NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

To increase food security through access to affordable dairy products and promote greater resilience of the dairy supply chain, IFC is making an equity investment of up to BRL160 million (approximately US$32.6 million) in Alvoar Lácteos S.A., the fifth largest dairy producer in the country. The investment aims to expand production, processing, and distribution of dairy products in the Northeast Region of Brazil, helping tackle malnutrition and food insecurity.

IFC’s investment will support Alvoar’s expansion program, including the installation of new equipment, renovation of existing industrial units, and expansion into cheese production. The project will further allow the company to implement necessary environmental and social (E&S) upgrades, boosting production efficiency and increasing the supply of dairy products in the Northeast of Brazil, an area with a high prevalence of food insecurity.

Alvoar’s milk supply chain in the Northeast spans approximately 3,500 producers, most of them small and mid-size farmers. The company today provides technical assistance to a number of these smallholder suppliers and IFC is discussing with Alvoar ways to strengthen this assistance. The goal will be to support farmers increase their productivity, incorporating good international industry practices, which would also lead to lower greenhouse-gas (GHG) intensity per liter of milk.

The project is aligned with IFC’s Global Food Security Platform (GFSP) that was launched in October 2022 in response to surging levels of food insecurity. GFSP is a $6 billion financing facility to strengthen the private sector’s ability to respond to crisis and help support food production.

“IFC’s investment will allow Alvoar to increase the volume of dairy products in an underserved region of Brazil and boost the impact in the Brazilian milk supply chain. This will also benefit more local consumers, especially because of the affordability of the products and their improved availability across cities in the Northeast Region. We further plan to ramp up the supply of nutritious products, reducing the prevalence of protein and micronutrient deficiency among the underserved consumer households in the country,” said Bruno Girão, Alvoar’s CEO.

IFC will support Alvoar to improve its E&S policies and management practices in line with IFC Environmental and Social Performance Standards and industry best practices, including incorporating sustainable sourcing standards within its supply chain of raw milk.

“One of IFC’s priorities is to increase the resilience of the global food supply market. This investment in Alvoar will contribute to that by facilitating increased milk production and distribution in the underserved areas of Brazil. While improving people’s access to food supplies, the project will also support better market access and purchases from smallholder farmer suppliers, boosting the domestic food system’s resilience to future shocks,” said Carlos Leiria Pinto, IFC Brazil Country Manager.

Photo courtesy of atramos.