Nov 01, 2010
Banks in Mato Grosso Resume Repossessing Ag Equipment
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
After a brief two week extension of the grace period during which farmers could renegotiate their delinquent equipment loans, banks in Mato Grosso have once again started to repossess equipment from farmers for lack of payment. The majority of equipment being repossessed is planters, which is ironic because this is the peak of the planting period in the state.
For example, a farmer in Rondonopolis, located in southeastern Mato Grosso, was surprised last Friday night when his six planters were taken away by authorities between six o'clock in the evening and midnight. He was doubly surprised due to the fact that he was actively negotiating with the bank concerning the loan in question. Now the farmer in a dire situation because he had only managed to plant 15% of his 2,030 hectares of soybeans due to the extended dry season. Last year at this time he had already planted 80% of his soybeans.
The ironic thing is that when the equipment is sold at auction, the receipt of the sale will pay only for a fraction of the outstanding loan and then without a crop growing in the field, the farmers will be even harder pressed to pay off their outstanding loans.
Farm organizations in the state have rallied in support of their members against these repossessions and they have gone to court in an attempt to stop them. Thus far, it's only been a delaying tactic and the courts are not expected to enter into the fray. The banks for their part say they have rolled over these loans numerous times already and the farmers either refuse to pay off their debts or they were greatly over extended in the first place.
The total amount of farmers in Mato Grosso affected by these actions is tiny and these repossessions are not expected to have any significant impact on the total crop production in the state. Since planting has already gotten off to a delayed start, the weather during the growing season now becomes even more important.