INSTRUMENT ANALYSIS SEPTEMBER 2023 LOW-CARBON AGRICULTURE TRANSITION MECHANISM (LATM)

The Low-Carbon Agriculture Transition Mechanism (LATM) is a financial structure designed to decarbonize Brazil's agricultural sector by providing small and medium-sized farmers with long-term loans, technical assistance, and a first-of-its-kind income guarantee. The mechanism targets four specific credit lines: Pasture Recovery, Sustainable Livestock Intensification, Integrated Systems, and Agroforestry and Bioeconomy. It aims to mobilize USD 115 million in total capital—combining commercial, concessional, and grant funding—to reach 78,000 hectares by 2030 and avoid or remove over 187,245 tons of CO2e per year. The implementation follows a three-phase pathway: a Pilot Phase testing components in the Amazon and Cerrado, a Commercial Phase scaling the full structure across three biomes, and a Scale-up Phase reducing dependency on concessional capital.

• The LATM's primary innovation is the Transition Guarantee Facility, which provides an income guarantee to farmers transitioning from low-productivity cattle or soy to sustainable systems, mitigating the opportunity costs and income fluctuations typically experienced during the first three years of transition.
• The mechanism utilizes a portfolio risk management approach across four credit lines to offer lower interest rates for agroforestry and bioeconomy activities, which are typically more dependent on concessional capital, by leveraging profits from other credit lines.
• In its commercial phase, the LATM targets a total area of 78,164 hectares across the Amazon, Cerrado, and Atlantic Forest biomes, with an estimated annual emission reduction or removal of 187,245 tons of CO2e.
• The financial structure requires a total of USD 115 million, consisting of USD 100 million for a Revolving Debt Program, USD 10 million for the Transition Guarantee Facility, and USD 5 million for Technical Assistance. Commercial capital is expected to provide 60% of the total funds.
• The implementation is divided into three phases: a Pilot Phase using Agribusiness Receivables Certificates (CRAs) and credit funds to test components; a Commercial Phase implementing the full structure; and a Scale-up Phase aimed at reducing concessional capital dependency to 5%-10%.
• The mechanism targets 3,659 producers in its commercial phase, with 23% being female farmers, and aims to increase income by up to 40% through improved productivity and sustainable practices.

APA

Climate Policy Initiative (2023). INSTRUMENT ANALYSIS SEPTEMBER 2023 LOW-CARBON AGRICULTURE TRANSITION MECHANISM (LATM). https://www.climatepolicyinitiative.org/wp-content/uploads/2023/09/LATM_Instrument-Analysis.pdf

Chicago

Climate Policy Initiative. INSTRUMENT ANALYSIS SEPTEMBER 2023 LOW-CARBON AGRICULTURE TRANSITION MECHANISM (LATM). 2023. https://www.climatepolicyinitiative.org/wp-content/uploads/2023/09/LATM_Instrument-Analysis.pdf.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=INSTRUMENT ANALYSIS SEPTEMBER 2023 LOW-CARBON AGRICULTURE TRANSITION MECHANISM (LATM) |date=September 2023 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2023/09/LATM_Instrument-Analysis.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2023instrument, author = {{Climate Policy Initiative}}, title = {{INSTRUMENT ANALYSIS SEPTEMBER 2023 LOW-CARBON AGRICULTURE TRANSITION MECHANISM (LATM)}}, institution = {Climate Policy Initiative}, year = {2023}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2023/09/LATM_Instrument-Analysis.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }