They disbursed R$15.5bn in farm loans in July and August, more than private-sector banks
Corn harvest in Campo Verde, Mato Grosso — Foto: Fernanda Pressinott/Valor
Credit cooperatives extended R$15.5 billion to farmers in lines linked to the 2022/23 Crop Plan in the first two months of the season, up 11% year-over-year, and surpassed private-sector banks in terms of volume of funds lent to this public through the financial system – excluding issues of agribusiness bonds. They are second only to state-owned lenders, a group led by Banco do Brasil.
Thiago Borga, coordinator of credit at the Organization of Brazilian Cooperatives (OCB), said that credit cooperatives had already been standing out for the volume of transactions carried out, aimed especially at regular expenditures, with an important role in the spreading of farm loans across the country. In addition, the increase in the subsidy limits destined for these lenders is one reason for the higher amount released to farmers in July and August.
“The segment’s goal is always to serve the farmers in the most efficient way – at the speed required by agriculture for the arrival of credit and at the most adequate cost. The consolidation in the second place in this ranking will result from the efficiency of credit cooperatives,” Mr. Borga told Valor.
Currently, 519 cooperatives offer farm loans, many of them linked to cooperative systems like Sicoob, Sicredi and Cresol. Others operate independently, such as Credicoamo and Credialiança. These five entities received more than R$40 billion of subsidies from the National Treasury to offer lines aimed at regular expenditures and investments during the 2022/23 Crop Plan, which is an advantage considering the rising interest rates in Brazil. In 2020/21, when Credialiança was not yet part of the group, loans totaled R$19.3 billion.
The allocation of subsidized rates by private-sector banks stood at R$1.7 billion in 2021/22 (Bradesco, BDMG, Banrisul, BRDE, CNH Industrial) and R$2.5 billion in 2022/23 (Banrisul, BDMG and BRDE).
Sicredi is one of the main players in the segment. In this crop, it is expected to lend R$50.6 billion to farmers. In the first two months of the cycle, it disbursed R$11.6 billion through 93,000 operations, including financing through Rural Producer Bills (CPR), which exceeded R$2 billion.
Luis Henrique Veit, Sicredi’s head of agribusiness, links the good performance of cooperatives to their broad bases and close relationship with members. “We have the expertise and tailored service.” The cooperative serves 650,000 farmers across the country. In about 200 cities, it is the only lender present.
With a growing demand in the sector, the cooperative has made efforts to increase fundraising in order to offer more loans. Mr. Veit said there is room to increase the subsided amount, now at R$15 billion, by up to 40%. Sicredi has also issued more Agricultural Credit Bills (LCAs) and is the main on-lending player for funds from the Brazilian Development Bank (BNDES). By Tuesday, Sicredi had already received R$3 billion from the state-owned bank.
Several cooperatives are also accredited in BNDES, seek funds from this source, and bridge the gap between development programs and cooperative farmers. Besides Sicredi, Cresol, Bancoob, and Credicoamo also took funds from the bank to extend farm loans between July and September. Part of the strategy of the cooperatives is to increase their physical presence. In the last two years, more than 1,100 units opened in Brazil. In March, there were already 8,153.
In recent years, credit cooperatives had already been reducing the distance to private-sector banks in terms of disbursements through Crop Plan’s official lines, but they had not yet surpassed these lenders, a group led by Bradesco, Santander, and Itaú. In the 2020/21 crop, when R$246.1 billion were disbursed by all players, the difference was R$8.6 billion, the lowest to date. In 2021/22, it rose to R$9.4 billion.
The cooperatives also lagged behind private-sector banks when comparing the first two months of the last five harvests. In 2021, the private-sector group lent R$14.4 billion. In 2022, R$11.5 billion were lent in the period, down 20%. The biggest decrease was Itaú’s, to R$1.5 billion from R$2.4 billion. But Bradesco and Santander kept pace, with R$4.2 billion and R$2.3 billion, respectively.
As private-sector banks direct funds from savings accounts to investments in housing credit, state-owned banks and cooperatives received larger subsided limits for farm loans this crop, which became a huge advantage considering that Brazil’s key interest rate is 13.75% per year. Private-sector lenders also adopt different allocation speeds, so as not to miss the pace and be forced to “close the portfolio” early. “The broad scenario is of scarcity of farm loans, in which banks have placed themselves as ‘fund takers’ of each other at rates close to the ceiling rate,” said Itaú BBA.
Private-sector lenders, however, have open doors to fund Rural Producer Bills (CPRs), issue bonds, and do structured transactions, which are not accounted for in these calculations. With insufficient subsidized money to foster agriculture, private-sector banks can recover the lost ground through non-earmarked funds.
The Brazilian Federation of Banks (Febraban) said that the first month of the crop year was impacted by the reallocation of subsidized lines by the Ministry of Agriculture, but that the lenders will resume the pace. “Besides the 30.83% increase in the allocation of these funds, there was an internal reallocation of funds, directed almost entirely to the credit cooperatives. Moreover, July is the month in which banks adjust systems and processes to put in place the agricultural policy established by the Ministry of Agriculture and the Central Bank,” Febraban told Valor.
*By Rafael Walendorff — Brasília
Source: Valor International