Brazil's 2023 farmer bankruptcy filings up 535 pct, raising alarm bells

SAO PAULO: Brazilian farmer bankruptcy requests shot through the roof in 2023, according to a new survey from data services company Serasa Experian, reflecting higher business risks for global grain traders in one of the world's biggest food producers.

According to Serasa's data released on Thursday, there were 127 farmer bankruptcy filings last year, up 53 per cent from the year before.

Most of the creditor protection requests came from soybean growers, Serasa said, though cattle property owners and coffee farmers also sought to stay creditors and reorganize their businesses, Serasa said citing satellite sensing data.

"Put into perspective, the number of bankruptcy filings compared with the millions of people engaged in farming activities seems small," said Marcelo Pimenta, head of agribusiness at Serasa. "But the speed at which these requests are growing quarter by quarter is worrying."

Brazilian grain merchants have become increasingly vocal about the issue because the rise in farmer bankruptcy cases may affect delivery of committed produce and hamper traders' ability to complete export programs.

"A historically big challenge in Brazil is how to finance agricultural production," said Paulo Sousa, CEO of U.S. grain trader Cargill in Brazil, speaking at an event this week. "Lately there has been a wave of bankruptcy filings in agriculture ... and brings a lot of concern to the sector."

Serasa's Pimenta cited climate issues, which have caused crop failure in several regions and boosted farm management challenges, as a driver of farmer bankruptcies.

He also said lower commodities prices have tightened farmer margins in a scenario of still-high interest rates in Brazil.

Most Popular
Related Article
Says Stories