Farm lending falls as more turn to bonds

With farm debt climbing and banks growing more risk-averse amid climate and financial pressures on the agricultural sector, lenders pulled back sharply during the 2025/26 crop year, which wrapped up last week. Disbursements under traditional rural credit lines fell 12% from the previous season, the second straight year of decline. Orange juice export revenue plunges Deadlock persists over farm debt restructuring Creditor challenges restructuring of Lavoro, claiming it weakened collateral Banks extended a total of R$338.9 billion to small, medium, and large producers. Funding fell across operating costs (-13%), investments (-17%), and marketing (-25%), while financing for processing jumped 54%. The figures, obtained by Valor on July 2, come from the Central Bank. The pullback was concentrated among large producers, who borrowed R$210.1 billion—down 19% from the prior crop year. This group has increasingly turned instead to Rural Product Notes (CPRs) to raise financing: by May, R$185.1 billion had already been raised this way, though the government has yet to release consolidated figures through June. The full-year total is expected to land between R$200 billion and R$210 billion. Credit to family farmers and medium-sized producers, by contrast, ticked up modestly—3% and 5%, respectively. The National Program to Strengthen Family Farming (Pronaf) disbursed R$67.4 billion, while the National Program to Support Medium-Sized Producers (Pronamp) extended R$61.4 billion. Of the total disbursed, R$181.3 billion went to operating costs, R$84.9 billion to investments, R$37.8 billion to marketing, and R$34.9 billion to processing. The 2025/26 total also includes roughly R$47 billion in transactions tied to restructuring farm debt, authorized under provisional presidential decree 1314/2025. All told, rural credit disbursements in 2025/26 came in nearly 20% below the 2023/24 cycle, when farmers borrowed R$421.8 billion. Central Bank data also show that state-owned banks (-29%) and private-sector banks (-25%) have both lost ground in rural lending over the past two crop years, while credit cooperatives have gained share, expanding their piece of Crop Plan lending by 15%. Ivan Wedekin, a rural credit consultant and former secretary of agricultural policy at the Agriculture Ministry, points to the sharp drop in operating-cost financing over the past two years as especially notable. The government’s explanation is that this kind of financing has increasingly shifted to CPRs instead. “Once again, the Crop Plan turns out to be something of a statistical illusion,” he said. “The government folds CPRs into its total for rural credit resources, but they aren’t actually a credit line—a CPR is an instrument issued by the producer, and the Central Bank doesn’t record it as a rural credit loan.” For the 2026/27 crop year, the Ministry of Agriculture has added R$38.5 billion from standalone programs and other sources outside the traditional rural credit system into its total for the Crop Plan. “You can no longer set agricultural policy without recognizing that every producer’s outcome depends on multiple markets and financing sources at once,” said José Carlos Vaz, an agribusiness legal consultant and himself a former secretary of agricultural policy. “We also need to face up to how inefficiently public subsidies for equalizing financing costs are being allocated. The National Treasury isn’t the engine of rural production anymore—it’s become the handbrake.” According to the Brazilian Confederation of Agriculture (CNA), banks have grown choosier about who they lend to. Tighter collateral requirements and greater selectivity have pushed more producers toward private financing. “The trouble is, conditions have gotten tougher in the private market too. There’s an overall climate of extreme caution out there,” said Guilherme Rios, the CNA’s agricultural policy adviser. With financial constraints likely to persist into 2026/27, the CNA isn’t ruling out a reduction in planted area nationwide. “This crop year is going to take a lot of skill and flexibility to manage. Producers are telling us they’re cutting back on acreage and opting for leaner technology packages,” Rios said. “And it’s not just the difficulty of getting rural credit driving that—it’s also the lack of real tools for managing risk.” The Organization of Brazilian Cooperatives (OCB) says the increasingly tough environment is forcing farmers to rethink how they operate. “Farmers’ ability to repay has weakened, interest rates remain high, the exchange rate keeps swinging, and geopolitical conflict has ratcheted up trade tensions,” said Rodolfo Jordão, who coordinates the OCB’s agricultural division. Looking ahead to 2026/27, the OCB is counseling caution. “What we’re seeing on the ground is more conservative technology packages, less medium- and long-term investment, and more hesitation around expanding planted area—whether through leasing land or building new on-farm infrastructure,” Jordão said.