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Agroforestry:
worthwhile businesses for restoration
Learn about the operations of Belterra and Caaporã, startups created and
incubated with support and investment from Fundo Vale, which are leveraging the
expected impact strategy of the 2030 Voluntary Forest Commitment of its sponsor,
Vale.
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To
meet the challenge of restoring and protecting 500,000 hectares of Brazilian
jungle by 2030, it is necessary to join forces and jointly build models that
will point the way forward with the ecosystem’s key agents. More than a
challenge, this movement is a pact
between Vale and society, aimed at generating positive
social and environmental impacts, and it has been under way since 2019, led
by Fundo Vale. This movement involves businesses that are aligned with
market logic while yielding benefits for the environment, society and
Vale.
The goal is to protect 400,000 hectares of forest and
restore 100,000 hectares of degraded areas. This distinctive Voluntary
Forest Commitment goes far beyond planting trees. There is also a clear
intention, through a sustainable production model based on agroforestry
systems and organic fruit production, to improve the economic and social
conditions of the entire chain involved, from small producers on the front
line to end consumers.
But how can we achieve such a large
scale? Which companies would accept a challenge of this size? There wasn’t
anything in the market prepared to deal with this demand. So, Fundo Vale
embarked on a journey to strengthen the social and environmental impact
business ecosystem, supporting the creation, incubation and development of
two of the five agroforestry startups that currently make up the business
portfolio created to meet the demands of this bold commitment. Thus,
Belterra and Caaporã were born, and together with other initiatives,
they implemented 1,053 hectares in 2020, providing a proof of concept
for Fundo Vale’s social and environmental impact business
thesis.
In this interview, we talk with Valmir Ortega,
founding partner of Belterra Agroflorestas, and Luis Fernando Laranja,
founding partner of Caaporã. We will find out a little more about how the
two companies have been developing, aided by Fundo Vale’s support and
investment, as well as their initial operations, the challenges posed by the
pandemic, the importance of flexible investment and impact
measurement.
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Please
comment on the importance of agroforestry
systems in the context of large-scale
positive social and environmental impact
planning and Vale’s 2030 Voluntary Forest
Commitment.Valmir
Ortega – Belterra is a
company of rural partnerships. Our operating
model is to establish links with producers to
restore degraded areas and implement
agroforestry. This solution was designed
precisely because it combines a set of positive
impacts encompassing environmental and social
factors, biodiversity, soil and water protection
and the formation of carbon inventories. In
other words, there is a set of related
environmental aspects providing and offering
ecosystem services to society. There are
productive agroforestry landscapes producing
agricultural and forestry products, which manage
to bring this mix of attributes to areas that
were degraded.
Belterra is converting
degraded pasture areas into agroforests,
combining a series of benefits and positive
social and environmental impacts while creating
value for small and medium producers. In other
words, the process contributes more technology,
capital, investments and opportunities for
marketing and commercial
integration.
Belterra’s agroforestry
systems will generate an estimated return of
around 20% per year for the company. In total,
704 hectares were implemented by Belterra,
contributing to the Voluntary Forest Commitment,
between 2019 and 2020. We expect to reach 2,200
hectares of restored areas in
2021.
This year, more than 200
temporary workers engaged with our goal and we
will in due course have approximately 1,500
hectares of cocoa crops, for example. We
estimate that every five or 10 hectares of cocoa
plants will require one permanent worker. That
means around 150 fixed jobs in the next few
years. It is worth mentioning that Belterra’s
business plan sets out the goal of having 40,000
hectares of cocoa crops by 2030, generating
between 60,000 and 80,000 metric tons of output
per year and directly employing 4,000 people. It
is a labor-intensive activity that will improve
income distribution. We already have 21 rural
properties operating in four states: Rondônia
(2), Pará (2), Bahia (6) and Minas Gerais
(11).
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Belterra’s
agroforestry systems
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Luis
Fernando Laranja – In
recent years, we at Caaporã have developed a
thesis to integrate the production of
different animal proteins with agroforestry.
The first initiative we worked on involved
milk, through Guaraci, an operation that
started in 2017 and is now mature. The goal
was to obtain animal welfare and carbon
neutrality certification. The integration of
an agroforestry system with milk production
allowed us to achieve animal welfare
together with carbon sequestration and
neutrality. Thus, we obtained three types of
certifications: organic, animal welfare and
carbon neutrality. This initiative gave rise
to some other projects, and that was when
Fundo Vale started to support us, aiming at
other types of animals. So, we developed
pilot projects with pigs, chickens and
cattle (both beef and dairy). Caaporã has
now started up with the support of Fundo
Vale and this partnership is fundamental in
structural terms.
As part of the
Voluntary Forest Commitment, Caaporã’s work
led to 350 hectares of restored habitat by
2020, and in 2021 our target is to reach
1,500 hectares. In all, five rural farming
organizations are directly involved in this
process
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How
is the growing of trees becoming an
indispensable practice for the development
of activities in the countryside in a more
sustainable way?
Valmir
Ortega – I think that the
main challenge in Brazil for the development
of agroforestry models, models with trees as
a productive element in rural properties, is
related to our short-term culture. In other
words, we Brazilians, in general, whether in
the city or in the countryside, have a
short-term vision for doing business.
Everything has to be immediate and very
fast. At Belterra, we try to design
production models with agroforestry systems
that start producing from the first year.
The reason is precisely to deal with this
cultural barrier that we have in the
country: a short-term vision of revenue,
income and economic opportunity. Thus, we
are planting short-cycle species of crops
that require between three months and one
year to harvest, such as corn, soybeans,
beans, rice, peanuts and cassava. However,
from the point of view of the model as a
whole, we need a medium and long-term
vision. We are talking about cocoa, açaí,
cupuaçu, species that will reach their
optimum production and balance from the
fifth or seventh year of
cultivation.
Another point is
that models involving tree production
systems require greater investment in the
beginning and they take longer to generate
consistent revenue. Therefore, the
investment cost at the start of the
operation is much higher and the breakeven
time is longer. This requires a different
type of investment and a different capital
need. After all, not all farmers can
wait.
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“The
logic is always to find different reasons to
plant trees. In the end, we are obsessed
with planting trees. We are planting out of
conviction and we are creating a model that
also makes sense from an economic point of
view.”
Luis Fernando Laranja,
Founding partner,
Caaporã
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Luis
Fernando Laranja – Adding
tree growing also has multiple objectives,
ranging from carbon sequestration to support
for biodiversity and conservation of natural
resources. It is worth mentioning that some
trees have two or three purposes. For
example, we are planting avocado trees,
which have three functions. First, they
produce avocados, which we can sell. Second,
they are leafy and well-structured trees, so
they provide shade, which improves animal
welfare. Third, they also help with carbon
sequestration, as they are robust and
long-term trees, essential factors to enable
carbon sequestration. We are also planting a
variety of eucalyptus trees. We have about
15 varieties available. That is because when
we plant three different types of eucalyptus
on one property, they flower at different
times. That is good for the small set of
beehives we have on the farm, producing
honey.
The eucalyptus trees also
provide shade and sequester carbon, as well
as boosting honey production. The logic is
always to find different reasons to plant
trees. In the end, we are obsessed with
planting trees. We are planting out of
conviction and we are creating a model that
also makes sense from an economic point of
view.
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“This
type of investment by Fundo Vale is very
important. After all, this investment
prioritizes impacts, it is patient and it
has greater risk exposure, which is crucial
to create this type of business.”
Valmir Ortega,
Founding partner, Belterra
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How
has Fundo Vale’s impact investment
transformed your company’s
operations?
Valmir
Ortega – In the case of
Belterra, it has been decisive. After all, we
received seed capital of R$10.5 million to
contribute toward the Voluntary Forest
Commitment in 2019 and 2020. For 2021, we have
received further investment of R$25 million. We
are a fledgling company that has demonstrated
enormous potential for business impacts, but we
had no prior track record for raising capital.
This type of investment by Fundo Vale is very
important. After all, this investment
prioritizes impacts, it is patient and it has
greater risk exposure, which is crucial to
create this type of business. So, if we think
about the challenge facing Brazil, to restore 12
million hectares and create new businesses
linked to the forest chain, we will need more
investments like this one. In other words, new
funds, in addition to Fundo Vale, that are
willing to expose themselves to the risks of new
businesses. That doesn’t just mean businesses
that were set up recently, but also new chains
of enterprises that will be structured, which
therefore have a high degree of uncertainty and
aspects to be structured. It is necessary to
have appropriate interest rates and expected
returns, a balance between return and impacts.
