Private banks increase the granting of agricultural credit

As one of the highest performing sectors in the country, the agricultural segment has aroused great interest in private banks for granting credit. This is due to the increase in the need for private credit and the attractiveness of the sector due to the reduction and more expensive supply of subsidized credit, and the reduction in the SELIC rate, which brought the interest rate that rural producers can pay closer to that practiced in the market. .

Banks' demand for this new market is due to the peculiarities of agribusiness. “The means that producers use to seek credit are different from the conventional ones used by other companies. For example, the producer is not digitalized and will not look for credit solutions online; the producer should not be financed or charged based exclusively on conventional information, such as IR or its balance sheet. Although the producer's biggest asset is his land, the currency he uses is the commodity, something that the bank does not understand, does not want to operate and does not have the agility to execute. Therefore, their debts are collateralized in the land, which creates difficulties in collection in agribusiness”, explains Bernardo Fabiani, CTO of TerraMagna, a Brazilian agrotech that works to mitigate agribusiness risks.

To serve farmers in remote areas, several bank branches are being opened in strategic points, generating the hiring of many managers to operate in the field and - literally - physically approach producers. If, on the one hand, banks are trying to lend more, in terms of credit security, there are few solutions applied to guarantee the receipt of the debt.

“Firstly, the benefits that private banks bring to farmers are cheaper credit and, secondly, greater professionalization. As contact with the producer develops, gradually raising the bar for granting credit will lead to more established corporate governance and access to other financial services that the producer lacks, such as hedging (an operation that reduces or eliminates exposure at commodity prices). Credit in agribusiness is not risky, but it is often poorly managed,” says Fabiani.

To assist in the security of receiving credit from financiers, TerraMagna monitors crops using its own satellite system and also field monitoring to follow the grain from the field to the silo. Monitoring works as follows: the company receives a description of the credit granting operations and the financier monitors the crops in real time, arriving before other creditors and avoiding fraud, such as absence of planting or diversion of the grain produced. If signs are observed that there will be payment problems, the creditor quickly executes the collateral and has a guarantee of liquidity with the sale of the crop. “We provide more security in agribusiness financial operations, making the process transparent and less invasive, with free data”, concludes the agrotech CTO.