Venture is making land stewardship pay


Meeting food demand through productivity improvements and responsible practices rather than clearing land for more pasture and crops is considered key to slowing deforestation. Produzindo Certo’s land-stewardship initiative involves annual monitoring to confirm member farms and ranches are following this path. (Photos by Produzindo Certo)

When Juarez Soares accepted a conservation organization’s assistance in improving his land-stewardship practices in 2014, he had recently begun converting his ranch in the Brazilian state of Mato Grosso to a rotational soybean and cattle operation. The organization, Aliança da Terra, has provided ongoing guidance and monitoring to help him boost production on his working acreage while complying with legally required natural-lands protection and a range of other government socio-environmental regulations. The engagement has continued since Produzindo Certo, a for-profit spinoff created by Aliança da Terra, took over the annual monitoring last year.

The improvements, addressing everything from erosion control and forest set-asides to fertilizer storage and worker protections, have been worth the effort, Soares says. They qualified his business to maintain membership in a registry—developed by Aliança da Terra and now managed by Produzindo Certo—listing sources of responsibly produced soybeans and beef for corporate buyers catering to green-conscious customers. That, in turn, has enabled his and other ranches in the registry to keep receiving premium prices for the beef they sell. Says Soares: “The upgrades Aliança da Terra, and later Produzindo Certo, advised us to make made us a far more sustainable business and opened up new markets for our products.”

Conservation organizations in recent years have turned increasingly to economic incentives to further the cause of ecosystem protection. The land-stewardship initiative implemented successively by Aliança da Terra and its for-profit spinoff, Produzindo Certo, offers a notable case in point. Currently, there are 1,600 members of the sustainable land-stewardship registry in all—900 soybean farms and 700 cattle ranches. Together, they account for nearly 1.7 million hectares (4.2 million acres) of soybean cropland and one million hectares (2.47 million acres) of pastureland supporting one million head of cattle. And they are located in two regions—the Amazon, heart of Brazil’s ranching industry, and the Cerrado, home to the bulk of the nation’s soybean production—where relentless agricultural expansion is consuming the former’s native rainforest and the latter’s vast, wooded savanna.

John Carter, a co-founder of Aliança da Terra, asserts the approach holds more promise in slowing Amazon and Cerrado deforestation than conservation efforts sponsored by foreign nonprofits have to date. “Many [projects funded by international nonprofits] have not done much to reduce forest loss in those biomes because their top-down approaches have not addressed the economic needs of private landowners, mainly ranchers and farmers,” Carter says. “[Our] bottom-up approach has addressed those needs by working directly with farmers and ranchers to become more profitable, while teaching them how to better conserve and protect their forested land, an approach which has reduced deforestation in those biomes among our registry members.”

Aliança da Terra, or Land Alliance, was established in 2004. Its main aim was to encourage Brazilian soybean farms and cattle ranches to adopt eco-friendly land stewardship practices by showing them they can improve their efficiency—and sometimes earn price premiums—in the process. Headquartered in the Cerrado state of Goiás, it was founded by Carter, a U.S.-born rancher in the state of Mato Grosso; Anna Francisca Carter, his Brazilian wife; Dan Nepstad of Earth Innovation Institute, a U.S. nonprofit; and Ocimar Villela, an agribusinessman.

When Aliança da Terra created Produzindo Certo in May of 2019, it turned over management of the registry and all associated technical assistance and monitoring to the new for-profit. That left Aliança da Terra to focus exclusively on foundation-funded work it had done in parallel since 2009 to improve Brazil’s wildfire-prevention and suppression capability. This has included training 900 volunteer firefighters who have helped combat fires on the land of registry members, communities and indigenous reserves, as well as training registry members themselves in wildfire prevention.

The shift of the land-stewardship registry to Produzindo Certo represents a bet that a for-profit approach will generate more of the funds needed to fuel expansion of the technical-assistance model. Rather than relying on foundation funding of this work, Produzindo Certo, or Producing Right, signs contracts directly with Brazilian and foreign companies seeking to strengthen the socio-environmental practices of the farms and ranches in their Brazilian supply chains. Analysts say the bet appears to be paying off.