After all, this is money for profit and it can
generate greater impacts. We have
also raised funds from the Good Energies
Foundation in Switzerland and we are in advanced
negotiations with a Brazilian impact investment
fund and an American climate fund, for
investment rounds this year. These funds are
geared toward the climate, reductions in
greenhouse gas emissions and the pursuit of
solutions based on nature. This is our main
investing public. It is also important to point
out, regarding the viability of our business,
that Belterra’s agroforestry models foresee
breakeven in the third year of
implementation. Luis
Fernando Laranja – Among all
the aspects, the environmental impact combined
with social impact stand out. The environmental
impact is very logical, since, with the support
of Fundo Vale, we took a step forward in our
existing milk operation, for example, which
culminated in the launch of NoCarbon
Milk this quarter. We were
able to plant more trees and accelerate the
carbon neutralization process. These models also
proved viable in the pilot projects we ran last
year with Fundo Vale, facilitating the
engagement of producers. For example, we are
finalizing a partnership with six small dairy
farmers who agreed to enter into a carbon
neutrality certification plan. Thus, this
production model will have a social impact on
small producers, generating better income
opportunities in the countryside. As for the
feasibility and development of Caaporã’s
activities and projects, it is important to say
that each one has a specific breakeven period.
For example, our milk-related activities should
reach this point by the end of 2021, while the
others should reach breakeven within two to
three years. In addition to the investment made
by Fundo Vale, today we are also talking to and
receiving contributions from other funds.
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What
impacts have Belterra and Caaporã, in their
work with the Voluntary Forest Commitment,
been bringing to society in the midst of the
pandemic?
Valmir
Ortega – I believe there have
been several aspects related to this. We had to
learn to work remotely and therefore there was
reeducation in our team and it had to happen
quickly. This process happened at Belterra and
Caaporã. We were building the company and
expanding our operations at the same time. And
this adaptation continues as the pandemic is not
over yet. Faced with restrictions on mobility,
we created conditions to mobilize networks of
trust, partnership networks that would allow us
to act in certain regions without going there in
person. That required us to accelerate these
decentralized work formats, hiring high-quality
service providers and establishing local
partnerships. From the very beginning of
Belterra, we have chosen to work in four
different states – Rondônia, Pará, Bahia and
Minas Gerais – and this choice would already
have required a decentralized model at the
company. The pandemic radicalized this: it
forced us to start operating in this way, with
no preparation time. So, we had a steep learning
curve, but we adapted well. On the other hand,
there was a positive aspect: the crisis created
by the pandemic made the planet’s environmental
and climate risks more evident. Consequently, it
has made it easier to quickly engage companies
and investors to create and support solutions
that minimize or mitigate these risks. Thus,
solutions such as Belterra’s have become
attractive.
Luis
Fernando Laranja – There is
no way to separate the social from the
environmental in our activities. We are at an
early stage, as we only started last year, but
our approach is always to include family farmers
in the process. In other words, we want to
consolidate our pilot projects and spread this
technology, through an open, public platform. In
this regard, we are establishing an agreement
with Embrapa to analyze life cycles and carbon
emissions in organic milk production. We will be
the first organic milk farm model in Brazil that
will have this type of analysis. Our platform
will have another very important impact element:
the generation of public knowledge.
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NoCarbon
Milk
Caaporã, in partnership with
the Guaraci Agropastoril farm (part of a larger farm called
Fazenda do Toca), launched NoCarbon Milk this quarter. It is
the first carbon-neutral milk in Brazil, produced from
agropastoral systems and full of added value due to the
growing of trees and the mix of forestry and farming. The
milk has three certifications: organic, animal welfare and
zero carbon.
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Alignment
with Brazilian context
Brazil has more than 5 million rural establishments, largely
made up of family farmers, who in most cases lack access to
capital, knowledge and technology. They often also face barriers
to fairer and more transparent sales conditions. In its
activities with small and medium producers, Belterra offers
three types of contracts to these farmers:
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Restoration
of degraded areas through social and environmental impact
businesses
In line with the Voluntary Forest Commitment’s goal to restore 100,000 hectares
of devastated areas, Fundo Vale created, incubated and developed two startups to
meet demand: Belterra and Caaporã. This involves an unprecedented, innovative
and very challenging proposal to implement agroforestry systems on a large
scale. To achieve the Voluntary Forest Commitment, the strategy was to start
with a proof of concept, which in 2020 reached 1,530 planted hectares. By the
end of 2021, we will reach another 5,000 hectares. We will continue to ramp up
until we reach 100,000 hectares of restored areas in 2030, while generating
social and environmental benefits for the entire chain involved.
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Expectation
of recovered areas for 2021
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