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Regenerativelivestockandagriculture:examplesfromtheMAISProgram

ITC/UNFCCC,Geneva

29th-31stOctober2018

DanieleCesano

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2.Theenvironmentisanexternality

Thepresentandthefutureoffood…

3.Farmingdisrespectsnature’slaws(àclimatechange)

4.Farmersproduceunhealthyfoodsindegradedenvironments…

5.…forprocessingcompaniesthatarejustcommercialactorwithlimitedbenefits(employment+taxes)

6.Financialinstitutionssupportanagri-systemthatisdeterioratingrapidlyourenvironmentandfood

7.Thegovernmentbelievesitcan(andhasto)changethesystemthroughsubsidiesandregulations

1.Thesoilisdegradedtomaximizecurrentproductivity

2.Theenvironmentistheassettoenableproduction

1.Thesoilisrestoredtosustainingsupplies

3.Thefoodchainsequesterscarbon

4.Farmersproducehealthyfoodsinhealthyecosystems…

5.…forprocessingcompaniesthatbecamesocioeconomicforcesinalowcarbonagri-economy

6.Financialinstitutionssupportsustainableinnovations

7.Thegovernmentreducessubsidiesandincentivizeinnovations

Fazendasintropica“OuroFino”,Bahia,Brazil

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Firstexperienceswithlargescaleagroforestryandregenerativeagriculturesystemsarehappeningalready…

FazendaMatadoLobo,RioVerde(GO)Foto:F.Pasini/LifeinSintropy

ThesystemsproducesMombaça,coffe,papaia,beans,eucaliptus,banana,cedo,mogno,arueira,mangaingà,gliricidia

Howtomainstreamregenerativeagriculture?

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WhatwedoØ  We incubate multistakeholder ecosystems to implement the MAIS Program, a

climate smart system that transforms vulnerable s/m farmers into sustainable,resilientandlowcarboncorporatesuppliers(marketintegration)

Ø  Main impacts: production increase, lower costs, less production fluctuation,reduction in the environmental footprint, ecosystem services restoration andinclusionofsmallandmediumholdersinmoresolidandstructuredvaluechains.

Ø  Our main partners/customers are primarily corporations (mainstream) andcooperatives; we operate in partnership with financial institutions (impactinvestors)

Ø  Weuseblendedfinancesolutionstobringdevelopmentandtransformrealitiesinchallengingenvironments

SnapshotØ  Phase1/2006-2013:Researchand partnership coordinatedbyanNGO (REDEH)

withtheobjectiveofbuildingclimateresilienceinthevaluechainoffamilyfarmersinsemiaridBrazil

Ø  Phase 2/2014-2018: conception and prototyping of the MAIS Program with 2farmers’cooperatives fundedthroughan IDBgrant.Focus:bovinemilkand lambmeatvaluechain,100farms,2000Ha

Ø  Phase 3/2018-2022: Scaling up. Several commercial systems are beingimplemented to supply livestock and additional products coming from theregenerativemodeltoagro-industries

AdaptagroupandtheMAISProgramoverview

Mainpartnersandsupporters

MAISprogramimpact•  >30%production•  20%costreduction•  30%betterpastureland•  30%lessproductionoscillations•  2yearsROIonthefarmer’sinvestment

1.  2005:Wisions(WupperhaltInstitute)2.  2005:UNHabitat3.  2008:SEEDAward-UNEPandUNDP4.  2013:CelsoFurtado,MinistryofNational

Integration5.  2014:Mandacaru,IABS6.  2014:PremioODM/Millenium

DevelopmentGoals,BrazilianPresidencyOffice

7.  2016:FONTAGRO/IDBPrize8.  2016:Besttechncialassistanceservice–

BahiaGovernment9.  2016:Bestpractice,BahiaGovernment10.  2017:BestRuralImpactBusiness,

