Smart connections that impact

Our financial solutions enable lenders and borrowers of various sizes, regions, and agriculture segments to thrive in their businesses, while also enabling tools to create an economically viable, socially equitable, and environmentally sustainable business environment.

The challenges

Agricultural credit is scarce and unevenly distributed.

Agriculture's share of total credit is proportionally smaller than its contribution to the economy around the world. According to FAO, "the agricultural sector received less than 3.5 percent of the total credit in nearly half of the countries" (2018). Moreover, most of these credit lines are inaccessible to small and medium-sized farmers, which traditional lenders do not usually attend.

Difficulties in obtaining credit hold off this public from the best agricultural practices, creating barriers to the professionalization of the countryside, adopting more sustainable socio-environmental actions, and pushing these farmers closer to poverty and subsistence farming.

Because small and medium farmers are disconnected from the financial market, lenders are unable to price their risks and, as a result, do not create credit lines that meet the needs of this public. When they do so, they charge exorbitant interest rates.

The issue

How can we connect small and medium-sized farmers to the financial market, giving them visibility and opening up opportunities to thrive and generate prosperity?

Traive's™ proposal

Science's power and its positive impact

Traive™ uses science and proprietary algorithms to provide financial inclusion and data analytics solutions to close the financial sector gap for small and medium farmers. We understand that the exclusion of them cannot be explained or resolved solely based on financial considerations, but finance plays a critical role in all of them. Contributing to the financial inclusion of small and medium-sized farmers can thus have a significant impact on the development of individuals, communities, regions, and even countries.

Sabemos que a exclusão deste público não pode ser explicada ou resolvida apenas por questões financeiras, mas as finanças desempenham um papel crítico em todos eles. Assim, contribuir para a inclusão financeira de pequenos e médios produtores pode ter um impacto significativo para o desenvolvimento de pessoas, comunidades, regiões e até países.

While financial inclusion is not an explicit goal of the 17 UN Sustainable Development Goals (SDGs), it is a critical enabler for all of them, particularly the eight SDGs discussed below.

More economic growth: small farmers contribute to a sizable proportion of the world's poor. Empowering them creates a once-in-a-lifetime opportunity. According to the World Bank, "Growth in the agricultural sector is two to four times more effective than growth in other sectors in increasing income among the poorest."

According to FAO, "investment in agriculture, particularly in the poorest, is more effective than investment in non-agricultural sectors in reducing poverty."

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The vast majority of rural properties around the world are small or very small in size. And, if they have access to credit and technical assistance, they can be decisive in meeting the demand to increase global food production by 70% by 2050 (Source: IFC-International Finance Corporation).

According to studies, "small farmers worldwide produce 28 to 31 percent of total crop production and 30 to 34 percent of food supply in 24 percent of agricultural area."

According to the UNSGA, "farmers who have access to financial services tend to produce more abundant crops, influencing progress toward the second ODS: reducing hunger and promoting food security."

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Agriculture is the most crucial sector for women's employment worldwide, particularly in low- and middle-income countries. However, the majority of them are unpaid or underpaid. In addition, poverty and conflict cause an exodus of men from rural areas in many parts of the world, resulting in the feminization of agriculture.

Women also face challenges in maintaining agricultural businesses, owing to a lack of knowledge and capital. This situation puts additional strain on rural businesses while also intensifying inequality and poverty. The only way to change this is to include everyone in the credit systems.

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Agriculture remains the most important source of employment in developing or underdeveloped countries. Much of this work is casual, with high levels of activity and seasonality. Poor working conditions cause rural exodus, uncontrolled urban expansion, and health issues for workers.

Child labor rates are also higher in rural areas. According to the International Labour Organization (ILO), "60% of all working children aged 5 to 17 work in agriculture worldwide." According to the FAO, there are approximately 129 million girls and boys, with many entering the labor force at a young age, typically between five and seven. More than half of these children work in hazardous conditions.

Poor working conditions also discourage young people from working on farms, risking agriculture's future.

However, studies show that providing credit to farmers can improve their productivity even in the short term. Simply because they can eat better, hire more labor, and invest more in their land. All of this adds up to a better working environment for farmers.

