Hacienda San Jose (HSJ) is an innovative cattle business that cultivates and disseminates superior genetics and beef production in the Vichada region, located in the eastern Colombian plains. On 31 December 2021, &Green and HSJ concluded a COP 30 Billion (approximately USD 7.7 million at the time of execution) 12-year long-term senior secured loan to support HSJ’s ambition to disrupt the cattle sector in Colombia and become the market leader in sustainable deforestation-free beef production. As of 31 December 2022 HSJ has access to a USD 7.7 million facility as they unwound the hedge provided the previous year.

This transaction marks &Green’s first investment in Colombia, in a sector which is associated with poor land management, deforestation, and inefficient farming practices across the country, including in and around the Amazon biome.

NAME
Hacienda San Jose (HSJ)
Jurisdiction
Colombia
Sector
Cattle
E&S Risk Category
A
&Green Investment
USD 7.7 million
Investment Term
12 years
Financial Structure
&Green provided a 12-year long term senior secured loan
Impact Targets
Up to 180,000 hectares of land sustainably intensified
Up to 27,000 hectares of forest protected and restored
Knowledge sharing with other farmers, employment creation, community engagement

KPIs

&Green’s investment in HSJ aims to help transform the Colombian cattle sector, which is characterized by inefficient management practices, and associated with deforestation and ecosystem degradation. HSJ was operating on approximately 8,800 hectares of land at the time of investment from &Green, and during the period of the loan, the business intends to expand to have influence over up to over 150,000 hectares of productive land. HSJ’s expansion strategy involves acquiring land, implementing its sustainable development model, and then selling productive land in approximately 1,000-hectare units to private buyers. Buyers must commit to long-term operational and sustainability management under HSJ’s guidance.

HSJ commits to protect all forest areas under its current and future management; an area of up to 13,500 hectares of gallery forest. In addition, HSJ will set aside an equal number of hectares for forest restoration, promoting the natural regeneration of savannah next to the gallery forest. This allows for forest regrowth and serves as a buffer for the conservation areas.

HSJ will catalyze the development of the cattle sector in Colombia by expanding its sustainable intensification model, protecting and restoring forest, and fostering social inclusion and knowledge sharing.

HSJ’s production blueprint exemplifies how regenerative agriculture practices can be adopted in &Green’s investments:

Cattle ranching in Colombia’s Vichada region typically follows an extensive and low-intensity management approach, on large areas of land, with seasonal burning practices. This has led to detrimental effects on soil health, water management, and CO2 emissions from savannah grasslands. Data on fire incidents is alarming, with every hectare of grassland experiencing repeated burning, hindering the natural progression of the ecosystem. Over the past decade, more than 70,000 fires have been recorded in the project landscape .

HSJ’s Landscape Protection Plan, targets, developed together with &Green, include:

See how regenerative agriculture practices were adopted on Roncador’s farm:

HOW &GREEN’S TECHNICAL ASSISTANCE WAS USED IN THE HSJ TRANSACTION

&Green supported HSJ using the Technical Assistance (TA) budget to support its (prospective) clients design the Land Acquisition Tool (LAT) in collaboration with three organisations: Climate Focus, GANSO , and AMPLO.

Climate Focus is an international green advisory company who partnered with International Center for Tropical Agriculture CIAT to form GANSO. GANSO focuses on transforming degraded pastures into sustainable landscapes. AMPLO is a Colombian Environmental, Social and Governance (ESG) consultancy who contributed to the LAT social component by conducting a social risk assessment and stakeholder mapping exercise.

The LAT is designed to guide HSJ in its land acquisition processes. The LAT integrates the IFC PS , Aval GANSO requirements, and additional social safeguards, including screening for connections to armed groups, into a comprehensive checklist. LAT checks are made in a two-step process: an initial GO/NO GO on a desktop quick-screen which requires minimal resources, followed by a more thorough investment evaluation process. The evaluation requires site visits, stakeholder consultations, and a cost/benefit analysis to inform HSJ’s acquisition decision. The LAT tool has been integrated into HSJ’s existing systems, covering operational, financial, and legal checks.

HIGHLIGHTS

Expansion

As part of HSJ’s ambitions to roll out their sustainable cattle ranching model across the landscape, the company acquired new properties in 2022 and 2023. This has expanded their forest conservation area to 687 hectares of gallery forest, and their savannah restoration area to 1,010 hectares. HSJ started the development of these properties, using their regenerative practices to improve the pastureland and putting in place the infrastructure required for the sustainable management of the plots. The cattle is expected to be brought into the plots in mid-2024.

Sustainable livestock production certification

HSJ continues to be certified against the Aval GANSO standard, which is a Colombian certification programme that aims to convert degraded pastures and soils into sustainable and productive landscapes.

Financial Update

Revenue decreased by 9% to COP 15.5 billion in 2023, while EBITDA decreased by 9% to COP 2.1 billion. EBITDA margins remained stable at 14%, compared to the prior year. Over the course of the year the Colombian Peso strengthened significantly against the US dollar, resulting in an increase of 15% in EBITDA and revenue measured in USD.

In 2023 we initiated the second phase of our project, which consists of an associative ecosystem of sustainable farms, following Hacienda San Jose’s Nelore Short Cycle genetics and sustainability standards. This year (2023) we delivered the first 2 farms to independent investors and expect to deliver other 2 in 2024. This is part of our plan to expand our operations in the region, developing a sustainable cattle supply chain on under-utilized land. We made great strides on the regenerative pasture agriculture, under the scientific guidance of International Center for Tropical Agriculture (CIAT) and Biodiversity.

PAULO MOREIRA

CEO OF HSJ

LOOKING FORWARD TO 2024

ENVIRONMENTAL AND SOCIAL MANAGEMENT SYSTEM

In 2024, HSJ will work on the finalization of their Environmental and Social Management System (ESMS), to secure the governance of their current and future operations.

SUSTAINABILITY DIRECTOR

In early 2024, HSJ hired a new Sustainability Director, who will be instrumental in the finalization and implementation of these systems.

SUSTAINABLE CATTLE RANCHING CERTIFICATION

2024 is also the year in which the company’s sustainable cattle ranching certification (Aval Ganso) expires and a new audit will take place. We expect HSJ to get recertified for another two years.

INITIATIVES

Several initiatives are in the pipeline for 2024, including land tenure training, a study of the restoration potential of HSJ’s buffer zones, and a landscape-wide fire management program.

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