INCLUIR,UNDPandSEBRAE11.  2017:Veja-SE,VEJAMagazine–amongthe

3finalistinthe“Innovation”category12.  UNFCCCClimateAction/LighthousePrize

Prizes

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BusinessmodeloftheMAISProgram

ADAPTA

Data

4.Capexfor• Structure• -Production• -Environment

IMPACTFUNDSorDEVELOPMENT

BANKS

$

PRONAFcreditline(BNDES)

CooperativeorCompany

(multinational) Market

BANKorFUND

$

$

$Product

$

$

Mgmtsupport

familyfarmers

$

$

Option2:

retentionand

directpayment

inbulk($)Agreem

ent1.Designof

regen.system

2.Technicalassistance

3.Monitoringandevaluation

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Casestudy1:milkandmeatproductioninsemiaridBrazilSemiaridBrazil(Sertão)isthepoorestregionofBrazilØ  23million people living in a biome (Caatinga) with yearly droughts (600mm/y) and

recurrentdrieryears (<400mm/y);massivemigrationtourbanareas inS/SEBrazil (≈50%overthepast50years)

Ø  Climatechangecaused30%rainfalldropand1.75°Cincreaseinaveragetemperaturein1decade

Ø  60%lossofforestcoveronaverage,with90%peaksinsomeregions(1decade)

Today extensive cattle is the main responsible of deforestation,aggravatingthelocalclimatechangecomponentØ  Rain-fedagricultureisnolongerviable;farmersrelyonextensivecattle,accelerating

desertificationØ  Todaylivestockaccountstothegreatestmajorityoffarmers’incomeinmostregions

(80%)

Keyissuesfor2farmerscooperatives(FrigbahiaandCoopsertao)Ø  Obsolete/inappropriateproductionsystem,basedonextensivepastureandimportedinputs

•  Degradation,highproductionfluctuations,lowprofitability,lowfoodandwatersecurity

Ø  Largeproductionfluctuationsthatdestabilizelocalvaluechainsand•  Lackofworkingcapital;lackofmanagementskills;hurdleoffinancialliabilities

Ø  LackofTechnicalAssistance(TA)obsoletepublicprogramsreachingoutonly5%offarmer…

•  Focusonsubsistence farmers; inefficientpublicprogramswith1 field technicianevery60/80 farmers; lowqualificationoftechnicians;nofocusonimpacts;nomonitoringofresults

Ø  Limitedandbureaucraticaccesstocredit,disconnectedfromactualdemand/needsandTA;

•  Bureaucratic credit system; disbursement does notmatch agronomic calendar; very limited effect (or evennegative)ifnotlinkedtoplannedoperations

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ThestandardizedClimateSmartSystemforsmallfamilyfarmersintheCaatinga

Opuntia-ficus2Hectares

Silvopastorialsysteminrotationalpasture(timber,fruitsandforage)

Fishculture1000tilapiaevery6months20-50m3ferrocementtank

Ferti-irrigation(drip)forthefirst12/18months

500m2vegetablegarden

Watersource(earthdamorwell)Waterconsumption:5-10m3/week

Honeyproduction Smallanimals+eggs

Bestanimalmanagementstrategies(semi-confined+pasture)

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Rainwaterisconveyedtoasuperficialstoragethroughcontourlines.Thewateristhenusedtododripirrigationwithminimalwatervolumes(5to10m3perHaperweek)linesofdifferentforagetrees.Thetreesareprunedandprovideanexcellentsourceoffibreandproteintotheanimal.Thisintensifiesalotproduction,decreasingtheareabyatleasthalf,regeneratesthesoil,sequesteringcarbonandcreatingamoreresilientenvironment.

