Brazilian banks are taking a harder line with distressed farm borrowers after three years of financial strain, warning that weak governance, unreliable records and clients who stop taking calls are undermining the credit relationships needed to finance Brazil’s crops.
Lenders also say calls for debt forgiveness are feeding expectations of a legislative rescue and may encourage more delinquency. Average debt among defaulting rural borrowers tripled to more than $23,200 (120,000 reais) in the first quarter of 2026 from about $7,750 (40,000 reais) in the first quarter of 2023, according to data presented by Brazilian credit bureau Serasa.
The comments marked a shift from the more conciliatory approach banks had used to preserve ties with farm clients. The criticism dominated an Aug. 12 panel at the annual congress of Andav, Brazil’s association of agricultural and veterinary input distributors.
The panel examined the impact of recuperação judicial — Brazil’s court-supervised reorganization process, broadly similar to a Chapter 11 filing — on agribusiness lending.
“If someone running a restaurant can keep proper books on less than $97,000 (500,000 reais) in monthly revenue, how can someone generating $7.7 million (40 million reais) a year still hand the accountant a bag of receipts?” said Pedro Fernandes, Itaú BBA’s agribusiness director.
Fernandes criticized debt-forgiveness rhetoric promoted by some farm groups as they lobby for laws to renegotiate rural obligations. He said it creates the impression that the crisis can be resolved with a stroke of the pen, increasing delinquency.
“This logic will not solve anything. There is no miracle,” Fernandes said. “We need to discuss what kind of business environment we want.”
Private Capital at Stake
Government-directed credit under Plano Safra, Brazil’s annual subsidized farm-credit program, totals $29.0 billion (150 billion reais) in 2026, Fernandes said. Market-rate lending, which banks can extend at their discretion, adds $27.1 billion (140 billion reais).
Outstanding CPR, a bond-like instrument backed by future crop deliveries, totals $99.7 billion (515 billion reais). Fernandes said focusing on the subsidized pool — about one-fifth of the funding base — cannot address the broader financing challenge.
“Are we going to keep thinking that changing one-fifth of the funding base will solve the whole thing? It won’t,” he said. “We have to make sure nearly $136 billion (700 billion reais) is flowing properly. Complaining about subsidies helps very few people.”
Debtors Go Dark
João Andrade, Santander’s agribusiness superintendent, said it can take 50 attempts to speak with a delinquent farmer. The process can become even harder once the borrower enters court-supervised reorganization.
“When you finally get through, you have to talk to the lawyer. That’s another 50 attempts,” Andrade said.
Fernandes said 20% of Itaú BBA’s rural delinquency problems are linked to reorganization proceedings. The rest often involves borrowers who are overdue but do not answer calls or cannot be reached, he said.
Bank executives also criticized informal management practices and inaccurate disclosures. Andrade cited a farmer who said he paid seven bags under a land lease, but whose contract showed 18 bags of soybean per hectare (7.3 bags per acre). The payment was denominated in crop bags rather than cash.
“There is no room left for this kind of incorrect information,” Andrade said.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
