Responsible Commodities Facility - Deforestation and Conversion Free: Finance for soy production in the Cerrado, Brazil (RCF-DCF Project)

Brazil’s Cerrado, one of the world’s most biodiverse savanna ecosystems and a critical carbon sink, is facing increasing pressure from agricultural expansion, particularly soy production. Soy farmland expanded from 13 million hectares in 2000 to 44 million hectares in 2023, making it a major driver of deforestation and land conversion in the region. Agriculture and land-use change together account for more than 60 per cent of Brazil’s greenhouse gas emissions. As a result, more than half of the Cerrado’s native vegetation has already been cleared, leading to loss of biodiversity, degraded water systems, and greater vulnerability of farming communities to climate risks such as droughts, heatwaves, and changing rainfall patterns. While national regulations such as the Forest Code exist, enforcement remains limited, and farmers often lack financial incentives to conserve native vegetation, particularly as around 70 per cent of the remaining natural habitat lies on privately owned land.

The RCF-DCF Programme seeks to address these challenges by aligning financial incentives with landscape protection in the soy sector. The initiative supports deforestation- and conversion-free crop financing for soy producers in the Cerrado through a dedicated climate-focused investment structure. It includes a USD 85 million impact fund alongside additional co-investment vehicles designed to mobilise larger pools of capital.

Through customised credit lines, farmers will be enabled to forgo converting native vegetation and to support a shift in soy production business models towards landscape protection. By linking agricultural finance to conservation outcomes, the programme aims to protect native vegetation, reduce emissions from land-use change, and support more sustainable soy production systems across the Cerrado landscape.

The programme represents a first-of-its-kind attempt to use a scalable payment-for-ecosystem-services model for farmers in a region facing acute deforestation pressures. It was developed under GCF’s Project-specific Assessment Approach (PSAA).