Welcome to The Brazil AgTech Report (The BAR) — a weekly summary of key news and insights shaping Brazil's agrifood tech ecosystem.
In this week’s edition…
Bumper bean crop
Ag credit squeeze
Power in diversity
Opportunity amid adversity
Carbon credit changes
JBS sees sixes
Take-or-Pay pain
Brazil going nuts
Chipsafer exit
Bumper bean crop…
Conab, Brazil's Agricultural production and supply chain agency, has forecast a bumper 2024/25 grain harvest, with production expected to reach 322.53 million metric tons—an 8.2% increase on the 2023/24 season. Growth stems from an expansion in planted area, now projected at 81.4 million hectares, and a 6.3% increase in average yields, estimated at 3,962 kilograms per hectare.
Soybean area is set to expand by 2.6% to 47.36 million hectares, with a 9.6% improvement in yields to give an estimated production of around 166mm tons next year. Adding to this optimism, SLC, Brazil's largest grains producer, reported that this season's soybean planting occurred under ideal conditions. Mato Grosso, in particular, benefited from optimal planting conditions back in September, which could lead to a bumper crop next year.
Ag credit squeeze…
Last week, I attended Conacredi, Brazil's largest annual agricultural credit event. The two-day gathering in Sao Paulo was marked by a cautious atmosphere, with a prevailing consensus that the sector’s challenges would persist until at least December. Concerns were heightened by the potential risk of another major distributor facing financial difficulties, following Agrogalaxy’s Chapter 11 filing in September.
Despite these uncertainties— investment vehicles, known as Fiagros, that finance the Ag sector, have demonstrated resilience and continue to deliver strong financial results and dividends. A recent study by Grana Capital showed that all listed Fiagros on the local B3 exchange achieved 12-month dividend yields exceeding 13%, outperforming the local CDI benchmark interest rate. Due to perceived market risk, Fiagros have experienced an average share price decline of 20% over the past year, but maintained a solid average dividend yield of 16.69%, providing an excellent buy opportunity.
Power in diversity…
Amid challenges in Brazil's grains sector this year, 3tentos stands out as a thriving publicly listed ag company. Originally an input distributor from the country's south, 3tentos has expanded nationally into grain origination, trading, and industrial processing, including soybean meal, oil, and biodiesel.
The company will also begin processing sorghum and corn at a new ethanol plant in Mato Grosso by 2026. Additionally, it is introducing canola production in Rio Grande do Sul to boost biodiesel output, capitalizing on canola's superior oil yield compared to soybeans.
To sustain its ethanol operations, 3tentos is securing 27,000 hectares of eucalyptus plantations in Mato Grosso to provide the 900 tons of biomass required daily for its boilers. This effort includes leasing land, partnering with local farmers for eucalyptus cultivation, and collaborating with forestry funds to maintain a steady supply.
These initiatives are part of a $400 million investment plan through 2030, focused on sustainable growth, optimizing production processes, and diversifying raw material sources.
Opportunity amid adversity…
Boa Safra, a leading Brazilian seed company, faced considerable hurdles in 2024 due to adverse weather and restricted credit availability. Delayed rains in some parts of the country disrupted the soybean planting season, postponing seed deliveries and cutting revenues, resulting in a 53% drop in net profit for the third quarter.
Despite a low default rate of just 1.7%, the company revised its credit strategy, reducing reliance on large retailers like Agrogalaxy—from 40% to 20% of revenue—and shifted its focus to small and medium-sized retailers.
Looking ahead, Boa Safra remains optimistic, according to local press reports. A strong order backlog for the fourth quarter signals recovery, and the company is preparing for expansion, with plans for acquisitions in 2025 to boost production capacity.
Digital drive…
In a push to drive digital transformation and promote sustainable agriculture, two government initiatives are paving the way for innovation among small Brazilian farmers. Emater, part of the government’s extensionist program, has launched Edocampo (www.edocampo.com.br), a digital marketplace in Minas Gerais. Aptly named "from the field," the platform empowers small-scale farmers to directly market and sell specialty products like coffee, cheese, and cachaça—Brazil’s iconic sugarcane liquor—boosting reach and profitability.
