New Ecoinvest round seeks $1.5bn for land restoration | Agribusiness

Officials at the Ministry of Agriculture estimate the auction will be held by June. Results are expected to be ratified within 45 days, with funds disbursed starting in early August. The ministry is eager to present tangible progress on the program at the COP30 climate summit in Belém this November and is currently working with the economic team to expedite the process.

Under the auction rules, financial institutions will compete for the right to operate foreign capital loans raised through the Ecoinvest initiative. In return, they must offer matching contributions and provide currency hedging guarantees. The key selection criterion will be the leverage ratio—how much of their own funds the banks will commit alongside the capital they attract from abroad.

The minimum leverage ratio will be published in the call for bids. The government expects to mobilize $1 billion in foreign capital and $500 million from domestic financial institutions. According to a source at the Ministry of Agriculture, banks will pay a 1% fee to the National Treasury for the share of public capital provided—which is the smallest portion of the total funding. All financial risk will be borne by the lending institution.

Officials have yet to determine the final interest rate that will be charged to farmers. The original goal was to cap the rate at 6.5% annually, but that target has since been dropped due to the rise in Brazil’s benchmark interest rate, the Selic. The ministry recently acknowledged that rates could climb to 8%, though some expect they may rise even further.

A source said that the Selic rate is the “minimum return” expected by banks, which could make Ecoinvest loans more expensive than initially projected. As a result, interest rates under the program could exceed those currently offered through the Crop Plan’s existing pasture recovery line, which charges 7% per year. According to one insider, the R$2 billion allocated to that line this season was exhausted within 30 days.

Last week, the National Monetary Council (CMN) approved a resolution establishing new rules for Ecoinvest’s blended finance line, which will fund the pasture conversion program.

The changes expand the types of financial instruments that can be used to disburse the funds, such as investment fund shares (including FIAGROs), as well as structured products like Agribusiness Receivables Certificates (CRA) and Rural Product Bills (CPR).

These updates not only support the upcoming auction for pasture recovery but also lay the groundwork for future Ecoinvest auctions targeting other sustainable initiatives. The adjustments aim to align the program with credit instruments familiar to rural producers. Financing may also be offered through traditional rural credit lines.

The new rules also allow small-scale farmers to access blended finance funds through Ecoinvest for pasture recovery without losing eligibility for PRONAF, Brazil’s National Program for Strengthening Family Farming. According to the CMN resolution, loans issued through this auction can offer a grace period of up to three years, up from the previous two—a change aligned with Agriculture Ministry goals.

The announcement follows months of negotiations in Brasília, during which the Agriculture Ministry expressed frustration over delays in organizing the auction. Ecoinvest is currently the only viable instrument identified by the ministry to attract external capital at affordable rates for Brazil’s National Program for the Conversion of Degraded Pastures into Sustainable Agricultural and Forestry Systems (PNCPD).

The upcoming call for bids will detail eligibility requirements, including credit limits based on producer profile, interest rates, repayment terms, and environmental compliance standards—such as cutoff dates for deforestation linked to the producer’s taxpayer identification number (CPF).

The National Treasury declined to comment.