Best Value Chain Sustainability Initiative
Project Lead: Socicana
Project partner: Sicoob Coopecredi (Sicoob Pro)
Socicana is an association of Brazilian sugarcane farmers in the Guariba region in the state of São Paulo. It has over 1,200 active members which it supports through high quality training, technical, and legal support.
Sicoob Coopecredi is a free admission credit cooperative* in the Guariba region, with more than 5,000 members. It was created with the purpose of providing financial support to farmers involved with the cultivation of sugarcane.
*a credit cooperative is a financial organisation owned and controlled by its members. Members can borrow money at low interest rates from the pool of money the group has collectively saved.
Context
“Green financing is to increase the level of financial flows (from banking, micro-credit, insurance and investment) from the public, private and not-for-profit sectors to sustainable development priorities.” United Nations
To achieve a transition to a low-carbon and sustainable economy, financial capital needs to be directed towards activities that promote sustainable development. Green finance is an important tool to help achieve this goal, as it invests in projects and initiatives that have positive environmental impacts, and integrates sustainability principles into financial decision-making at a business level.
But although the availability of green finance is important for the promotion of sustainability, it often isn’t accessible to farmers. Green finance tools can be complex, and require a high initial investment – more than a farmer might need.
Socicana wanted to find a way to democratise sustainable finance and support both large and small farmers, while also incentivising farmers to keep investing in sustainability. Therefore it established a partnership with Sicoob Coopecredi to address this challenge.
The project
Sustainability is important to Socicana – it has its own sustainability programme (TopCana), and offers its farmer members support and training to improve the sustainability of their agricultural practices. It’s also an active member of Bonsucro.
Socicana recognised that while its farmer members wanted to invest in sustainability, there were no accessible green finance opportunities available to them to help lower the cost of implementing more sustainable practices. Socicana looked to use its position as a central organisation to address this issue, and help promote sustainability amongst its farmers.
As a farmer association, Socicana couldn’t offer financing to farmers itself. A financial cooperative could help create a new financial product with ease and speed, and with the interests of the farmers at heart. So Socicana presented the project to Sicoob Coopecredi, a regional credit cooperative of sugarcane farmers, and Green Rural Loan was launched in January 2021.
Green Rural Loan is a line of credit for producers associated with Socicana and Sicoob Coopercredi. Its aim is to recognise and reward the efforts of farmers who have dedicated time and resources into implementing sustainable agricultural practices.
The credit line – also known as the Green Rural Credit line – is exclusive to farmers with proven sustainability credentials, and offers farmers a lower interest rate than conventional credit lines. It is funded by farmers and wider society through the Green Cooperative Deposit Receipt (Green CDR), a low-risk, fixed income investment fund created by Socicana and Sicoob Coopercredi for Green Rural Loan. Over 18.7 million USD (100 million BRL) was invested in the Green CDR over three years.
To be eligible for credit, farmers are eligible if they have achieved certification against the Bonsucro Production Standard, or against TopCana. Socicana uses its expertise on sustainability to manage the information about the farmers, assessing and validating the extent of their sustainable practices to Sicoob Coopercredi, who in turn offer the credit.
Socicana and Sicoob Coopecredi came up with its own internal ranking which means the more sustainable a farmer’s agricultural practices, the better the discount rate offered. Farmers with international certifications like Bonsucro, which require compliance on a larger range of sustainability criteria, are offered the most favourable interest rate discounts. Through Green Rural Loan, a farmer can save up to 20% on the cost of a loan.
| Sustainability Programme | Discount offered – up to* |
| Bonsucro/RSB | 20% |
| TopCana Gold | 16% |
| TopCana Silver | 12% |
| TopCana Brzone | 8% |
| TopCana Attention | 4% |
Source: Socicana
*These values depend on the current interest rate in Brazil
By offering different discounts based on the extent of a farmer’s sustainability practices, Socicana and Sicoob Coopecredi can incentivise farmers to improve their practices, and encourage new producers to join the programmes.
By 2024, over 130 farmers were eligible for the Green Rural Credit line, representing a possible 30,000 hectares.
Impact and results
The impact of Green Rural Loan is measured monthly using monitoring points such as the area financed by the Green Rural Credit line and the amount available in the Green CDR for new loans.
Between January 2021 and January 2024, Green Rural Loan had given 8.57 million USD (48.3 million BRL) to 25 farmers through 42 different loans. These loans have financed over 8,000 hectares of sugarcane land and impacted the production of more than 700,000 tonnes of sugarcane.
Comparing the interest rate on the Green Rural Credit line with the interest rate on regular credit lines, Socicana found that farmers who participated in Green Rural Loan saved approximately 406,000 USD (more than 2 millionBRL) on their loan.
The project has also generated greater interest in Bonsucro certification amongst Socicana’s farmer members. The number of farmers now certified against the Bonsucro Production Standard is 13, up from four in 2021.
Green Rural Loan has been featured in a magazine in South Africa, as well as in Brazil’s main business newspaper and as part of a report in the Financial Times.
Learnings and future work
Through Green Rural Loan, Socicana has shown it is possible to make green finance accessible to rural producers, through simple tools, and rigorous checks of sustainable production practices. Socicana has also found that by financially recognising sustainable practices, the production of sustainable sugarcane increases.
In 2024 a new line of credit was created which has greater discount rates and a simpler and faster bureaucratic process for farmers. A new local partner, a local mill, also joined the project and participates in the new credit line by acting as a facilitator for Sicoob Coopercredi’s session on producer rights. With this new partnership, Green Rural Loan is expected to benefit a greater number of farmers.