“Creating Produzindo Certo has given this for-profit spinoff the capital to expand its operations by contracting more field team members and improving other [technical assistance] logistics needed to serve a growing registry of farming and ranching members and, as a result, attract new corporate clients wanting to be sustainably supplied by them,” says Richard Smith, a consultant in Brazil for the Washington-based nonprofit Environmental Defense Fund. “By connecting different segments of the agribusiness supply chain, Produzindo Certo has created an innovative business model, based on sustainability, that can be adopted and even upscaled by nonprofit and for-profit companies in Brazil and elsewhere.”

Registry members undergo initial evaluations to gauge how efficiently they are using their land and how well they meet government requirements on everything from agrochemical controls to protection of designated conservation areas. They then receive training and ongoing technical assistance to help improve their productivity and compliance with social and environmental regulations. Efficiency improvements might involve restoration of degraded pastureland and the rotation of pasture and crops to ensure ongoing soil enrichment. Compliance steps, meanwhile, could include the installation of fencing and relocation of water troughs on ranches to keep cattle out of legally required forest-conservation areas and prevent pollution of water sources.

To verify progress, Produzindo Certo conducts annual audits that involve analysis of satellite images against geo-referenced maps as well as visits by field teams. For farmers and ranchers, the reward is improved productivity and documented compliance that can bring them market opportunities—provided the annual registry audits continue to show they are meeting socio-environmental standards.

“We took the maverick approach of using financial incentives, mainly market-based premiums, to encourage rural producers on our registry to become more sustainable and profitable,” says Produzindo Certo CEO Aline Locks. “As a result, since joining the registry, all of our 1,600 members have stopped illegally clearing their land, thus exponentially curbing deforestation. Those who have illegally cleared their land, some 100 former members, have been excluded from the registry since 2004.”

Organizers acknowledge that on some issues they have needed to take a pragmatic approach. For instance, Carter points out that soy farmers’ use of genetically modified (GM) seed varieties, which come in for criticism by environmental groups, does not mean disqualification from the registry. “Our argument for not banning [transgenic soy] among our members is that our main goal is, in part through our technical expertise and assistance, to help members improve land stewardship and be in compliance with socio-environmental laws. And GM soy is legal here and used by over 95% of farmers and nearly all of our soy farmers. So if we banned the use of GM soy by members of our registry, we would have hardly any soy-farming members in the registry.”

Among those who testify to the benefits of ongoing registry membership is Pelerson Penido Dalla Vecchia, president of Grupo Roncador, a large cattle ranching and soy operation in the Cerrado state of Mato Grosso. He says Aliança da Terra and now Produzindo Certo have helped him develop an integrated cattle and soybean operation on land that previously had been used exclusively for ranching.

“When we replaced our cattle ranching operation with a production system that integrates and rotates cattle raising and soy farming on the same land, Aliança da Terra helped us make this conversion more sustainable,” says Penido Dalla Vecchia, who has 75,000 head of cattle and 50,000 hectares (124,000 acres) of cropland. “The soy biologically puts nitrogen into the soil that nutrifies it for pasture planted after the soy is harvested. While the cattle graze on that pasture, their manure fertilizes the soil for planting the next soy crop after the cattle are trucked to market. This integrated system allows us to now produce 41 times the amount of food we did only from cattle ranching, without cutting more forest to do so and with the use of far less fertilizer.”

Crucial to those productivity gains has been the use of a breeding service that facilitates artificial insemination of cattle in Brazil with semen from high-quality Spanish bulls, dramatically improving livestock health, rate of growth and, thus, profitability. (See Q&A—this issue.) Grupo Roncador and 31 other ranches using the service have joined the land-stewardship registry, with Produzindo Certo auditing their progress against an associated checklist of economic, social, environmental, animal-welfare and product-traceability standards. The ranches must phase in compliance with 200 requirements ranging from conservation of land bordering headwaters to ensuring all workers are registered with the Brazilian Labor Ministry.

Thanks to their participation in the registry, 18 of the ranches maintain an exclusive sales relationship with Brazil’s largest supermarket chain, Grupo Pão de Açúcar (GPA), and the other 14 retain a similarly exclusive relationship with the French-owned Carrefour supermarket chain. All receive price premiums from the two chains and are expected soon to have their beef sold under a Produzindo Certo green seal.

“The work of Produzindo Certo is fundamental to fostering and supporting the [GPA] supply chain to help it reach new socioeconomic standards,” says Susy Yoshimura, GPA’s sustainability director. “We aim to support the development of our suppliers and our supply chain as they improve their production practices.”