Day1 Day10

Day20 Day30

Day40 Day60 Day70

ImpactonenvironmentandpastureofMAISsystem

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IntegrationofpasturewithothersourcesofincomeTraininganduseofsmallmachineryforhigheryield

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EnvironmentandSocialBenefits/Impact

MaingoalsØ MoreproductionØ LessproductionoscillationsØ LowerlogisticcostsØ BetterproductqualityØ ReducedcarbonandwaterfootprintØ CapacitybuildingØ SocialinclusionØ ReducedruralexodusØ NewworkforceØ WomenempowermentØ Newdignity,proudandhopeforruralworkersØ SubstantialfamilyincomeincreaseØ -EnvironmentalrestorationØ BetteruseofsoilØ Contractualagreementstosupply

Numberofproducers Nr 100Costperproducer/farmer R$/month 400TermoftheProgram(months) Nr 36

Totalcostofa3yearsProgram R$ 1.440.000Av.annualcost R$/year 480.000

BENEFITSTOPRIVATESECTOR-DAIRY/MEATlogisticcostsreduction R$/year 187.868Avoidedlossduetoreductionofsupplyvolatility R$/year 1.552.500SUB-TOTAL R$/year 1.740.368

Av.increaseofincomeperproducer R$/year 1.574.063Avoidedcost,mechanization R$/year 1.697.250SUB-TOTAL R$/year 3.271.313

BENEFITSTOPUBLICSECTORDelinquencydrop R$/year 89.000Icreaseoftaxinflowoninputs,technology R$/year 90.000Increaseoftaxinflowonproduction R$/year 1.101.844Deliveryof"BolsaFamilia" R$/year 39.312Reductionoftechnicalassistance R$/year 60.000Avoidedcostofprofessionalcapacitation R$/year 32.000SUB-TOTAL R$/ano 1.412.156

TOTAL R$/year 6.423.836

SHAREDBENEFITSMovimentaçaoadincionalnaeconomialocal R$/ano 600.000Trabalhosindiretosformaisgeradosnaeconomia Nr 9Novostrabalhosdiretoscriados Nr 38Carbonoadicionalarmazenado R$ 919.800TOTAL R$/ano 1.519.800TOTALBENEFITS R$/ano 7.943.636

BENEFITSTOPRODUCERS

AVERAGEADAPTACOST

MainachievementsØ 64%increaseinproductionØ 204%increaseinfarmers’incomeØ 30%restoredpasturelandØ 2yearsofherdfoodsecurityØ increasingthesustainabilityof2farmer's’cooperativesØ 30%ROIonfarmers’investment

•  Cooperatives:FrigbahiaandCoopsertao•  Funder:InteramericanDevelopmentBank•  Credit:BancodoBrasilandSICOOB

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Casestudy2:diarymultinationalinsoutheastBrazil(undisclosed)

KeyissuesfordiaryfarmsinsouthernMinasGerais,AtlanticForestØ  Highdependencyonlargescalefarmers,implyinghighrisksforcartelsandhighlogisticcosts(+9%)

Ø  Decreasingnumberof farmersbecauseofobsoleteproduction system, lackof technicalassistanceandlowmilkquality

Ø  Environmentaldegradation,underminingpastureandcrop(corn)productivity

Ø  Increasingriskofrecurrentdroughtsbecauseofclimatechangeleavingmostdiaryfarmerscompletelyunpreparedtodealwiththesituation

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Projectobjectives:2019-2022

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Projectfinancialsandimpacts

Farmer’sproductivity

Doubling(200l/dto400l/d)

Netincome

USD$200toUSD$1500

Carbonemissions

Closetobeneutralized

Sustainableland

management

100%ofthefarmwithyouthandwomeninclusion

SDGs

Financialviabilityoftheprogram

Paybacktimeof5years

Farmer’scredit

30%ROI

Ifthe15largestdiarycompaniesinBrazilwouldadopttheMAISProgramon100%ofitsvaluechain,BrazilianGHGemissionswouldbereducedby4%withanestimatedmarketopportunityofUSD$4billions

AGoldStandard

Sustainablediaryproductiontobecomeasupplier

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ContactsDanieleCesano,ManagingPartner

Ø  dcesano@adaptagroup.comØ  Tel/Whatsapp:(+5521)96674.5749

www.adaptagroup.com