Market Context of INA's Offerings
Market Context and Participants - Agriculture
The annual cost of a harvest in Brazil is around R$1 trillion (~200bn USD), the Safra Plan covers, on average, a quarter of the necessary resources. The rural credit market, as a whole, generates around R$700 billion (~140bn USD) per year. A third of this financing comes from public and private banks, and another portion from the balance sheet of industry and capitalized rural producers. The role of financing investments is fundamental for the growth of the sector, even more so when it comes to financing for crop production and productivity development. It can be said that the country's growth, with an agricultural economy, is directly related to its capacity for rural financing, that is, that access to different forms of credit combined with competitive rates is of crucial importance in the evolution of agribusiness and, therefore, of the economy in general. There are several lines of credit offered, both public and private, but it is worth noting that the sector depends on loans.
Plano Safra
The main instrument of Brazil’s agro policy, the Safra Plan (Plano Safra) is crucial for sustainable development, establishing credit lines aimed at ensuring financing for crop production and product commercialization. Its main goal is to provide resources and incentivize the agroindustry through subsidized and unsubsidized financing.
The subsidized rates are better than what's available in private markets. Rates vary from 5% to Small Agricultural Families and between 8% and 12% for mid and big size producers.
It’s important to note that the unsubsidized resources accounted for about 43% in the 2023 Plan, mainly through the Letra de Crédito do Agronegócio (LCA Livre).
Private Credit and Capital Markets
The Safra Plan is an important program in Brazil to guarantee some level of financing and funding for the Agro operations. However, the market is demanding more than what the government has incentivized the industry with. The Agriculture Ministry has consolidated the data regarding private credit in the Agro Industry.
Financing the Brazilian harvest is no small feat; the Private Credit and Capital Markets provide the remainder necessary to put everything to work. The instruments and vehicles used for this are many, as you would expect from a well-developed financing structure, such as CPR, CRA, LCA, CDCA and FIAGROs. FIAGROs are funds that were created in 2021 to allow the Capital Markets to invest in assets exclusively from the Agriculture Supply Chain. Another important vehicle to invest in Agro is the FIDC Agro. They are a subset of FIDCs - which are funds mandated to buy credit rights such as receivables. Besides that, the Brazilian market has non-securities operations using receivables as collateral; these are the Factoring businesses that act locally and are usually funded by the founders’ money.
In 2023, these were the volumes by each of one these instruments and vehicles:
Agro Factoring: 20 bn BRL - $4bn
FIDC Agro: 60 bn BRL - $12bn
CPR: 298,12 bn BRL - $59,6bn
CRA: 127,74 bn BRL - $25,4bn
LCA: 459,03 bn BRL - $91,8bn
Fiagro: 37,86 bn BRL - $7,6bn
You can learn more about each of these products here.
Private Credit Market Growth
The Credit Market for the Agriculture Industry in Brazil has been expanding fast, with a CAGR of approximately 35% from 2021 to 2023.
Private Agro Instruments Stock & Resources (billions of BRL):
Private Agro Instruments Stock & Resources (billions of USD):
Market Context and Participants - Credit Card Receivables
Market Context and Participants - Creator's Economy
Market Context and Participants - Credit Markets Globally and in Brazil
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