SAO PAULO, (Reuters) – Abiove, Brazil’s oilseeds industry group, said on Tuesday that commodities traders may reduce financing to farmers by around 50 percent for the new crop (2019/20) due to defaults and bankruptcy protection requests in the sector.
Patrícia da Silva, Abiove’s tax and legal affairs manager, said the potential reduction in farmer loans is related to a “breach of trust” between grain traders and grain growers in Brazil, the world’s biggest exporter of soybeans and other agricultural commodities.
Through loans and especially barter operations, the Brazil-based trading firms exchange fertilizers and agrochemicals for a portion of a farmer’s future crop. In Brazil, grain traders account for about one-third of farmer financing.
Read Also
Farming Smarter receives financial boost from Alberta government for potato research
Farming Smarter near Lethbridge got a boost to its research equipment, thanks to the Alberta government’s increase in funding for research associations.
“We need to restore the trust in our partners,” Silva said at an event hosted by Abiove, where the group vowed to be more active in discussions of policy for the oilseeds industry.
A spate of farmer defaults in Brazil’s top grain-producing state, Mato Grosso, has created headaches for global traders who are among farmers’ main creditors.
Abiove President André Nassar told reporters on Tuesday that commodities traders are taking a more cautious approach to the new season because of uncertainty stemming from freight prices in Brazil and a large soybean supply in the United States.
