A landmark deal with Banco do Brasil will help thousands of smallholder farmers in Brazil to farm their land more sustainably.
J.P. Morgan arranged the $800 million loan for Banco do Brasil that will be distributed to farmers across the country. This will fund greater use of no-till farming practices that prevent soil erosion and reduce the need for heavy machinery powered by fossil fuels.
The transaction featured a J.P. Morgan Development Finance Institution assessment, which articulated the sustainable development intentions of the deal and highlighted how it will support the United Nations Sustainable Development Goals (“UN SDGs”) around food security, sustainable agriculture and climate action, including plans to reduce emissions. It forms part of the firm’s target to finance more than $2.5 trillion for climate solutions and sustainable development by the end of 2030.
Climate change has brought huge challenges for Brazil, increasing the occurrence of crop-threatening heatwaves and droughts. The country is the world’s third biggest agricultural producer behind China and the U.S. and is a leading producer of coffee, sugarcane, soybeans, beef and poultry. Its smallholder farmers account for more than 75% of agricultural production and Banco do Brasil is their biggest financier.
Brazil has set a target to reduce greenhouse gas emissions by 53% by 2030 and carbon neutrality by 2050. Agriculture accounts for nearly 40% of Brazil’s total emissions.
“This is a landmark transaction for Brazilian agriculture, supporting the government’s environmental targets and the UN Sustainable Development Goals.”
Rodrigo Carmo
Head of Brazil Global Corporate Banking, J.P. Morgan
“Climate change has made food insecurity and food inflation a reality in recent years,” explained Faheen Allibhoy, global head of multilateral development banks at J.P. Morgan. “Even though Brazil is a leading producer, its agricultural economy is largely connected to global supply chains and exports, meaning there is limited protection for local consumers when prices go up. The deal will help Banco do Brasil with its plans to support more low-carbon farming and the sustainable supply of crops for local communities.”
Loans of up to $2 million will go to smallholder farmers who use conservation agriculture methods, such as no-till practices. This involves seeds being planted directly into undisturbed soil instead of churning the soil with a plow, which helps to reduce soil erosion and retain nutrients. And because these methods do not require a tractor, they also help to cut emissions.
According to the Multilateral Investment Guarantee Agency (MIGA), an arm of the World Bank Group, the loan could finance the cultivation of nearly one million hectares and help avoid almost 12 million tons of greenhouse gas emissions over the deal’s 10-year guarantee period.
“We congratulate Banco do Brasil for this innovative financing and thank MIGA for its support,” said Rodrigo Carmo, head of Brazil Global Corporate Banking at J.P. Morgan. “This is a landmark transaction for Brazilian agriculture, supporting the government’s environmental targets and the UN Sustainable Development Goals.”
This deal is the biggest-ever MIGA deal in Latin America under its Non-Honoring of Financial Obligations guarantee program.
John Meakin, global head of export and agency finance at J.P. Morgan, added: “This MIGA financing is key to support Banco do Brasil’s sustainability plan to promote good agricultural practices and low-carbon agriculture, and showcases our commitment to Brazil and its leading agricultural sector.”
Learn more about J.P. Morgan in Brazil, J.P. Morgan’s Development Finance Institution and our approach to ESG.
Related insights
-
Investment Banking
Investment Banking
Providing investment banking solutions, including mergers and acquisitions, capital raising and risk management, for a broad range of corporations, institutions and governments.
-
Banking
Powering new investments in the clean energy space
July 11, 2024
J.P. Morgan recently partnered with clean energy developer Ørsted on a groundbreaking $680 million tax equity financing deal.
-
Banking
Helping New York Blood Center Enterprises invest in its future
May 16, 2024
J.P. Morgan led a $46 million bond sale to support New York Blood Center Enterprises’ critical infrastructure needs.
This material (including market commentary, market data, observations or the like) has been prepared by personnel in the Investment Banking Group of JPMorgan Chase & Co. It has not been reviewed, endorsed or otherwise approved by, and is not a work product of, any research department of JPMorgan Chase & Co. and/or its affiliates (“J.P. Morgan”).
Any views or opinions expressed herein are solely those of the individual authors and may differ from the views and opinions expressed by other departments or divisions of J.P. Morgan. This material is for the general information of our clients only and is a “solicitation” only as that term is used within CFTC Rule 1.71 and 23.605 promulgated under the U.S. Commodity Exchange Act.
RESTRICTED DISTRIBUTION: This material is distributed by the relevant J.P. Morgan entities that possess the necessary licenses to distribute the material in the respective countries. This material is proprietary and confidential to J.P. Morgan and is for your personal use only. Any distribution, copy, reprints and/or forward to others is strictly prohibited.
This material is intended merely to highlight market developments and is not intended to be comprehensive and does not constitute investment, legal or tax advice, nor does it constitute an offer or solicitation for the purchase or sale of any financial instrument or a recommendation for any investment product or strategy.
Information contained in this material has been obtained from sources believed to be reliable but no representation or warranty is made by J.P. Morgan as to the quality, completeness, accuracy, fitness for a particular purpose or noninfringement of such information. In no event shall J.P. Morgan be liable (whether in contract, tort, equity or otherwise) for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction. All information contained herein is as of the date referenced and is subject to change without notice. All market statistics are based on announced transactions. Numbers in various tables may not sum due to rounding.
J.P. Morgan may have positions (long or short), effect transactions, or make markets in securities or financial instruments mentioned herein (or options with respect thereto), or provide advice or loans to, or participate in the underwriting or restructuring of the obligations of, issuers mentioned herein. All transactions presented herein are for illustration purposes only. J.P. Morgan does not make representations or warranties as to the legal, tax, credit, or accounting treatment of any such transactions, or any other effects similar transactions may have on you or your affiliates. You should consult with your own advisors as to such matters.
The use of any third-party trademarks or brand names is for informational purposes only and does not imply an endorsement by JPMorgan Chase & Co. or that such trademark owner has authorized JPMorgan Chase & Co. to promote its products or services.
J.P. Morgan is the marketing name for the investment banking activities of JPMorgan Chase Bank, N.A., J.P. Morgan Securities LLC (member, NYSE), J.P. Morgan Securities plc (authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority), J.P. Morgan SE (Authorised as a credit institution by the Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) and jointly supervised by the BaFin, the German Central Bank (Deutsche Bundesbank) and the European Central Bank (ECB)), J.P. Morgan Securities Australia Limited (ABN 61 003 245 234/AFS Licence No: 238066 and regulated by Australian Securities and Investments Commission) and their investment banking affiliates. J.P. Morgan Securities plc is exempt from the licensing provisions of the Financial and Intermediary Services Act, 2002 (South Africa).
For Brazil: Ombudsman J.P. Morgan: 0800-7700847 / ouvidoria.jp.morgan@jpmorgan.com
For Australia: This material is issued and distributed by J.P. Morgan Securities Australia Limited (ABN 61 003 245 234/ AFS Licence No: 238066) (regulated by ASIC) for the benefit of “wholesale clients” only. This material does not take into account the specific investment objectives, financial situation or particular needs of the recipient. The recipient of this material must not distribute it to any third party or outside Australia without the prior written consent of J.P. Morgan Securities Australia Limited.