Financing Sustainable Agriculture in the Cerrado Biome

This report by Climate Policy Initiative/Pontifical Catholic University of Rio de Janeiro (CPI/PUC-RIO) analyzes the financial architecture supporting agriculture in Brazil's Cerrado biome, with a specific focus on the MATOPIBA region. It evaluates the effectiveness of subsidized rural credit and emerging blended-finance instruments in aligning agricultural production with zero-deforestation and sustainability goals.

• Subsidized rural credit flows to the Cerrado are substantial but disproportionate to production value, particularly in MATOPIBA. Between 2020/21 and 2023/24, the Cerrado received R$ 198 billion in subsidized credit, representing about 36% of Brazil's total rural credit. MATOPIBA received R$ 48.59 billion (US$ 9.1 billion) during this period; while the region generated approximately 14.5% of agricultural production value, it received more than 32% of the financing volume.
• Sustainable subsidized credit is limited in scale and highly concentrated among large producers. From 2020/21 to 2023/24, sustainable subsidized credit accounted for only 5.7% of total rural credit in the Cerrado. The RenovAgro and ABC programs, the primary sustainable lines, show larger average loan sizes (around R$ 1.2 million per installment) compared to other programs (R$ 700,000 to R$ 750,000), suggesting a bias toward large-scale farms.
• There are significant gaps in the territorial coverage of sustainable credit. Only 40% of municipalities in the Cerrado had contracts under the RenovAgro/ABC Program, and 53% of municipalities showed no sustainable credit lines under the National Program for Strengthening Family Farming (PRONAF) during the analyzed period.
• The rural credit market in MATOPIBA is dominated by a few institutions, which limits competition and access to sustainable finance. Banco do Brasil, Banco do Nordeste, and Banco da Amazônia hold 85% to 90% of total subsidized rural credit in the region. In the sustainable segment, 45.5% of municipalities have either only one institution offering RenovAgro/ABC or sustainable PRONAF contracts, or none at all.
• MATOPIBA relies heavily on Constitutional Financing Funds (FCFs), which creates a transparency gap regarding sustainability. FCF credit accounts for more than 62% of subsidized credit in MATOPIBA. Because the SICOR database provides restricted information on FCF lines, it is difficult to distinguish sustainable from non-sustainable subprograms, meaning sustainable finance may be underestimated.
• Blended-finance instruments show potential to complement public credit but face scale constraints and high competition from the economic gains of deforestation. The report analyzed nine instruments ranging from R$ 20 million to over R$ 1.5 billion. A primary barrier is that the financial incentives offered by these instruments are small compared to the immediate economic gains farmers obtain through deforestation.
• Successful blended-finance approaches in the Cerrado often move beyond competitive pricing to include risk mitigation, technical assistance, and value chain partnerships. Examples include the use of insurance and guarantees (Green CRA Tech, AGRI3), simplified credit assessments (GAN Fund, RCF), and flexible loan terms with extended grace periods (Reverte Pasture Recovery Program).
• Several structural barriers hinder the scaling of private and blended finance in the region, including high Brazilian interest rates, complex foreign investment regulations, and a lack of a bankable project pipeline. Some instruments, such as Green CRA Tech and the VERT Transition Bond, were retired due to interest rate volatility.

APA

Afflalo, L., Assunção, J., Hoover, N., & Wallock, W. (2026). Financing Sustainable Agriculture in the Cerrado Biome. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/03/Report-Financing-Sustainable-Agriculture-in-the-Cerrado-Biome.pdf

Chicago

Afflalo, Lucas, Juliano Assunção, Natalie Hoover, and William Wallock. Financing Sustainable Agriculture in the Cerrado Biome. Climate Policy Initiative, 2026. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/03/Report-Financing-Sustainable-Agriculture-in-the-Cerrado-Biome.pdf.

Wikipedia

{{cite report |last1=Afflalo |first1=Lucas |last2=Assunção |first2=Juliano |last3=Hoover |first3=Natalie |last4=Wallock |first4=William |title=Financing Sustainable Agriculture in the Cerrado Biome |publisher=Climate Policy Initiative |date=March 2026 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2026/03/Report-Financing-Sustainable-Agriculture-in-the-Cerrado-Biome.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{afflalo2026financing, author = {Afflalo, Lucas and Assunção, Juliano and Hoover, Natalie and Wallock, William}, title = {{Financing Sustainable Agriculture in the Cerrado Biome}}, institution = {Climate Policy Initiative}, year = {2026}, month = mar, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2026/03/Report-Financing-Sustainable-Agriculture-in-the-Cerrado-Biome.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }