smallholders through a combination of know-how, networks and credit. “The partnership means we can provide more loans to our members to increase yields and incomes,” adds de Souza Paiva. Together, Foundation and Sicredi have loaned €150,000 on favorable terms to Co-opnoroeste in Mato Grosso state, as well as awarding the coop a technical assistance grant of €50,000.
“A cow that spends all day in the hot sun won’t produce much milk”- Eva Teekens, Program Manager Brazil and Africa at Rabobank Foundation
Investing in shade
“Mato Grosso is one of the hottest regions in the country,” says Eva Teekens, Program Manager Brazil and Africa at Rabobank Foundation. She visited Mato Grosso in January 2018, during the ‘cooler’ season. It was around 34°C during the day. “A cow that spends the whole day in the hot sun won’t produce as much milk as one which has shade available. That’s why providing shade is one of the first things you do to invest in dairy producers in this region, followed by better fodder.”
She explains that once those are put in order, farmers can think about investing in breeding, electricity and infrastructure such as fencing them in, in order to prevent the cows from polluting local waterways. The next stage is enabling iCLF rotation to increase biodiversity and climate resilience.
“People assume that Brazil does not need development aid because it's an emerging country,” says Teekens. “But in certain areas the farmers are as poor as African farmers while their costs are much higher.”
Smallholders in Mato Grosso, for example, do not have enough money left over after paying their bills to save, which makes it difficult to invest in their farms. To make matters worse, credit is almost impossible to obtain, mainly because few farmers have all the required documents. “The largest challenge for us is the lack of land deeds,” says Ricardo Amadeus, Manager of the Sicredi branch in the town of Araputanga, Mato Grosso. “The many smallholders who don't have deeds have no formal access to credit.”
“The most important thing is the contact with the farmers”- Eva Teekens, Program Manager Brazil and Africa for Rabobank Foundation
A question of trust
Sicredi is one of the largest cooperative financial institutions in Brazil, comprising 116 credit unions and about three million customers. Its strong roots in small-scale agriculture make it an excellent partner for the Rabobank Foundation. Foundation’s mission is to support disadvantaged groups with money, technical assistance and access to networks.
“Sicredi has their co-operatives in place,” says Teekens. “They've got their agents and their loan officers talking to farmers on the ground. So they provide infrastructure, local knowledge and technical assistance. There is a lot of trust involved and the most important thing in a deal like this is the contact with the farmers.”
WWF and deep research
The partnership between Sicredi and Rabobank Foundation falls under the Earth theme of Rabobank's Kickstart Food program. The program promotes the transition to a more sustainable food and agriculture sector. The initiative dovetails with the wider aims of organizations like the World Wide Fund for Nature (WWF).
Suitable additional projects for collaboration between Sicredi, Rabobank Foundation and the WWF are currently being explored. The Foundation is also financing a research team to investigate the potential for more such sustainable investment in Brazil. The results will be presented in São Paulo, Brazil in July 2018 and at the inaugural Global Research Alliance for Sustainable Finance and Investment conference in Maastricht, the Netherlands, in September.