MILAN – Leading global coffee merchant COFCO International, together with Dutch bank Rabobank’s Rabo Foundation and the Consorcio Cerrado das Aguas (CCA) announced on Wednesday an unprecedented first “impact financing” aimed at water resilience in Brazil’s coffee industry.
COFCO, a member of CCA and one of the creators of the project, will act as guarantor of the initiative and of coffee purchases in the environmentally sensitive and highly productive Cerrado Mineiro region.
According to a statement issued by the consortium, the total amount of the financing will be 1.6 million reais.
The state of Minas Gerais is Brasil’s biggest producer of Arabica coffee. In Cerrado, coffee yields are among the highest in the world, thanks to highly technified growing systems and intensive irrigation.
CCA includes among its members Nescafé, Expocaccer, Nespresso, Lavazza, Cooxupé, CofCo, Volcafé, Stockler, Daterra, and Federação dos Cafeicultores do Cerrado e Cervivo.
The financing follows an impact investment structure in which the producer accesses resources at low interest rates and, in return, provides pre-established indicators of water resilience in the property and watershed, reports Reuters.
The 9% annual rate in the pilot project was made possible by the participation of Fundación Rabo and COFCO, without financial intermediaries, as the buyer of raw materials and guarantor of the operation, the statement also said.
“In order for projects of this kind to be permanent and have durable and replicable results, you need the participation of different stakeholders along the value chain. This was the factor that made Cofco International join the arrangement and involve the engagement of other players,” said the Global Head of Sustainability at Cofco International, Julia Moretti.
“In Brazil, the focus of our action is on the Cerrado because it is a biome that is still neglected by impact investments and because it is important from the point of view of groundwater supply and water supply,” said program manager of the Rabo Foundation for Latin America, Ligia Freire Caesar, quoted by Reuters.
As reported by Reuters, the project will last one harvest and, in this first year, will include 10 medium-sized farms that participate in CEC’s Conscious Grower Investment Program and are located around Petrosinio, one of the largest coffee growing regions in Mineiro.
Each property will receive between 130,000 and 150,000 reais (between $26,800 and $31,000) during this period. In addition, they will receive technical guidance from the consortium for the implementation of field interventions, with a focus on water resilience – considered in the same line of credit.
