BUSINESS CASE Mainstreaming Sustainable Cattle Ranching Project $ Colombia Cattle ranching context in $ $ $ $ $$ Market’s main figures Cattle ranching, one $ $ Country $ $ of the most important general 24M4 sectors of the 1.141K Km2 24MBovine 4 information US$309B1 49M1 24M4 24M 4 4 24M inventory Colombian economy, Country’s Bovine 4 Bovine Bovine Country GDP total area Total population 24M Bovine 24M 4 inventory inventory inventory generates income 24M 24M 4 4 inventory Bovine Bovine Bovine Bovine 24M4 inventory inventory for more than half a inventory inventory 24M4 Bovine inventory Bovine million rural families, inventory and guarantees Agricultural economy 6,3%6 49%3 43M ha7 US$3,9B3,4 US$3,9B 3,4 3,4 US$2,2B3,4 3,4 US$2,2B US$3,9B US$3,9B 3,4US$3,9B 3,4 3,4 US$2,2B US$2,2B US$2,2B 3,4 3,4 national self- Agricultural sector Cattle-ranching Total land for agricultural use US$3,9B Beef Beef 3,4 Beef market Beef market US$2,2B market value market value value 3,4 valueMilk Milk market val market MilkMilk market value market valu value / GDP Beef market US$3,9B US$3,9B Beef value US$3,9B 3,4 market value 3,4 Milk Milk US$2,2B market 3,4 US$2,2B market value 3,4 value US$2,2B 3,4 (Without (Without 3,4 derivati derivativ sufficiency inmeat / GDP Beef market (Without (Without value (Without (Without derivatives) derivatives) Milk market value derivatives) derivatives Cattle-ranching Beef Beef market market US$3,9B value Milkvalue market 3,4 (Without US$2,2B Milk value market derivatives) 3,4value and dairy production (Without Beef market value (Without derivatives) derivatives) Milk market value nationwide. It also US$2,2B US$3,9B3,4(Without 3,4 derivatives) Beef market value Milk market valu contributes 6.3% $ (Without derivativ $ $$$ $ percent of the Livestock US$82M3,4 US$87M3,4 $ $ $ 5 US$82M milkUS$82M Beef and US$82M 3,4 US$82M US$87M 3,4 of beef US$87M 3,4 3,4 3,4 US$87M US$87M US$87M 3,4 3,4 3 sector 89% 5 90% 4 28% 514K 3 US$82M Import 3,4 3 agricultural sector’s Beef and US$82M milk exports US$82M Beef 3,4Beef and Beef and Import US$87M milk and and milk milk US$87M milk of beef 3,4 Import of 3,4Import beef Import of beefof be of $ 3,4 Beef and milk US$87M and milk Import of be Cattle-ranching Small farms / total Households Beef and milk rural exports Import of beef Beef exports US$82M and milk and milk exports exports 3,4 and and milkmilk3,4 gross domestic land / Land for farms employmentl depend on Beef Beef and imports and milk milk US$82M Beef exports exports Beef Beef andand and Beef milk milk 3,4 and Import milk and milkmilk milk and of beef and milk Import of3,4 US$87M beef El sector agricultural use ganadero colombiano representa livestock ~US$6B de exports imports actividad Beef and milk imports imports exports and milk product (GDP). $ Beef and milk Beef Beef and milk imports and milk imports Import of beef económica. Las exportaciones representan menos del importsBeef and importsexports2% milk and milk imports beef US$87M3, US$82M 1) International Monetary Fund – 2018, 2) IGAG, 3) FEDEGAN 2016-2017 4) ICA - Bovine census 2017 (small farms < 100 bovines) global conference 6) DANE, 2017, TechnoServe analysis 7) National agricultural census 2014. Beef and Sustainable 5) milk 3,4 imports Beef and milk Import of bee exports and milk Market size for the livestock sector, 2017 Market export Beef and milk Cattle ranching is theagricultural (B, US$) 2.2 6.1 (B, US$) imports subsector that occupies the 0.15 1,4B largest share of the nation’s agricultural land, with extensive 3.8 livestock production systems 0.67 predominating on about 35 2,0B million hectares of pasture land. 0,4B 1,9B Cattle