INSTRUMENT ANALYSIS

The Growth Next-Generation Agriculture (GAN) is a proposed BRL 250 million (USD 44.4 million) blended finance debt fund designed to support the transition to regenerative agriculture in Brazil. By providing working capital to small and medium-sized enterprises (SMEs) that produce biological inputs (bio-inputs), GAN enables these SMEs to offer credit to farmers, reducing the sector's reliance on synthetic fertilizers and pesticides. The instrument utilizes a Brazilian financial structure involving Fundo de Investimento em Direitos Creditórios (FIDC) investing in Agricultural Receivables Certificates (CRAs), supported by a proprietary AI credit assessment tool from Traive Finance. The fund includes a technical assistance facility managed by Folio Institute to train farmers and SMEs in regenerative practices. GAN targets environmental outcomes including the transition of 2 million hectares to regenerative practices and the annual avoidance of 2,312 tons of CO2e.

• GAN is designed as a BRL 250 million (USD 44.4 million) five-year credit fund and technical assistance facility, with a target of raising BRL 250 million for its first demonstration fund to prove commercial viability.
• The fund addresses a critical credit gap for biological-input SMEs in Brazil, as traditional financing is dominated by producers of synthetic pesticides and fossil fuel-based fertilizers who control an estimated 47% of the credit market for soybean farmers in Mato Grosso.
• GAN employs a blended finance structure consisting of a senior tranche (expected BRL 200 million) and a junior tranche (BRL 50 million), using a Fundo de Investimento em Direitos Creditórios (FIDC) to invest in Agricultural Receivables Certificates (CRAs).
• To mitigate the perceived high risk of the bio-input market, GAN uses a proprietary AI credit assessment tool developed by Traive and implements a 20% first-loss tranche composed of ordinary and synthetic junior tranches.
• The fund's environmental targets include transitioning 2 million hectares of land to regenerative practices, avoiding 1,000 tons of artificial pesticides and fertilizers, and avoiding 2,312 tons of CO2e annually.
• Financial modeling suggests that in a base-case scenario with a 5% realized loss rate, the senior tranche would receive a return of 4.0% above the DI (benchmark rate) and the junior tranche 1.3% above DI.
• The fund focuses its geographic scope on the Cerrado and Amazon biomes in Brazil, where farmers are particularly vulnerable to chronic drought, unpredictable flooding, and prolonged heatwaves.

APA

Climate Policy Initiative (2024). INSTRUMENT ANALYSIS. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/10/Growth-Next-Generation-Agriculture.pdf

Chicago

Climate Policy Initiative. INSTRUMENT ANALYSIS. 2024. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/10/Growth-Next-Generation-Agriculture.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=INSTRUMENT ANALYSIS |date=September 2024 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2024/10/Growth-Next-Generation-Agriculture.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2024instrument, author = {{Climate Policy Initiative}}, title = {{INSTRUMENT ANALYSIS}}, institution = {Climate Policy Initiative}, year = {2024}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2024/10/Growth-Next-Generation-Agriculture.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }