Agricultural cooperatives double their share of agribusiness GDP
Brazilian agricultural cooperatives emerge as one of the main winners of the recent cycle of financial tightening in some parts of agribusiness. Survey of L.E.K. Consulting shows that the participation of these organizations in the sector's GDP went from 8.1% in 2019 to 15.4% in 2024, growth of around 90% in the period.
The advance occurred in an environment marked by the reversal of commodity prices, an increase in rural defaults and financial difficulties faced by input resellers.
According to Eric Emiliano, partner at L.E.K. Consulting responsible for the agribusiness and food sectors, the movement reflects a broader transformation in the rural financing system.
"The Safra Plan has been losing representation over the years, especially among large producers. For a long time, the chain financed agriculture through barter and commercial credit. In recent years, this model has suffered a major shock with the increase in defaults", he states.
The difference in performance between cooperatives and resellers became more evident after the fall in soybean and corn prices. While companies such as AgroGalaxy, Lavoro and Belagrícola entered judicial or extrajudicial recovery processes, cooperatives preserved growth and expanded market share.
For Bruno Brandi, senior manager at the consultancy, the scenario exposed weaknesses in part of the distribution sector. "In many cases, resellers were functioning like banks. They financed the producer through barter and extended terms. When default rates increased, this model showed its limitations", he says.
According to the consultancy, default on credit linked to agribusiness, historically close to 3%, is currently approaching 15%, a level higher than that observed in the crisis of 2016 and 2017.
"We are seeing defaults on the order of three times the last relevant peak in the sector. The producer faced two consecutive harvests in which costs grew more than revenue", says Emiliano.
In this context, cooperatives began to occupy part of the space left by resales by expanding the offer of credit, barter, technical assistance and services to members.
"Cooperatives create a complete ecosystem for the producer. They finance, purchase, store and sell. This reduces defaults and strengthens the long-term relationship", says Brandi.
The study points out that the resilience of these organizations is linked to revenue diversification and the ability to capture value at different stages of the production chain.
Capitalized after years of expansion, cooperatives are now advancing on four main fronts: industrialization, biofuels, geographic expansion and acquisitions of assets from companies in financial difficulties.
Industrialization makes it possible to capture more added value from products already produced and sold; while entry into the biofuels sector follows a favorable market wave and diversifies revenues.
L.E.K also points out that cooperatives can take advantage of companies in judicial recovery to expand territory and capture operational synergies.
The South of the country leads in absolute growth in the number of cooperatives in the country, while the Central-West and Southeast offer greater potential for expansion, given the large market and low presence of cooperatives.
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Source: CNN