ranching systems are characterized by low profitability and high vulnerability to 0,3B Local beef market Beef export Local milk market Milk export Total variations in climate, and they have considerable impacts on Volumes 770K 8K 7M n.d. implicit the environment and greenhouse tons tons tons gas emissions. Source: FEDEGAN, DANE, Cattle-ranching Sacrifice Survey; Trademap, TechnoServe analysis Cattle ranching faces           The  national   production   of meat and  milk is facing     significant productivity a growing competition, as evidenced by the reduction -1.7% 0.7 < 2% of exports and increase of imports. and competitiveness Contraction Large Cattle Of market challenges. The Beef (Millions of US$) Milk (Millions of US$)* of meat Units (LCU) / ha value in production exports production of meat Fresh or refrigerated Predominance of and milk has remained Exports Frozen Exports Sector stalled extensive livestock Marginal exports 203,3 32,9 by structural -17,8% stagnant at the national -24,1% failures 19,5 level, and exports of 15,0 67,3 9,5 43,6 these products are 33,5 34,2 0,8 20-30% 35% 0.3 to 1.3 weak. Colombia faces 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Increase of Cattle land Minimal utility meat and affected by per year strong international milk imports, environmental competition from other Imports Imports respectively incompatibilitys Families of +30,3% cattle ranchers exporters. Profits are so +24,9% 16,1 108,6 Increase in Little resilience with little 11,1 78,2 70,7 low that most families 6,6 7,4 7,8 52,6 competition by to climate capacity of 24,6 foreign players change that rely on cattle overcoming poverty ranching for a livelihood 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 have few prospects of Source: Trademap, DIAN overcoming poverty. * Powdered and liquid milk statistics. Other milk derivatives not included Mainstreaming Sustainable Cattle Ranching Project (MSCR) Dispersed trees With the objective of generating more efficient 1 (DT) Non and productive conditions for raising livestock, intensive the Mainstreaming Sustainable Cattle Ranching systems Project (MSCR)* is being implemented in five (SPS) regions of Colombia. The project builds capacity 2 Live fences (LF) to implement silvopastoral systems (SPS) that integrate agroforestry and livestock production, Forage Hedges provides incentives to support good cattle 3 (FH) ranching practices, and validates and integrates approaches to monitor the impacts of different productive systems on changes in land use, biodiversity, carbon emissions, and productivity. Intensive systems Mixed fodder * TMSCR is an alliance between the Federation of Colombian Cattle Breeders 4 banks (MFB) (iSPS) (FEDEGAN), The Nature Conservancy (TNC), The Fund for Environmental Action and Children (Action Fund), the Center for Research in Sustainable Agricultural Production Systems (CIPAV), and the World Bank, with financial support from the Department of Business, Energy and Industrial Strategy (BEIS) of the United Kingdom and the Global Environment Fund (GEF). The project also Recursos dirigidos Recursos dirigidos a desarrollar a desarrollar la ganadería has institutional support from the Ministry of Environment and Sustainable 5 la Forage (F) sostenible ganadería sostenible Development (MADS) and the Ministry of Agriculture and Rural Development (MADR). en Colombia en Colombia resultarían resultarían en: en: Recursos Recursos dirigidos dirigidos a desarrollar Recursos a desarrollar la ganadería la ganadería dirigidos sostenible a desarrollar sostenible la ganadería sostenible en Colombia en Colombia resultarían resultarían en: en: resultarían en