Private finance ploughs into Brazilian agriculture
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Private finance ploughs into Brazilian agriculture

Cotton harvest / cotton harvest
Photo: Getty Images

Brazil’s agribusiness sector is booming on the back of sky-high commodity prices. The public banks that have long financed the sector now face a wave of new private-sector competitors.

“Not many years ago, when a farmer faced a problem, he could sell his pick-up truck and that would solve his problem. But, as the money that’s involved in production has gone through the roof, if there’s a cash flow shortfall, the sale of a pick-up isn’t going to bridge the financing gap. It could be R$2 million, R$10 million – R$20 million.”

Itaú BBA's director of agribusiness, Pedro Fernandes, makes a reasonable point about increased scale in Brazil’s booming farming industry. Where once a pick-up truck was a large nominal expenditure for a farmer, today a cotton harvester costs around R$6.9 million ($1.3 million). Genetically-modified seeds cost huge multiples of those that were planted a decade ago – offering much higher and more resilient yields but adding to the jump in costs which have risen along with revenues.


Rob Dwyer head.jpg
Latin America editor
Rob Dwyer is Latin America editor. He has been a financial journalist since 1997 and has worked in London, New York and São Paulo, Brazil, where he is now based.
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