AGROPECUÁRIA RONCADOR LTDA

About RONCADOR

&Green announced its first Brazilian and cattle sector transaction in June 2020. Agropecuária Roncador Ltda (Roncador) is a cattle and soy farmer operating on a farm of approximately 150,000 hectares in the State of Mato Grosso in Brazil. &Green has financed Roncador for the upscaling of its sustainable farming system that integrates crops (predominantly soy) with livestock ( ICL ) to their full farming operations. In addition, the project includes the recuperation of degraded pastures.

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Transaction Summary

NAME

Agropecuária Roncador Ltda (Roncador)

Jurisdiction

Mato Grosso (Brazil)

Sector

Upstream Cattle and Soy

&Green Investment

USD 10 million

Investment Term

8-year Tenor

Financial Structure

&Green provided an 8-year long term senior secured loan

KEY PERFORMANCE INDICATORS

FOREST CONSERVED

64,366 ha

CLIMATE BENEFITS

354,798 tCO₂e*

ECOSYSTEM RESILIENCE

116,351 ha

PEOPLE RESILIENCE

441

PEOPLE BENEFITTING

441

CAPITAL MOBILIZED

USD 106.7 Million

INVESTMENT RATIONALE

&Green invests in projects that approach land management from a regenerative agriculture perspective. Regenerative agriculture broadly refers to the adoption of production practices that understand the availability of the land’s natural resources, increase biodiversity, prioritize soil health and fertility, sequester carbon, and reduce or eliminate the use of pesticides. The principle behind regenerative agriculture is to protect and restore ecosystems’ health, instead of depleting it, therefore contributing to combating climate change, which aligns well with &Green’s vision to transform tropical commodity supply chains.

Roncador’s production blueprint is a great example of how regenerative agriculture practices can be adopted in &Green’s investments.

At the core of the Roncador Landscape Protection Plan is the upscaling of an Integration Crop and Livestock ( ICL ) model: a form of mixed production that simultaneously utilizes part of the land for agriculture, namely soybeans and second-harvest maize, and part of the land for cattle, for the other (approximately) six months of the year. The overarching objective of the ICL model is to transition from monoculture (pasture) production to one that integrates components of different productive systems to achieve increasingly higher levels of product quality, environmental quality and competitiveness. ICL systems are a promising strategy to direct the expansion of pasture and crops towards already deforested areas and promote agricultural practices that can intensify production sustainably. By combining crop and livestock activities in the same area, farmers are able to increase fertility and organic matter in the soil. This favors biomass production and allows for higher stocking rates in pasturelands and higher productivity for grain cultivation. Such increase in the system’s total productivity represents a direct advantage for farmers if it can be translated into higher economic returns and soil conservation over the longer run.

WHAT ARE THE BENEFITS OF ICL?

Ecological & Environmental Benefits

Improved use of natural resources through synergy between animal and plant components;

Improved physical, chemical and biological properties of soil thanks to increase of organic matter;

Greater input efficiency;

Reduced agrochemicals use to control insect pests, diseases, and weeds;

Reduced pressure to clear and open new areas for agriculture;

GHG mitigation resulting from increased sequestration capacity;

Reduced erosion risk.

Economic and Social Benefits

Increased yield and production quality;

Increased annual food production at lower costs;

Reduced production seasonality;

Reduced variability of herd size, less outsourcing needs and reduced sensitivity to market cycle and market prices for procurement;

Increased competitiveness of animal product chains in national and international markets;

Diversified commercial activities;

Enhanced public image of farmers, linked to environmental awareness.

See how regenerative agriculture practices were adopted in the HSJ transaction.

VIEW HSJ

A YEAR IN REVIEW

HIGHLIGHTS

INTEGRATING CROP & LIVESTOCK

Roncador’s Landscape Protection Plan (LPP) is based on the company’s farming system which integrates crop production (predominantly soy) with livestock production (i.e. Integrated Crop and Livestock or “ ICL ”) on all of the farm’s productive areas. Impact targets linked to the ICL model include soy and cattle productivity improvements and annual information sharing activities to support replication of this blueprint within the sector. In 2023, the regenerative practices implemented by Roncador were important to mitigate the adverse effects on productivity caused by extreme heat and rainfall instability in the region. Overall, it was projected that the farm would achieve an average productivity of 66 bags of soybeans per hectare, while the actual result was 53 bags per hectare (ca. 50 in the region of Querência as a whole). However, out of the total 30,000 hectares of planted area, 10,000 hectares delivered a production close to forecast: 64 bags per hectare. At such area, the ICL model implementation is more developed, and, moreover, subject to other regenerative practices such as direct planting and biological pest control.

On the cattle side, productivity has been improved year after year since the 2019 baseline was established. The farm currently has ca. 70,000 heads in an area of 18,000 hectares of perennial pasture, which is equivalent to 3.8 animal/hectare, a number well above the national average of 1.15 and over 2.5x the baseline set forth in the LPP. Moreover, the intensified production system allows animals to be sent to slaughter with 21 at 18 months old (against a national average of 20 at 30 months), materially reducing GEE emission as the production cycle is much shorter than average These results are a clear demonstration of the benefits provided by regenerative practices in agriculture, creating remarkable climate resilience that will further benefit Roncador as the ICL model already implemented matures over the whole area of the farm.

CORPORATE GOVERNANCE IN AGRI-BUSINESS

Fazenda Roncador (as well as Grupo Roncador) has been an established family-owned business, initially set up by Pelerson Soares Penido, and then run by his son and thereafter his grandsons since 1971. &Green was notified that Mrs. Rosa Penido Dalla Vecchia, the controlling shareholder of Roncador Group passed away in 2021 triggering a restructuring of the company and farming operations, which is expected to be completed in 2024.

Our most important pillars are economic, environmental and social sustainability. With the arrival of &Green, we formalized our actions into commitments made publicly and disclosed so that they could be replicated. It was also a great incentive for us to hold lectures, field days, interviews, etc. in order to disseminate and share acquired knowledge, positively impacting a series of producers and people from other sectors. In addition, we formalized our Environmental Management System in a manual that communicates and defines our guidelines and parameters.
We are grateful for the trust and partnership with &Green as it really helped us to better organize our social and environmental agenda and, with this, we were able to create new solutions and evolve a lot.

PELECO PELERSON PENIDO DALLA VECCHIA

President of the Roncador Group

LOOKING FORWARD TO 2024

ONGOING RESTRUCTURE

The ongoing restructuring process, nearing its completion, signals an impending early prepayment of &Green's investment.

REGENERATIVE AGRICULTURE INITIATIVES

Roncador remains resolute in its commitment to advancing the consolidation and expansion of its regenerative agriculture initiatives.

ENHANCING FARM RESILIENCE

These practices have consistently demonstrated their effectiveness as catalysts for augmenting both beef and grain production while simultaneously enhancing the farm's resilience to climatic variations.

ENVIRONMENTAL STEWARDSHIP & ECONOMIC VIABILITY

This steadfast pursuit underscores Roncador's recognition of the intrinsic value and long-term benefits associated with sustainable agricultural methods, aligning with broader objectives of environmental stewardship and economic viability.