Colombia en: Project Colombian Sustainable Ranching Results, Incremental Incremental Private leveraged Private leveragedConverted Converted hectares hectares income forincome for Impacted producers Impacted producers investment investment to SSP and to SSP and SSPi SSPi producers producers sarrollar la ganadería sostenible 4.100 4.100 IncrementalIncremental Incremental Private Up to 523 Up toPrivate leveraged 16.7 USD 523 leveraged 16.7 per Private USD dollar leveraged Converted of cooperation per dollar Converted hectares of cooperation 27.950 ha to hectares27.950 ConvertedSPS hectares and ha to SPS and income for income for income for 4.112 ha 4.112 to SPSi ha to SPSi en: producers bia resultaríanImpacted Impacted producers Impacted producers investment USD/ha/year producers producers producers USD/ha/year investment investment to SSP and to SSP and SSPi SSPi to SSP and SSPi 4.100 4.100 4.100 Up to 523 Up to 523 16.7 Up USD per 16.7 USD dollar per to 523 of cooperation dollar 16.7 USD per dollar 27.950 ha to27.950 SPS andha to SPS and 27.950 ha to SPS and of cooperation of cooperation 4.112 ha to SPSi 4.112 ha to SPSi 4.112 ha to SPSi USD/ha/year USD/ha/year USD/ha/year Increment Increment in in productivity productivity 24.8% increase 24.8% inincrease in ecosystems ConservedConserved ecosystems al Private leveraged fodder supply fodder supply 18.238 ha of 18.238 forestha of forest and and Converted hectares investment to SSP and SSPi productivity Increment in Increment in productivity 36.2%Increment increase in 36.2% productivity in milk increase in milkother ecosystems other ecosystems Conserved production ecosystems Conserved production conserved ecosystems Conserved conserved ecosystems 24.8% 24.8% increase in increase in 24.8% increase in 16.7 USD per dollar 27.950 ha to SPS and fodder supply fodder 23%supply fodder increase18.238 23% supply ha inincrease load of 18.238 forest and ha in load2.849 ha of of forest 18.238 2.849 and haenriched ha of enriched of forest and of cooperation 4.112 ha to SPSi 36.2% increase 36.2% increase in milk capacity in milk 36.2% other increase other ecosystems ecosystems capacity in milk secondary forests other secondary ecosystems forests ar conserved conserved conserved production production production 23% increase in load 23% increase23% in load2.849 hain increase of enriched 2.849 ha of enriched load 2.849 ha of enriched capacity capacity secondary forests capacity secondary forests secondary forests Propagación Propagación de especies de especies amenazadas amenazadas (arbóreas, (arbóreas, arbustivas, arbustivas, Carbon capture validated by the Mainstreaming Sustainable Cattle-Ranching Project y de fauna) y de fauna) in tons of CO2 per hectare / year ment in productivity .8% increase in Co eePropagación Propagación Conserved ecoregion, de especies Operación ecosystems de especies Propagación Orinoco amenazadas ganadera Operaciónamenazadas de especies (arbóreas, con ganadera Cesar River mayor Valley arbustivas, (arbóreas, amenazadas con resiliencia aychoques arbustivas, mayor(arbóreas, y ambientales de fauna) resiliencia de fauna) arbustivas, a choques y de fauna) ambientales odder supply Boyacá and Santander 18.238 ha of forest and foothills and Lower Magdalena % increase in milk other ecosystems conserved 11,0 production Operación ganadera Operación Sector ganadera con Operación Sector ganadero mayor con ganadero con resiliencia ganadera mayor mayor con con a resiliencia mayor competitividad mayor competitividad choques a choques resiliencia para a ambientales ambientales fomentar para choques fomentar comercioambientales internacional comercio internacional