Rural producers expand search for judicial recovery

During the second quarter of this year, according to new data recorded by Serasa Experian, rural producers who operate as individuals in Brazil filed 214 requests for judicial recovery. The comparison with the first three months of the year showed an increase of 108 requests. Check out the chart:

According to Marcelo Pimenta, head of agribusiness at Serasa Experian, “climate events, rising interest rates, falling commodity prices and rising production costs were factors that negatively impacted financial stability in the countryside, especially for producers who were already highly leveraged. Even so, despite the increase, it is important to consider that the absolute number of requests is small when considering a universe with around 1.4 million producers who took out rural credit over the last two years in the country. Since there is a strong concentration of RJs in Mato Grosso and Goiás, this has generated pessimism among creditors who have started operating in the region in recent years.”

In terms of size, the data showed that those who do not own properties in the countryside, i.e., land leaseholders and economic or family groups related to the sector, filed 99 requests for judicial recovery. “For rural producers who deal with this type of financial commitment, in addition to economic factors, the challenge ends up being even greater,” comments the head of agribusiness at Serasa Experian. The analysis also identified that small rural landowners filed 44 requests, followed by large (36) and medium-sized landowners, who filed 35 requests.

Mato Grosso and Goiás were the most demanding Federative Units

Among the Federative Units (UF) of Brazil, the states in which judicial recovery was most concentrated were Mato Grosso and Goiás, which registered 57 and 54 requests, respectively. In addition, regions such as Minas Gerais, Mato Grosso do Sul and Paraná also stood out. See the full information on the TOP 10 regions in the chart below.

Forecast of financial instability could reduce exposure to judicial recovery

The performance of Agro Score – a Serasa Experian solution that provides specific analyses for the sector – can predict the risk of default by rural producers. This identification occurs because the tool's data monitoring is able to record, several months in advance, the financial profiles that already showed signs of instability. In other words, it is an analysis that mitigates the risks of granting credit.

The application of this technology showed, for example, that the average Agro Score of rural producers who act as individuals was significantly higher than that of those who filed for bankruptcy protection, even three years before the request. See:

Thus, it is possible to prove that the use of predictive models makes it possible to identify profiles prone to judicial recovery and allows creditors to make safer decisions. “Using more careful analyses to grant credit protects the market from financing with economically unstable profiles, reducing risks and encouraging the regulation of financial health in the sector”, concludes Marcelo Pimenta. 

Exclusive

The unprecedented survey conducted exclusively by Serasa Experian was compiled based on statistics on judicial recovery processes in the Agribusiness sector recorded monthly in the company's database and from the courts of justice in all states. This survey includes rural owners and producers of all sizes who operate as individuals. In this case, individuals (PF) profiles may request judicial recovery in accordance with Law 14.112 of 24/12/2020.