Targeting soy producers
Produzindo Certo is bringing its expertise to bear on the soybean supply chain, too. Fernando Alves Pereira, a soy producer in the Cerrado state of Goiás, says technical assistance he received from Aliança da Terra’s and later Produzindo Certo as a member of the registry helped him better control and document pesticide use. Such steps and improved land stewardship has helped a number of Produzindo Certo soy farmers fetch premiums on the soy they sell.

“Cargill [the U.S. grain processer and trader] gives us a small premium for the sustainable soy it buys from us and ships to Europe based on annual monitoring and verification that Produzindo Certo conducts on our socio-environmental operations,” Alves Pereira says. “We invest these premiums in everything from buying safer uniforms for workers applying pesticides to training them in how to correctly dispose of pesticide packages.”

Recently Produzindo Certo began working with a coalition of grain companies to reduce land clearing by boosting soy yields and rehabilitating degraded pastureland for farming in two Mato Grosso municipalities with the Cerrado’s highest rates of soy-driven deforestation. The coalition—Soft Commodities Forum, an arm of the Geneva-based World Business Council for Sustainable Development—includes Archer Daniels Midland (ADM), Cargill, Bunge, Cofco International, Glencore and Louis Dreyfus. It has hired Produzindo Certo to engage in the two municipalities with 50 soy farms that have the greatest potential to boost yields responsibly. KfW, Germany’s development bank, has agreed to give Produzindo Certo R$1 million ($180,000) to distribute to the 50 farms next year for their sustainability work. KfW is providing the support under the Reducing Emissions from Deforestation and Forest Degradation (REDD+) program, the U.N.-backed strategy aimed at promoting developing-world forest protection in order to decrease greenhouse-gas output.

Corporate clients
Since it was established last year, Produzindo Certo has signed US$1.4 million in contracts with corporate clients. Most are companies looking to green their agricultural-commodity supply chains—for instance, GPA, ADM and the Anglo-Dutch food producer Unilever. But Produzindo Certo has also penned agreements with companies that do not buy beef and soy yet value the registry as a sustainability yardstick—for instance, the Spanish bank Santander, which does social and environmental risk analyses for credit-seeking agribusiness clients.

Produzindo Certo signed a partnership agreement earlier this year with Traive Finance, which analyzes credit risk in the Brazilian agricultural sector, and Grupo Gaia, a securitization company, to make low-cost, one-year loans available to soy and corn farmers enrolled in the registry. The loans—up to R$6 billion (US$1.1 billion) over three years—will be securitized and sold to investors as “green bonds,” reflecting the best-practice agriculture underlying them.

“Produzindo Certo created the economy of scale needed for its members to access low-cost credit lines that improve their sustainability and facilitate their recognition by the financial sector for doing so,” says Daniela Mariuzzo, executive director in Brazil of IDH, a nonprofit, Dutch-based sustainable-trade trade initiative.

Mariuzzo lauds “Aliança da Terra’s highly original idea of creating a farmer-and-rancher-based nonprofit, and then spinning off a for-profit company capitalized by companies who are its clients and rely on agribusiness members to guarantee a sustainable supply chain.” Its success, she forecasts, “will influence other nonprofits to build new models, not relying on foundation grants, to help finance farmers and ranchers wanting to become more sustainable.”

- Michael Kepp

Fernando Alves Pereira
Sementes Vitoria Farm
Rio Verde, Goiás, Brazil
Tel: +(55 64) 3612-4242
John Carter
Aliança da Terra
Goiâna, Goiás, Brazil
Tel: +(55 62) 3945-6300
Pelerson Penido Dalla Vecchia
Grupo Roncador
Querência, Mato Grosso, Brazil
Tel: +(55 11) 3096-4535
Eduardo Grandal
GMG Import & Export
São Paulo, Brazil
Aline Locks
Produzindo Certo
Goiâna, Goiás, Brazil
Tel: +(55 62) 3945-6300
Daniela Mariuzzo
IDH, The Sustainable Trade Initiative
São Paulo, Brazil
Richard Smith
Environmental Defense Fund (EDF)
Florianópolis, Santa Catarina, Brazil
Juarez Soares
Telles Pires Farm
Sinop, Mato Grosso, Brazil
Susy Yoshimura
Grupo Pão de Açúcar (GPA)
São Paulo, Brazil
Tel: +(55 11) 3886-0533