Brazil’s farm debt dispute pits Banco do Brasil against producers

Brazil’s farm debt dispute pits Banco do Brasil against producers
Banco do Brasil and agribusiness leaders agree that the bank’s rural loan portfolio has deteriorated. They sharply disagree, however, on whether the problem is driven partly by borrowers’ choices or by a broader squeeze on farm income.

The bank’s president, Tarciana Medeiros, said some medium and large producers had declined to pay, renegotiate loans or provide new collateral despite facilitated restructuring programs. “We did not anticipate the persistence and intentionality of moral hazard,” she said. Banco do Brasil said the cases were concentrated among larger soy, corn and cattle producers in the Center-West, while stressing that about 90% of agribusiness clients remain current on their payments.

The financial impact has been substantial. Banco do Brasil reported adjusted net profit of 1.27 billion reais in the third quarter of 2026, down 66.5% year on year, as its agro loan delinquency rate overdue by more than 90 days rose to 6.92% in September from 4.84% a year earlier. The bank has cut its 2026 profit outlook to between 9 billion and 11 billion reais.

Farm-sector representatives reject the suggestion of a planned default. They say successive crop failures, unusually high production costs, weaker commodity prices and elevated interest rates have undermined borrowers’ ability to meet obligations. Senator Luis Carlos Heinze pointed to Rio Grande do Sul, which he said suffered five crop failures in six years because of climate events.

The sides also differ over the remedy. The Senate-approved MP 1.376 extends the window for debt renegotiations and eases eligibility requirements, but farm representatives regard it as temporary relief and advocate longer-term securitization of rural liabilities. Banco do Brasil, by contrast, distinguishes borrowers seeking solutions from those who neither negotiate nor pay: “For those who do not negotiate and do not pay, the instrument is collection,” Medeiros said.

The dispute has also prompted a broader political response. Commentator Rodrigo Constantino called simply, “Privatize now!” in response to reporting on the bank’s profit decline and rising delinquencies.

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