BARTER OPERATIONS CAN HELP BRAZILIAN FARMERS PLAN NEXT HARVEST...

May 7, 2020

Variations in the prices of commodities and the dollar, economic instability, the credit crunch of financial institutions and the lack of predictability of what may happen in the next harvest can generate insecurity in rural producers when planning and prospecting production costs.

To circumvent the uncertainties generated by the political and economic scenario, barter operations can be an option so that you can buy inputs for the 2020-2021 harvest. After all, the exchange allows the farmer to fix input costs using market perspectives for the price of harvested bags.

This type of operation began in the 1990s, with the interest of companies specializing in the commercialization of commodities to expand their soybean business in the Midwest region, but at the time it was still a little-known practice with a regional scope. However, because it is a safe option for farmers to acquire inputs in periods of high interest and difficult credit, this tool with a different name soon became popular and today it is well known by producers throughout Brazil. Barter, which means exchange, is a form of payment that accounts for about 20 percent or more of the turnover of large agribusiness companies. It is such a successful model that it has already been exported to Argentina and Eastern Europe.

In the last two decades, the barter business has gone beyond soybean cultivation and today includes the main crops in Brazil, such as cotton, coffee, sugarcane and corn. It has also become attractive to machinery suppliers. Since 2015, the main agricultural machinery manufacturers have also started to offer the operation as a form of payment. That is why, at large agro fairs, it is not difficult to find producers interested in knowing how to exchange their bags for implements, tractors, harvesters and even vehicles for daily use, such as pickup trucks.

With a fixed cost perspective, the farmer has peace of mind to worry only about production.

According to Branduliz, in addition to better controlling costs and keeping the farmer's cash in cash, the barter also helps the producer to better manage the storage of his production, since part of the harvest, has already been sold and has a pre-established delivery location. Another important aspect is to provide the producer with different marketing options, as we often take barter options on counterparts that the producer had not yet accessed.

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