increase in load 2.849 ha of enriched capacity secondary forests 8,4 Sector ganadero Sector ganadero con Sector 5,4 mayor con mayor competitividad competitividad ganadero con para mayor fomentar comercio para comercio para fomentar competitividad internacional fomentar internacional comercio internacional 3,3 3.7 2,9 2,7 azadas (arbóreas, arbustivas, y de fauna) 2,4 2,1 trees a choques ambientales ayor resiliencia Dispersed Hedges SPSi Dispersed Hedges trees SPPi Dispersed trees Hedges SPSi titividad paraAt of 2018, the the endcomercio fomentar MSCR project has registered internacional acumulative CO2 capture of 1,050,000 tons Approach to SPS and iSPS business case development in Colombia To capitalize on results from the MSCR and support decision makers, TechnoServe developed a study of the “Business case for the implementation and expansion of silvopastoral systems in Colombia.” The study, based on a cost and profitability analysis of SPS, defines the potential for scaling up SPS, identifies investment opportunities, and outlines the mechanisms required to shift livestock production towards sustainable SPS and intensive SPS (iSPS). The analysis: 1 Analyzes the characteristics, challenges, and opportunities in the cattle ranching subsector. 2 Develops a typology of representative cattle ranching systems and identifies the most commonly implemented SPS. 3 Analyzes gains in profitability for each type of ranching system in which silvopastoral practices were implemented. 4 Evaluates System incentives needed to profitably scale up the implementation of SPS and iSPS in each type of thecriteria: selection system. 1) They represent 90% of the area implemented with silvopastoral 5 Identifies systems project for scaling up SPS and iSPS in each type of system and the mechanisms required for this scenarios in the CSL transformation: public and private investments and incentives. present systematically collected benefit results 2) They SSP seleccionados para el análisis del caso de negocios: Silvopastoral systems selected for analysis System selection criteria: 1. Systems selected for the analysis represented 90 a b c percent of the area where SPS were implemented under Dispersed Hedges (H) iSPS the MSCR. trees (DT) Foraging (F) 2. Data on system benefits were collected systematically. Selected archetypes Production Estimated Caribe Production Region Estimated Symbol Caribe Cundinamarca Regionfocus representation* Symbol Cundinamarca & Boyacá focus representation* CAR & Boyacá CAR Cundinamarca Cundinamarca & Boyacá Plateau &> Boyacá 80% PlateauC&B > 80% C&B C&B C&B CAR CAR Specialized Specialized Antioquia milk Antioquia ANT ANT C&B C&B milk > 80% > 80% Nariño Nariño NAR Antioquia NAR Antioquia > 80% > 80% Cundinamarca Cundinamarca ANT ANT & Boyacá 17% C&B C&B & Boyacá 17% East East ANT Antioquia 10% ANT ANT Dual Antioquia 10% ANT EST Dual EST purpose purpose Caribbean 12% CAR EST /Atlantic Caribbean 12% CAR EST /Atlantic Nariño East, center 21% EST Nariño and south East, center NAREST and south 21% East, center NAR Breeding and south 30% EST East, center Breeding and south 30% EST Fattening Caribbean 30% CAR /Atlantic Fattening Caribbean 30% CAR * Total percentage of farms /Atlantic * Total percentage of farms Scenarios for profitability analysis: Evaluamos los impactos de los sistemas en los resultados Costs and benefits resulting from the combination of SPS and SPSi perativos bajo las diferentes combinaciones (típicas y potencial) Base Case Indicators of farms with no intervention Percentage of Combination 2 System area converted to Combination 1 silvopastoral systems (optimized case) Combinations Dispersed trees 8 – 18% implemented • Cash flow analysis of farms by the MSCR Hedges 10 - 17% Combination with a combination of program iPS 1 - 2% 1 (MSCR) systems that optimize cost effectiveness Without system 71 – 74% • Cash flow analysis of farms with Dispersed trees 5% Base case SPS and SPSi combinations implemented under the MSCR Hedges 10% project Combination 2 • Cash flow analysis of Optimized case iSPS 20% the un-intervened farms Without system 65% Los impactos bajo cada combinación, se aplican proporcionalmente al área Business case results The benefits of SPS and iSPS are evident in five aspects of cattle ranching that directly affect profitability: 1 2 3 4 5 Increased carrying Increased birth Increased milk Increased animal Lower production capacity rates productivity weight gain costs 4 La cantidad y calidad del forraje producido por los sistemas, 1. Increased carrying capacity: For all types of cattle 4. Increased permiten que animal weight los bovinos gain:su alcancen Under combinations peso máximo 1 más rápido Según la combinacón 1 ranching aplicada, la 1capacidad system, combinations and 2 withde carga SPS andcon SSP and 2, animals gain more weight in a shorter period. SSPi represent yiSPS alcanzaría niveles inUGG de ~2-4 an increase por hectárea carrying capacity of Changes in live weight gain Base case Current MSCR Optimized case ~2–4 livestock units per hectare (LSU/ha). (kg of live weight per age) 500 Accelerated weight gain linden / button Animal carrying capacity and changes per combined contributes to the improvement large cattle-ranching units (UGG) / ha Base case in Cash flow for the producer. High tropic 300 SPSi with Current MSCR Optimized case 200 +65% 0 +98% +39% Accelerated weight 500 linden / button 4,3 gain implies bovine sales in a shorter time 3,8 3,7 Low tropic 300 frame or animals SPSi with 3,1 3,2 entering their +33% +86% +58% +58% 200 productive stage 2,7 2,6 earlier, improving the 2,2 +39% +45% 2,0 2,0 2,0 0 cycle of cash flow for 1,9 1,9 1,6 500 the producer. 1,5 1,4 1,5 1,5 1,4 1,2 1,3 1,3 1,0 1,2 1,0 1,0 1,1 Low tropic 300 leucaena SPSi with 200 Milk B&S Milk ANT Milk NAR DP B&S DP ANT DP CAR DP ORI Breeding ORI Fattening CAR 0 Birth 9m 15m 24m 36m Dados los tiempos en que se dan los impactos en la finca, los B&S: Boyacá y Santander NAR: Nariño CAR: Caribe ANT: Antioquia 2 El incremento de natalidad mejora en línea con la porción de la ORI: Oriente SSPLower 5. production y SSPi permiten costs: Combinations un crecimiento with constante del SPS ingreso and iSPS represent a continuous increase in total finca birtha transformada 2. Increased silvopastoriles, rates: rate otras The birthentre variables increases as annual revenue. the area under SPS and iSPS increases. Incremental annual income of each combination * Illustrative case for archetype 1 COP millions Changes in birth rate (% of adult cows Average annual that have births) Base case Current MSCR Optimized case Base case growth Current MSCR 112 19.6% 80 Optimized case 97 70,7% 82 48 13.1% 62,8% 69 36 25 58,0% 54 56 15 46 50 11 12 6.1% 5 6 6 8 58,0% 40 2 4 4 4 1 3 40 42 43 45 46 48 49 51 53 3.4% 40 Year 1 Year 2 Year 3 Year 4 Year 5 Year 9 Year 7 Year 8 Year 9 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 • Notes: ̶ Two parameters were established to determine variations in birth rate: ∆ in productivity 1) major variations for cases where farm transformation to SPS and SPSi is greater than 30% and and birth 2) major variations for cases where SPSi represents more than 5% of the total transformation of the farm. ∆ in animal load /bovine inventory ̶ These rates were applied to all archetypes for the projection of herd dynamics and income (5 years) ̶ The variation of birth rates is not subject to silvopastoral systems only. Results also depend on the 3 En * Incremental values from one combination to another los 3 años implementation of goodposteriores in farm administration. del sistema, los a la implementación cattle-ranching practices Note: Revenue assumes that once the maximum impacts have been reached, the maximum Los sistemas han probado ser rentables en todos los arquetipos y impact remains stable for the remaining projection time cambios en productividad 3. Increased de leche alcanzan milk productivity: hasta un 29% Milk productivity 6. The SPS and notablemente iSPS en combinations los modelos are de leche profitable y DP en Caribefor increases up to 29 percent after three years of SPS all types of cattle ranching systems and iSPS implementation Changes in milk productivity IRR - Incremental ows for 9 years Cost of local bank financing ~ 17% ** with terminal value Area of average cattle-ranching returns in Colombia ~ 9-15% *** Liters / cow/ day Base case +14% 40 +24% Current MSCR 35% Current MSCR 14,6 15,6 Optimized case 35 Optimized case 13,9 13,7 12,4 30 +14% 27% 27% 11,2 25 23% 8,0 +24% 21% 20% 7,0 7,5 +14% +24% 20 18% 16% +29% 4,5 15 13% 14% 3,6 3,9 3,2 3,4 3,6 2,7 2,8 3,3 11% 1,7 1,9 2,2 10 7% 5% 5 5% 3% Arq. 1 Arq. 2 Arq. 3 Arq. 4 Arq. 5 Arq. 6 Arq. 7 AD 16% 22% 22% 16% 22% 29% 10% 0 -1% -5 -3% CV 48% 26% 26% 48% 26% 25% 15% -5% Arq.1 Arq.2 Arq.3 Arq.4 Arq.5 Arq.6 Arq.7 Arq.8 Arq.9 SSPi 92% 50% 50% 92% 50% 124% 111% * Terminal value calculated by perpetuity ** Average financing cost with Banco Agrario *** Data supplied by FEDEGAN based on the observed returns of farms in database Impacts applied by the system* IR: Internal rate of return. Meat Meat andand - Breeding - Breeding fattening fattening DualDual purpose purpose 7 Specialized dairy and Arq.Arq. Indicator Indicator animal C.MSCR. O.fattening C.MSCR. O. case. case. Arq. Arq. Meat Indicator - Breeding Meat C.MSCR. and - Breeding Indicator fattening and C.MSCR. O. O. case.. fattening case.. Dual Dualpurpose purpose systems are the TIR most TIR profitable: 27% 27% 35%35% Arq. TIR Arq. TIR Indicator Indicator 5% 5% C.MSCR. C.MSCR. O. 11%O. 11% case. case. Arq. Arq. Indicator C.MSCR. Indicator C.MSCR. O. case.. O.case.. • Investments C&B C&B in SPS for dairy and animal fattening systems are C&BC&B MCI–inc. 1.4x 1.4x 2.3x 2.3x MCI–inc. MCI–inc. 6.5x 29x 29x MCI–inc.TIR 27% 35% TIR TIR profitable within less than 10 years. 6.5x TIR 27% 35% 5%5% 11% 11% C&B C&B TIR -1% 3% C&B C&B TIR 21% TIR MCI–inc.-1%6.5x 6.5x 3% 29x MCI–inc. MCI–inc. 1.4x 2.3x TIR • In dairy systems, total farm income 21% flows 23%23% could support a drop ANT ANT MCI–inc. 29x 1.4x 2.3x ANT in milk ANT prices of up to $650 per liter. In dual-purpose (dairy and MCI–inc. 0.9x 0.9x 1.3x 1.3x MCI–inc. MCI–inc. 4.4x flows 5.1x TIR 21% 23% TIR TIR -1% -1% 3% 3% animal fattening) MCI–inc. systems, 4.4x total farm income 5.1x are better TIR 21% 23% ANT ANT protected from price volatility. ANT TIR TIR ANT 13% 13% 20% 20% MCI MCI –inc. –inc. 0.9x 0.9x 1.3x 1.3x TIR TIR 18% 18% 27% 27% CARCAR MCI–inc. MCI–inc. MCI 4.4x –inc. 2.6x4.4x 2.6x 5.1x 5.1x • Total NAR farmNAR income flows in meat production systems (cattle MCI–inc. 4.4x 4.4x TIR TIR 13% 13% 20% 20% MCI–inc. rearing and fattening) 3.9x3.9x can withstand MCI–inc. 5.4x5.4x high volatility in meat TIR TIR 18% 18% 27%27% CAR CAR NAR TIR TIR -3% -3% 7% 7% MCI MCI –inc. –inc. 2.6x 2.6x 4.4x 4.4x ORINAR prices. ORI MCI–inc. MCI–inc. MCI–inc. MCI–inc. 0.8x 3.9x 1.7x 5.4x 5.4x 0.8x 3.9x 1.7x Meat - Breeding TIR TIR -3% -3% 7% 7% Meat - Breeding andand fattening fattening ORI ORI MCI–inc. MCI–inc. 0.8x 0.8x 1.7x 1.7x Arq.Arq. Indicator Indicator C.MSCR. C.MSCR. O. case. O. case. Meat Meat - Breeding Breeding -Investment /and andha fattening fattening Investment Investment / ha Investment Archetypes Archetypes (COP, M) (USD) / ha O. TIR TIR -5%-5% 5% 5% (COP, Indicator Arq. IndicatorM) C.MSCR. / ha (USD) C.MSCR. case. Investment Arq. O. case. Archetypes Investment // Investment ha Investment ha EST EST Summary (COP, Archetypes of M) indicators profit (COP, MCI MCI–inc.