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Reducing inequalities (SDG 10) at the national and country levels is inextricably linked to the abolition of poverty (SDG 1) and hunger (SDG 2).

"Absolute levels of hunger and poverty are the most dramatic issues when it comes to tackling inequality," according to FAO. Farmers are typically among the poorest and most financially excluded groups. Furthermore, the majority of small and medium-sized farmers live in developing or underdeveloped countries.

Climate Change (SDG 13) and Terrestrial Life (SDG 15) are closely related to SDG 10, as they are all strongly linked to environmental sustainability and agriculture. Farmers and countries that rely heavily on natural resources and agriculture are particularly vulnerable to the effects of climate change.

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Providing farmers with adequate and affordable financial resources, particularly in the context of Green Finance, as well as data analysis tools that predict climate-related risks and allow farmers to adapt to changing conditions, is critical to preventing or minimizing the effects of climate change.

As the world's largest farmer group, they can play a critical role in amplifying or mitigating the effects of climate change. When faced with poverty, they frequently resort to the short term, resulting in massive deforestation, desertification, and land degradation. Once out of poverty, farmers can help to mitigate the effects of climate change.

Agriculture, forestry, and land-use change are responsible for 25% of greenhouse gas emissions. However, according to FAO, these sectors contain "nearly half of the solutions to global climate goals."

Small and medium-sized farmers are the most affected by climate change because their activity is heavily dependent on the weather. Agriculture accounts for one-quarter of all damage and loss in developing countries caused by natural hazards and disasters." Weather risks reduce farmers financial resilience and lenders' willingness to enter the market.

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One of the primary causes of biodiversity loss is unsustainable agricultural practices combined with climate change. The way we've been using nature over the last few decades has significantly impacted the planet.

However, for small and medium-sized farmers who lack the necessary knowledge and financial resources, the transition to sustainable practices can be a complicated and expensive process, threatening their livelihoods in the short term. They require financial support, in addition to access to educational programs, to make the necessary changes and to be able to endure some losses before they can begin to reap the benefits of becoming sustainable.

In addition, Traive™ develops financial solutions for small and medium farmers in general and solutions for Green Finance providers and farmers with sustainable practices.

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The ambitious goal of financial inclusion for small and medium farmers, specifically the underprivileged medium farmers, encourages many stakeholders to collaborate and share their knowledge and expertise. We bring cutting-edge technology and innovative tools to connect and empower farmers and lenders. If you share our passion and mission, we look forward to collaborating and working with you.

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The result

The real-life impact

In March 2021, seven farmers in Brazil's Midwest became the world's first to use a new type of agricultural credit. They directly accessed the capital market and raised R$ 63.3 million (estimated at US$ 11.8 million) thanks to an unprecedented operation of issuing CRA (Certificate of Agricultural Receivables) based on green finance.

The operation was green-certified by the Climate Bonds Initiative's (CBI) Agricultural Criteria. This international non-profit organization is a global reference in developing labeling criteria for this type of transaction.

The structure of CRA Verde.Tech resulted from these farmers' collaboration with Traive™ and its partners Produzindo Certo and Gaia Impacto. It was backed up by the issue of 17 CPRs (Rural Product Bills) by the growers, which, in addition to productive and financial commitments, are linked to a series of social and environmental performance targets in their properties. It is the first pulverized operation, bringing together rural farmers who are not affiliated with any agricultural group.

The growers' commitments will allow the preservation of 24,667 hectares of protected areas with intact native vegetation, 2,505 of which are riparian forests surrounding 387 kilometers of rivers and 141 springs of water.

Innovative technology-enabled partners to overcome the major barriers that prevent foreign investments from reaching Brazilian rural farmers directly, such as credit risk quantification. This technology reduces uncertainties and allows investors to calculate their returns based on actual risk, lowering costs and interest.

The socio-environmental verification ensures that financial resources are directed to farmers who comply to the best socio-environmental practices and ensure continuous improvement.

On the other hand, the agricultural insurance designed specifically for this operation, allows to transfer climate risks of the product, providing additional security for both him and the investor.