On September 30, 2024, the Securities and Exchange Commission of Brazil (CVM) published Resolution CVM 214, definitively regulating the Investment Funds in the Agricultural Productive Chains (FIAGRO). The new regulation will be implemented through the inclusion of the new Regulatory Annex VI of Resolution CVM 175, which addresses the general rules applicable to investment funds.

The FIAGRO, created by Law No. 14,130/2021, awaited specific regulation, which until then was provisionally governed by Resolution CVM 39, in addition to the general provisions of Resolution CVM 175. With the publication of Resolution CVM 214, the definitive regulation will come into effect on March 3, 2025, granting existing FIAGROs until September 30, 2025, to adapt to the new rules.

Resolution CVM 39 classified FIAGROs into three types: (i) FIAGRO-Credit Rights, which invests in receivables and debt securities from the agro-industrial chain; (ii) FIAGRO-Equity, focused on acquiring equity stakes in companies in the agro-industrial sector; and (iii) FIAGRO-Real Estate, aimed at acquiring real rights over rural properties. Until now, a FIAGRO was limited to one of these categories, without the possibility of diversifying its investment policy among the types of assets belonging to other modalities.

Resolution CVM 214 introduces an innovation by allowing the FIAGRO to function as a kind of "multimarket fund" aimed at agribusiness, with the possibility of exposure to various asset classes within the same fund. Thus, if provided for in the fund's regulations, it will be possible to allocate up to 50% of net equity to assets belonging to other categories of FIAGRO. If this limit is exceeded, the rules of the predominant category will apply subsidiarily.

Another novelty is the definition of rural property, which encompasses both properties with the Rural Property Registration Certificate (CCIR, in Brazil) and properties within urban perimeters, if they are intended for agro-industrial activities and duly registered in the Real Estate Registry. This regulation is compatible with the current scenario of the Brazilian agribusiness, where rural properties integrate a complex agro-industrial system, encompassing economic agents with various roles, such as the manufacture of agricultural inputs, planting, processing, distribution, and commercialization of agricultural products.

Moreover, the regulatory framework introduced by Resolution CVM 214 allows FIAGROs to actively participate in the carbon market, permitting the acquisition of carbon credits derived from agro-industrial activities. However, this operation demands strict governance control, such as ensuring ownership of assets and adopting widely recognized methodologies for certifying reductions in gas emissions. The FIAGRO will also be able to originate carbon credits and Decarbonization Credits (CBIO), creating revenue generation opportunities for investors.

The definitive regulation of FIAGRO, especially with the opening for asset diversification and participation in the carbon market, is also expected to significantly boost private credit in the agro-industrial sector. The multifaceted nature of the fund, with the possibility of diversified investments and entry into the carbon market, directly contributes to the development of agribusiness in Brazil, consolidating FIAGRO as an important financing channel for the sector.