03 Feb Eco-Friendly Farming Technology
Modern, efficient and competitive, Brazil’s agricultural market is currently experiencing a very positive phase, based on its quick expansion and consolidation in the international scene. Thanks to diverse whether, regular rainfall, abundant solar energy, and a substantial share of the fresh water available in the world, Brazil hosts millions of hectares of highly productive and fertile farmland, a large part of which is still unexplored.
Despite the record productivity and profitability indexes, as a leading player in global supply, Brazil’s farming and livestock sector has considerable challenges to be overcome. According to data published by the UN’s Food and Agriculture Organization (FAO), in the report entitled “How to Feed the World in 2050”, the global population will increase to up to approximately ten billion people in 2050. The increase in absolute population, coupled with the per capita income growth, will directly drive the rise of the global food and energy consumption. For instance, according to the same report, the demand for cereals will be of circa 3 billion tons by 2050.
In this regard, considering the current estimates for the maintenance of absolute numbers in the plantation area and arable land, intensive technology use becomes the main strategy to achieve the necessary productivity level to cater to the global demand for food and energy.
On the other hand, furthermore, together with the growing market demand, the productive sectors must also comply with ever-stricter sustainability criteria, in light of the growing concern of the markets and the population in general to meet environmental efficiency requirements. In this context, implementing specific technology solutions is also an essential tool to ensure sustainable development, especially in agribusiness, considering the substantial environmental impact it has, as well as its dependence upon the good management of the natural resources available.
Taking into account the mutual needs to increase rural productivity and environmental preservation, through the implementation of sustainable development practices, agtech Solinftec is a leading player in this market, as it offers smart farming automation solutions for its clients’ operations, by means of a unique platform that brings together cutting edge AI resources and world-class algorithms and hardware. Solinftec’s proprietary technology therefore connects its platform to rural machinery and equipment in real time, coordinating production to reduce the use of fuel and input. Also, with the help of weather stations, the startup manages to advise its clients, for instance, to better pulverize pesticides on their plantations, avoiding waste based on the adjustment to the weather conditions, especially considering the potential of having the product spread out to other areas.
Solinftec has recently raised BRL 140M to finance its activities, according to the industry trends and in order to meet the growing capital market demand, via Agribusiness Receivable Bonds (CRAs) issued by Planeta Securitizadora. CRAs, in turn, are backed by Agribusiness Receivables Certificates (CDCA) issued by Solinftec, which are tied to agribusiness credits stemming from contracts the company signed with its clients, which govern their use of the Solinftec-designed technological solutions.
Also, the CRAs issued by Planeta Securitizadora and due by Solinftec are defined as “Green Bonds”, according to the independent opinion published by SITAWI – Finanças do Bem[1], which classified the issue as compliant with the Green Good Principles and the Climate Bonds Standards, in addition to the certification of the CRAs as Climate Bonds, by the Climate Bonds Iniciative (CBI)[2]. As such, the startup must invest the funds raised via the issue and offering of the CRAs in projects related to the performance of its activities according to the criteria set out in the independent report, to develop solutions for sustainable agriculture and for the efficient management of natural resources.
The transaction is a milestone for this industry, as it is the first CBI-certified CRA issue, due by an agtech. Also, Itaú BBA led the offering of the CRAs to the investors, which included the legal advisory of VBSO Advogados to set up the transaction.
[1] Independent opinion drafted by SITAWI – Finanças do Bem, available at: https://spositawi.s3-sa-east-1.amazonaws.com/20210518+Solinftec.pdf. Access on December 6, 2021.
[2] Assessment Repot on the Issue According to the CBI Standards, available at: https://spositawi.s3-sa-east-1.amazonaws.com/20210518+Solinftec+CBI.pdf. Access on December 6, 2021.