Financial Concerns Delays Input Purchases in Rio Grande do Sul

The 2024/25 growing season in Brazil is rapidly approaching with planting starting within a few weeks if the weather cooperates. One of the key states to watch this growing season will be the southernmost state of Rio Grande do Sul which is traditionally the second or third largest soybean producing state, the largest rice producing state, and the largest first crop corn producing state in Brazil.

Unfortunately, the state has had three growing seasons in a row with cataclysmic weather, two of which were droughts and last year with torrential rains and historic flooding. This has left many farmers in a desperate financial situation as they try to prepare for a new growing season.

The Agricultural Federation of Rio Grande do Sul (Farsul) estimates that farmers lost an estimated R$ 4.1 billion in lost grain production not counting damage to infrastructure, buildings, equipment, and soil erosion. Farmers who did not harvest a crop last year cannot pay their debts, much less be eligible for new productions loans.

Farmers asked the federal government to step in and finance a program they call SOS Agro RS. On Thursday, August 22nd, the government announced an executive emergency credit program of R$ 2 billion for farmers in the state that were impacted by the flooding. The funds will help farmers pay production loans that were initiated by April 15th and maturing between May 1, 2024 and December 31, 2024. The funds will be available for farmers in municipalities that declared a state of emergency and suffered losses equal to or greater than 30%.

The new program is in addition to an Executive Order on July 31, 2024 that granted subsidies to rural producers who suffered losses from the flooding.

Farmer’s lack of resources has resulted in delayed purchases of needed inputs for the 2024/25 growing season. A report from Agrinvest Commodities indicated that farmers in the state have purchased 70% to 72% of their needed fertilizers compared to an average of 76%. In Brazil as a whole, more than 90% of the needed fertilizer has been purchased,

Seed and chemical purchases are even further behind. Farmers in Rio Grande do Sul have purchased 64% to 66% of their seed compared to 73% average and more than 90% nationwide. Chemical purchases are 48% to 50% compared to 55% average and 71% to 73% nationwide.

The financial situation for farmers in Rio Grande do Sul has added uncertainty to the potential 2024/25 acreage of soybeans, corn, and rice in the state. Farmers may start planting corn as soon as the weather permits and they may start planting soybeans when the soybean-free period ends on September 30th.

Tags: Production, purchases, first crop corn, Rio Grande do Sul, estimate, grain, planting, Brazil, weather, rice, soybeans