The combination of negative events in the local and international scenario – such as the ukrainian war and the lack or excess of rains in certain Brazilian regions – pushed part of the agribusiness for a crisis scenario, generating concern among the sector’s creditors. Part of rural producers has resorted to judicial recovery.
The numbers, for now, are still discreet. From 2020 onwards, there were about 50 requests for recovery in this sector. But this is just the tip of an iceberg, according to experts. This is because this year there has been a strong growth in the demand for restructuring, something that should soon be reflected in the survey.
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These movements reflect a recent change in the law, which allowed even individual rural producers, without CNPJ, asked for legal protection to negotiate debts. “The agribusiness sector is doing well and has helped the national economy, but the pandemic has affected everyone. When the industry believed there would be a recovery, there was the issue of the Ukrainian War, affecting fertilizers. The climate issue was the shovel”, says the lawyer for the Dasa office, Eduardo Kawatami.
Partner at Lefosse, Roberto Zarour states that cost pressure remains high. According to the expert, many creditors are considering executing debts owed to rural producers, which should speed up requests for judicial recovery. He also emphasizes that despite the Safra Plan, which has just been announced, has a record value, its cost is higher, which puts more pressure on the manufacturer.
The list of cases continues to grow. A company in the agricultural sector, the group from Mato Grosso Redenção recently had its judicial recovery approved recently, with debts of R$ 270 million. Another that entered into judicial recovery was the mining conglomerate Machado and Cruvinel, with debts of R$ 90 million. But the examples begin to spread across Brazil (read more below).
Partner of the NDN office, specialized in judicial recovery, Tiago Dalvia confirms that high demand. His view is that the rural producer is strangled by the expiration of subsidized credit operations, launched by the government in the pandemic. “Usually, financial operations in the agro sector expire between August and October to reconcile with the production cycle. With the fall in the harvest along with the maturity of credit operations, there was an increase in inquiries in this segment”, he reports.
O rural producer Adair Cristóvão da Rocha, from Campo Verde (MS), filed for judicial recovery after accumulating R$ 31 million in debts with banks, input suppliers and its own employees. The request was granted last month.
Rocha started working on an area of 300 hectares, but soon expanded his crops and, in 2014, he was already planting soybeans on about 1,000 hectares. The following year, a severe drought led to an almost total loss of production. Instead of retreating, Rocha decided to invest more in farming. The cultivation area was expanded to 5,000 hectares, which required new investments in machinery and inputs for the soil. In the following years, however, his financial situation only worsened.
I delivered a harvester, a truck, a pickup truck… And I was still in debt. Finally, I sold 324 hectares of my own land and that was the only way I was able to pay the debts.”
Ari Langer, farmer
In the request for judicial recovery, Adair Rocha also recalled the impact of the covid-19 pandemic on the supply of credit by financial institutions and the rise in the dollar, which increased the cost of inputs. The producer stated that he was fully convinced of its capacity and operational and financial viability, with the rehiring of employees and even with the potential for future expansion of its activities. A payment plan has already been prepared and is still awaiting approval by the judiciary.
To Estadão, Adair said that the bankruptcy has paved an important path for his business. “There are several families that depend on our activity, and keeping these jobs really leaves us with hope and expectation of better days.”
According to him, the judicial recovery guaranteed breath to build a payment plan. “We want to honor our commitments and honor our name. We live in a country with a complex economic situation and conditions are not always favorable, as in our case. The recovery paved the way for us to survive in this scenario and continue working in agribusiness.”
The agribusiness sector is doing well and has helped the national economy, but the pandemic has affected everyone. When the industry believed there would be a recovery, there was the issue of the Ukrainian War, affecting fertilizers. The climate issue was the lime shovel.”
Eduardo Kawatami, lawyer
O lawyer Marco Aurélio Mestre Medeiros, partner at Mestre Medeiros Advogados Associados, which proposed Adair’s lawsuit, said there had been increased demands at its offices. “The judicial reorganization institute began to be seen in fact as a restructuring tool by the rural producer.”
For the rural producer Ari Baltazar Langer, with cultivation areas in Gaúcha do Norte, Mato Grosso, the possibility of requesting judicial recovery came late. Last year, he was forced to get rid of machines, tractors and more than half of his own plantation area to pay off debts.
“I delivered a harvester, a truck, a pickup truck… And I was still in debt. Finally, I sold 324 hectares of my own land and that was the only way I was able to pay the debts. I have almost run out of equity, but I can’t stop working so I don’t lose the rest,” he said.
Thus, a crop of almost 5,000 hectares per year was reduced to 3,400 by 2020 and, now, to just 670 hectares. “In order to plant this amount, I am being forced to lease 470 hectares. That’s because, of the 242 hectares I have left to continue working, only 200 are open areas for planting”, he said.