South America | Climate Smart Agriculture

Cerrado Circular: how new businesses contribute to nature preservation

21 March 2023 9:00

Woodlands, grasslands and impenetrable rainforests, all home to plants and animals that can’t be found anywhere else: the Cerrado is a unique and expansive nature area in western Brazil. Unfortunately, the exceptional local flora and fauna are under pressure from climate change and deforestation. Rabo Foundation supports a local program that encourages smallholder farmers to improve their standard of living, by starting new companies that preserve nature.

Which challenges does the region face?

Lygia Cesar, Latin America Program Manager at Rabo Foundation: “The Cerrado is a spectacular region that encompasses a quarter of Brazil’s total land area. It’s the most biodiverse savanna in the world. And since many rivers have their sources there, it is essential for the country’s water supply. But like the Amazon basin to the north, the region struggles with climate change and drought. Intensive farming of corn and soy are also exhausting the soil.”

“Smallholder farmers need an economically interesting option for preserving the forest.”

Angélica Rotondaro, Rabo Foundation consultant in Brazil: “Another problem is the pressure on the land, which can result in deforestation. Even environmental enforcement and fines haven’t completely stopped this. So it’s essential for us to offer smallholder farmers an economically interesting option for preserving the existing forest, instead of trading the wood to coal companies and selling the ‘cleared’ area to monoculture players.”

“We were introduced to the first of these initiatives in July 2022, during a visit to the state of Mato Grosso do Sul. A group of local residents wanted to preserve 1,500 hectares of native savanna by selling fruits, nuts and honey.”

What is happening to turn the tide?

Lygia: “After our visit, we heard about the Cerrado Circular Program, which had just been set up by three local organizations: farmer’s cooperative Cooperapoms, the Instituto Cerrado Guarani, and the Climate-Smart Institute. Their goal was to encourage smallholder farmers in the region to set up sustainable businesses that value the products and fruits of the savanna – and that add value to the nature in the process. In October, Rabo Foundation decided to support the program with financing and mentoring of the participating farmers.”

Angélica: “That same month, the organizers called on residents to submit business ideas. Six groups were selected from among the submissions. One group wanted to promote the baru nut outside of Brazil, another came up with a plan to produce honey from the local flowers, and the third wanted to build an ecotourism industry. Some started from nothing, while others hoped to take the next step. But they all wanted to contribute to the preservation of the region’s unique nature.”

What does the Cerrado Circular Program entail, exactly?

Angélica: “From October to January, the participants attended an intensive series of workshops on things like production methods, cost calculation and setting prices: everything they need to commercialize their ideas. Then they received start-up capital to put their ideas into practice. In late January, they presented their products and business plans.”

Lygia: “It’s fantastic to see what the participants put together in such a short time frame. Some went from absolutely nothing to a finished product, complete with logo, proposition and price. That’s amazing, especially when you realize that many of the participants did it all in addition to their day jobs in agriculture.”

“Participants went from nothing to a complete business plan in just four months.”

Angélica: “The second phase of the program started in March. With guidance from Rabo Foundation, the groups received advice on starting their businesses. How do you apply a business plan to an actual business? How many employees do you need? Where can you sell your produce? The groups also received help finding commercial contacts and sales channels.”

“They also learned how the groups can reinforce one another by working together. For example: if the ecotourism company offers the honey company’s products, they can both benefit. And not just them, but the communities around them too. That way, the participants can turn an individual idea into collective profit.”

What economic and environmental impact does the program have?

Lygia: “It ties in seamlessly with what Rabo Foundation believes is important. To start with: it focuses on smallholder farmers. They live in the region in small communities, without access to the financial market. This is a perfect opportunity to help them get ahead. The program also invests in climate-smart agriculture. As the farmers preserve nature and enrich the soil, they contribute to protecting biodiversity while increasing their production – and therefore their income.”

Angélica: “Women also participate in the program, which helps strengthen them economically. Just like young people from the region. Now they see that they don’t have to leave the Cerrado. Since they can set up a company within the region itself, they can contribute to a healthy future for themselves and for their communities.”

How do you see the future of the Cerrado and the smallholder farmers in the region?

Angélica: “I’m optimistic. We’ve already noticed that the program inspires farmers in other communities. For example: a group of smallholder farmers outside the program has negotiated a prohibition on spraying pesticides from aircraft.”

“Another thing that gives us hope is that, thanks in part to Rabo Foundation’s support, the farmers were able to bring the program to the attention of the Brazilian State Secretary for the Environment. That means the program not only contributes to a better life for smallholder farmers, but also gives them a voice and a stronger position politically.”

Lygia Cesar started work as Rabo Foundation’s Latin America Program Manager in 2019. She is an expert in the field of impact investing in the agriculture and microfinance sectors.

Angélica Rotondaro has been active as a Rabo Foundation consultant in Brazil since 2017. She has a wealth of experience with impact investing, sustainable value chains and gender empowerment.

The Cerrado Circular Program helps smallholder farmers build better lives for themselves and their surroundings with their own business ideas. All while protecting the unique savanna ecosystem. That is a strategy that Rabo Foundation believes in, and that we are proud to support.