Nov 09, 2010
Since 2006, 800 Repossessions Have Occurred in Mato Grosso
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Over the last 20 days, farmers in at least five municipalities of Mato Grosso have seen some of their equipment repossessed by banks and equipment manufactures due to defaults on their equipment loans. The amount of repossessions in the state started to intensify in August and most of the equipment that is being repossessed are planters, which is ironic sine this the planting season in Mato Grosso.
Thus far in 2010, 233 actions have been taken against the farmers in the state. Since 2006, approximately 800 actions have been taken against farmers in Mato Grosso who have fallen behind or stopped paying entirely on the equipment loans.
Mato Grosso is the epicenter of these repossessions because the farmers in the state greatly expanded their soybean production in the early 2000's just before commodity prices slumped and the Brazilian currency strengthened. As a result, many farmers in the state had a negative cash flow for several years and they fell behind on their equipment loans. Mato Grosso has also become the most expensive location in Brazil to grow soybeans due to the lack of infrastructure and high cost of transportation. The expansion of soybean production in the state made the lack of infrastructure worse and drove transportation cost even higher.
Farm organizations claim that equipment loans for farmers are different that consumer loans for the general public and that legal protections for the farmers are being ignored. The banks and equipment manufacturers say that they work with each farmer on a case by case basis in an attempt to work out a settlement, but that many farmers have simply over extended themselves. The companies taking these actions include Bradesco, John Deere, Case/New Holland, Rabobank, and De Lage Landoen.