Default affects 28% of rural producers in the country, reveals Serasa Experian

Negative percentage decreases with age and the South region has the best scenario; study evaluated around 10 million rural profiles taking into account overdue debts of all types

12.09.2023 | 14:08 (UTC -3)
Maria Sossmeier

A new survey carried out by Serasa Experian, which considered the country's 27 federative units, revealed that, in July this year, 28% of Brazilian rural producers were in default. “Even though we have a portion of defaulting producers, this number can be considered low, because when compared to the entire negative population, for example, the rate reached 43,7% in July this year. Furthermore, the relationship with the study we carried out in March this year shows that the index remained practically stable, with an increase of 1%”, explains the head of agribusiness at Serasa Experian, Marcelo Pimenta.

Still according to the study, interestingly, age is a determining factor in negative attitudes in the field. The data shows that rural workers who are over 60 years old have lower default rates, while those who are between 18 and 25 years old have higher levels. Check out the graph below for complete information:

South of the country recorded the lowest level of rural default in Brazil

In the analysis by region, it is possible to observe that the South registered the lowest level of negativity, with only 15% of field workers with names in the red. Next was the Southeast (24,6%), the Central-West (30,4%), the Northeast (33,8%) and the North (40,1%).

The view by Federative Units (UF) showed that Amapá has the highest percentage of defaulting rural producers. On the other hand, the state of Santa Catarina shows the most positive scenario. See the full data in the graph below:

Financial Education and Agricultural Insurance are the keys to getting out of default and continuing to grow

In order to mitigate default risks, maintain a healthy credit profile and continue with production up to date, rural producers who act as individuals need, just like ordinary consumers, to dedicate themselves to financial planning, which in the case of agriculture involves in knowing market movements linked to input costs and future prices of their production with the aim of controlling finances.

Furthermore, it is necessary to consider taking out Rural Insurance to protect the producer and his production from risks linked to excessive rain, drought and frost, among others. Thus, when these events occur, the producer has the option of using insurance to cover his obligations to his financiers and partners without the risk of having his name negative.

In general, negotiations on overdue debts or those close to maturity are always an assertive way to avoid being part of the list of defaulters.

“Most Brazilian rural producers manage to avoid default and continue generating jobs, cultivating and expanding their earnings, in addition to mitigating the risks of their negotiations. Still, for those who need help, we are committed to providing tools that help with financial regularization”, concludes Marcelo Pimenta.

Methodology

For the Serasa Experian Rural Producer Default Indicator, updated in July 2023, around 10 million profiles of individuals who have rural and/or agro-industrial financing in the Positive Registry and/or who are property owners were analyzed rural areas, with CAR (Rural Environmental Registry) or CAFIR (Federal Registry of Rural Properties), distributed in all 27 Federative Units of the country

The 2017 IBGE Agricultural Census identified 5,1 million rural establishments and 15,1 million rural producers, of which 10,1 million were classified as family farmers. The current study population can therefore be considered a sample of this population of rural producers.

The default indicators presented consider all debts on the market, that is, if a producer is in compliance with a reseller or a cooperative, with a credit card or a financial institution, if he has overdue and/or negative debts, in any scenario this is considered defaulter until the overdue debt is paid. Additionally, this study evaluates all sizes of the agricultural population, from family to large exporters.

Default is a financial factor that occurs in all areas and, when we look at the debts of the agricultural population, we can see their low representation. Most Brazilian rural producers manage to avoid negative status and continue generating jobs, cultivating and expanding their earnings and mitigating the risks of their negotiations.

Mosaic Biosciences March 2024