–inc. 0.7x 0.7x 1.5x 1.5x C&B, C&B, ANT,ANT, TIR TIR -5% 5% M) ha(USD) //ha (USD) NAR, NAR, ORI EST ORI EST $3.8$3.8 -5% $1,300 $1,300 5% and investment needed per TIR 14% 16% MCI –inc. 0.7x 1.5x C&B, C&B, ANT, ANT, CARCAR TIR 14% 16% MCI–inc. 0.7x 1.5x archetype. $3.8 $3.8 $1,300 $1,300 NAR, NAR, ORI ORI CARCAR TIR $3.2 14% $3.2 $1,100 $1,100 14% 16% MCIMCI –inc. 2.9x2.9x –inc. 3.3x 3.3x CAR TIR 16% CAR CAR $3.2 $1,100 MCI –inc. 2.9x 3.3x CAR $3.2 $1,100 MCI–inc. 2.9x 3.3x Considerations for a scaling-up strategy 1 Promoting the use of SPS will require a combination of intensive and non-intensive systems. Dairy, animal fattening, and dual-purpose systems in Colombia’s Caribbean coast region are the most 2 attractive for private investment. 3 For the majority of the typical cattle ranching systems, a return on investment is seen in 5–7 years, so long- term financing will be required to promote these systems. 4 Dairy production systems are the most vulnerable to price fluctuations. 5 Meat production systems (cattle raising and fattening) can withstand price drops of up to ~ 50 percent. Efforts to convert land used in cattle ranching to SPS or iSPS should be carried out within the framework 6 of an integrated land use planning strategy that ensures effective land use, forest conservation, and ecosystem restoration. Appropriate incentives will be based on an evaluation of criteria related to environmental benefits as well 7 as profitability. • Dairy production systems are the most cost-effective option, but they have less potential for transforming land use through conversion to SPS and iSPS. • Cattle ranching for meat production is less profitable than the other types of systems but has greater potential to transform land use through the conversion to SPS and iSPS. To realize this impact, producers will require incentives from the private and public sector; the types and combinations of incentives will vary by region and production system. • The dual-purpose system in the Caribbean coast region offers medium profitability and a high potential impact on land transformation through the conversion to SPS and iSPS. • Regions with high potential to transform land use by moving toward sustainable cattle ranching systems will require specific packages of incentives so that producers can adopt SPS and iSPS. Cost effectiveness 1 # of producers Bank financing cost ~17% 500 The Business Case for Silvopastoral Systems in Transformation potential per thousands of 450 Colombia. hectares to convert to SPS and iSPS 400 350 Sustainable Cattle Ranching Project in Colombia (GCS), 300 DP CAR February 2019. 250 Breeding ORI DP ORI Consultancy commissioned 200 by the World Bank 150 Milk B&S  and funded by the UK 100 DP ANT Department of Business, DP B&S Milk NAR 50 Fattening CAR Energy and Industrial Strategy (BEIS). The 0 Milk ANT consultancy was led -50 -2 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 by Technoserve, with information and data High profitability Medium profitability Low profitability provided by the GCS Project. B&S: Boyacá and Santander NAR: Nariño CAR: Caribe ANT: Antioquia ORI: EST