Auctions of confiscated farms soar as rural debt grows

Auctions of farms seized by creditors are soaring across Brazil, according to data compiled for Reuters, with troubled rural credit accounting for almost a fifth of total outstanding loans.

Falling grain prices, high interest rates and rising production costs, in addition to the impacts of unpredictable climate change, have led to a much greater number of bankruptcies and farm confiscations across Brazil, producers and analysts told Reuters.

To make the situation worse, Brazilian farmers are preparing for a possible "super El Niño" weather phenomenon, which could harm agricultural production and further reduce their income. Furthermore, rising fertilizer prices during the war in Iran caused many Brazilian farmers to reduce their planting plans.

The state of Rio Grande do Sul, one of the most affected by the increase in agricultural defaults, suffered catastrophic floods in 2024, influenced by climate change and that year's El Niño, according to a study published in January in the magazine "NPJ Natural Hazards", affiliated with the magazine "Nature".

Troubled debt issued under Brazil's rural credit rules more than quadrupled in two years, reaching 171.2 billion reais ($33 billion) at the start of this year, according to Central Bank data that monitors problems such as defaulted loans, defaults, renegotiations and refinancing.

Defaults rose to 19.6% of total outstanding agricultural loans, from just 5.5% two years earlier, Central Bank data showed.

"Debt in the agricultural sector is at an extremely delicate moment," Guilherme Campos, Secretary of Agricultural Policy at the Ministry of Agriculture, told Reuters.

Sale of farms

Brazilian creditors have become more aggressive in seizing agricultural land as collateral for defaulted loans, increasing the number of rural properties up for auction, according to data from aggregator website Leilao Imovel shared with Reuters.

The volume of these auctions jumped to 14,219 rural properties auctioned in 2025, an increase of 30% compared to the previous year.

Properties seized and auctioned in faster extrajudicial procedures almost doubled, reaching 2,398 last year.

Leilao Imovel researched around 7% more auction houses in 2025, so the data is not directly comparable, said co-founder André Figueiredo. However, the biggest auctioneers have been sharing data since 2019 and there is a clear trend of worsening financial difficulties for Brazilian farmers in recent years, he said.

"The volume of rural properties (up for auction) increased significantly," he said, adding that regions focused on the production of soybeans and other grains were the most affected.

Bankruptcy filings in the agricultural sector jumped 56% in 2025, after more than doubling in 2024, according to data published by credit agency Serasa Experian.

Troublesome climate

Producers are still struggling to recover from a series of shocks, said Serasa Experian's general director of agriculture, Marcelo Pimenta.

Other factors eroding farmers' ability to meet their financial commitments, he said, include bad weather, falling prices for agricultural exports - particularly soybeans - and Brazil's benchmark interest rate, which has risen from 2% to 15% in five years.

"The outlook for the future is not good," he added. "Interest rates are very high and it is uncertain where commodity prices will go. The probability of a shock due to climate problems is very high."

A Rio Grande do Sul farmer, who asked not to be named, said he was struggling to pay "unpayable" interest after extreme weather conditions ruined his crops. A credit agency recently seized more than half of his family's rural property.

"Climate change is significant, it's clear. From one moment to the next, we were unable to produce because of too much rain or too much sun," said the farmer. "The climate factor is what put us in this situation."

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Source: CNN