The reading that “agro is broken” because of default is wrong, says Paulo Mesquita, a partner of Riza. He mentions that looking at the “about 3%” of default in Banco do Brasil’s portfolio () and concluding that the whole sector will not badly not match what is seen in everyday life: “I have producers who last week bought a farm of $ 1 billion. Most of the Brazilian agribusiness is still quite quiet,” he said.
He was the guest in the third episode of the root of the business – partnership between the Infomoney and The Agribiz, its road between the countryside and Faria Lima.
Suicide Strategy
According to Mesquita, “by mid -year” there was a higher level of default, but “from mid -year” there was accommodation. And the case of Banco do Brasil, he says, is specific: “It was 100 years financing Brazilian agribusiness and I had never seen it. Producers with a history of decades arrived in July and had no limit [de crédito].”
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For Mesquita, “this is a suicidal BB strategy”, as it exposes the institution to greater vulnerability in judicial recoveries, as in most cases the guarantee is the mortgage.
He adds that banks have restricted credit to the sector, which took liquidity and “forced default.” And large multinationals, after bad results in 2023 and 2024, also became more restricted. With this, “the producer had to refinance with his own money and something that came from the market.”
Stability
Even so, Mesquita estimates that the credit situation “decreased considerably” in the second half and “tends to go back to stability.” Default, he says, “It was a little beyond the account,” but “is far from indicating that the sector is in trouble.” “It was not absurd.”
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According to him, there was a turn from the safrinha, described by him as of very high productivity “all over Brazil”. Corn prices “are remunerating well” and the perspective for the 2025 soy is “good”: “If we can fix soy in Tocantins at 120 to the crop that comes when you look at the cost of production and an average productivity, this gives a margin of 30% per year.” For him, “the margins of the sector are recovering” and “the next cycle is very positive.”
