SAO PAULO (Reuters) - Commodities trader Bunge Inc, bank Banco Santander Brasil and conservation group The Nature Conservancy are promoting a scheme to finance Brazilian farmers who commit to preserve virgin land, they said on Wednesday.
The program expects to make available $50 million in loans starting in September that will be repaid in 10 years, they said in a news conference in São Paulo.
The first lines of credit are expected to fund three or four farmers undertaking preservation projects, with no current plans to expand it beyond a pilot scheme, according to Bunge and Santander representatives.
The initiative suggests grain handlers may be responding to pressure to support conservation efforts as China’s appetite for soybeans drives acreage and production growth in Brazil.
The loans are targeted at farm operations based in Brazil’s Cerrado, a vast tropical savanna where more than 105,000 square kilometers (40,540 square miles) of wild vegetation have been destroyed since 2008, according to government figures.
The Cerrado is one of the fastest growing soybean regions in Brazil, the world’s second-largest producer and biggest exporter of the oilseeds.
Santander will provide 65 percent of the funding, with Bunge accounting for 30 percent and The Nature Conservancy for 5 percent.
Farmers are forecast to expand the country’s soybean planted area for the 12th consecutive year, to just above 36 million hectares, amid strong demand from buyers in Asia in the 2018/2019 cycle that kicks off in September.
In May, grain trading houses including Bunge Ltd and Cargill Inc and dozens of farm operations were fined a total of 105.7 million real ($25.6 million) for activities in the Cerrado including buying soy produced in areas off-limits to farming under environmental rules.
($1 = 4.1306 reais)
Reporting José Roberto Gomes; Writing by Ana Mano; Editing by Frances Kerry