From the outset, Brazilian rural credit has been essential for financing the country’s agricultural sector. With the increasing professionalization of rural activities over the years, credit has become one of the main funding sources for the sector. However, state-sponsored subsidies alone are not enough to meet the needs of Brazilian agribusiness, which requires the search for additional funding sources.
Agribusiness in Brazil offers interesting alternatives for producers and investors, integrating sustainability, profitability, scalability, diversification, and a promising long-term market. As with any business activity, credit is essential to harness all this potential and yield wealth, food and energy security, social welfare, and prosperity in the countryside. In this context, FIAGRO emerges as an excellent option.
Launched in 2021, the Fundo de Investimento do Agronegócio (Agribusiness Investment Fund, known as FIAGRO), was developed to allow individuals and companies to invest in the agricultural sector, expanding access to financial resources for agriculture and livestock. By offering an investment option in the sector, FIAGRO accelerates change in the countryside, especially when combined with Technical and Management Assistance (TMA).
For more than ten years, the CNA System, through SENAR, has been serving thousands of rural producers from different production chains throughout Brazil through the Technical and Management Assistance (ATeG) program, aimed at small- and medium-sized producers. Recognizing the difficulties these producers face when accessing credit, CNA surveyed more than 4 thousand participants in the ATeG program.
The survey’s results showed the main factors restricting credit for these producers: excessive bureaucracy and documentation requirements, delays in approving credit, the need for guarantees, a lack of transparency in the relationship between credit institutions and producers, and lastly high notary costs. Based on this analysis, the CNA System began developing a credit type to mitigate these challenges.
Therefore, sensitive to the difficulties faced by producers, the CNA System, through the CNA Institute, launched CNA FIAGRO to boost the development of the agricultural sector and promote the prosperity of rural producers. In the pilot project phase, the main objective of this initiative is to build an alternative way of accessing financial resources that is agile, less bureaucratic, transparent and with competitive rates, complementing existing sources of funding, such as the Plano Safra (Safra Plan) and credit from suppliers of inputs, machinery and equipment.
Therefore, learning about the difficulties producers face, the CNA System, through the CNA Institute, launched CNA FIAGRO to boost the development of the agricultural sector and promote the prosperity of rural producers. In the project’s pilot phase, the main goal of this initiative is to build an alternative way of accessing financial resources that is fast, less bureaucratic, transparent, and with competitive rates, complementing existing funding sources, such as the Plano Safra and credit from suppliers of inputs, machinery, and equipment.
This pilot focuses on granting cost credit, reinforcing the idea of responsible credit by providing producers with all the essential information to adapt their proposal to the actual needs and capacities of their businesses. To ensure investor security, CNA FIAGRO demands the assisted producers be linked to ATeG, which will monitor the whole operation, from selecting rural premises to the credit’s discharge. This requirement aims to ensure technical and managerial support for the borrower, increasing the sustainability and the producers’ payment ability.
CNA FIAGRO was designed based on four crucial pillars for granting sustainable credit: governance, economic and financial sustainability, social responsibility, and environmental commitment. The project’s first phase, scheduled for 2024 and 2025, seeks to gain experience to expand the initiative. Currently, dozens of producers have been granted, and some of them are already applying to renew their credit. Given the expectation created, estimates show that around 400 thousand producers (who have been assisted or are being assisted by ATeG), could benefit from the project.
Considering the size and credit needs of this target audience, a simple calculation reveals the initiative’s great potential, envisioning a billion-dollar market on the horizon.
Authors:
Matheus Ferreira Pinto da Silva
CNA Institute’s Deputy Executive Director
Christiano Nascif
CNA Institute’s Entrepreneurship and Business Coordinator