Similarly, the Inova+Campo Platform, launched by the National Confederation of Agriculture (CNA), aims to enhance technological inclusion on small farms. This initiative focuses on identifying, testing, and adapting innovative solutions for rural properties, particularly benefiting small and medium-sized producers. By promoting access to machinery, automation, and efficient, economically viable technologies, Inova+Campo aspires to boost productivity and sustainability across the sector.
Meanwhile, in Mato Grosso, home to Brazil’s mega farms, a study by AgriHub revealed that 93% of farmers have some level of connectivity, enabling the use of agricultural software for monitoring production and managing finances. Furthermore, 91% of farmers expressed interest in testing new technologies, with 85% having the autonomy to implement trials directly within their operations.
Carbon credit changes…
Ahead of the COP30 Climate Conference in Brazil next year, the Senate has approved legislation establishing a national carbon credit market to regulate corporate greenhouse gas emissions. Notably, the agribusiness sector is excluded from the mandatory provisions, likely due to the complexity of implementation.
The legislation introduces two key components. The Regulated Market mandates participation for companies emitting over 11,000 tons of CO₂ annually, with strict government oversight. Meanwhile, the Voluntary Market allows organizations to trade carbon credits independently to achieve sustainability targets.
To combat fraud, including the illegal trade of carbon credits from protected Amazon areas, the law establishes the **Brazilian System for Trading Greenhouse Gas Emissions (SBCE)** to manage the regulated market.
Brazil's updated Nationally Determined Contribution (NDC) has committed to a 67% reduction in emissions by 2035. The Ministry of Finance estimates that a fully operational carbon market by 2030 could boost GDP by 5.8% over the following decade, potentially generating $120 billion in foreign investments by 2030.
JBS sees sixes…
Brazil's cattle industry, led by powerhouse JBS, posted remarkable growth last quarter, driven by soaring domestic and international demand.
JBS reported a sixfold increase in net income compared to the same period last year, fueled by its robust Brazilian operations and the strong performance of its Seara division. The company also announced approximately $800 million in dividends, highlighting its stellar results.
At the same time, cattle slaughtering in Brazil reached 10.33 million heads last quarter, marking a 14.8% year-over-year increase and a 3.7% rise from the previous quarter. This growth was attributed to an expanded supply of confined cattle and rising export demand. Mato Grosso led the way with a 60.67% surge in cattle confinement, processing 6.25 million head by October 2024—a 22.7% increase from 2023.
Take-or-Pay pain…
Brazil's trading companies face significant losses in 2024 as falling commodity prices and take-or-pay contracts force them to pay for unused logistics capacity. These contracts, covering rail freight, warehouses, and ports, have pushed traders into losses as domestic markets became more appealing to farmers, cutting export volumes. In some instances, rail freight costs of $35 per ton for unused capacity have resulted in millions of dollars in losses.
Efforts to address the burden of take-or-pay contracts were underway last year, with Amaggi, ADM, Bunge, Cargill, and LDC gaining approval for a joint venture named Movere. This initiative aimed to establish their own road transport operations, including over 1,000 trucks and drivers. However, a market slowdown and tighter margins have stalled the project indefinitely.
Brazil going nuts…
Brazil's peanut production is booming, with the 2024/2025 harvest projected to exceed 1 million tons—a 42.1% increase from the previous season. This surge in production, boosted by strong global demand, is attributed to enhanced productivity and cultivation techniques, with planted area expanding by 6.2% and yield per hectare expected to rise by 33.9%. While São Paulo leads production, cultivation is expanding to other states, strengthening Brazil’s position in global markets.
Chipsafer exit…
Chipsafer, an innovative hardware and software platform designed for real-time cattle monitoring via satellite, enabling producers to oversee livestock in areas with limited connectivity and enhance operational efficiency, has been acquired by NuSpace, a Singapore-based space technology company specializing in providing connectivity services for the Internet of Things (IoT) in remote regions with limited communication infrastructure. NuSpace plans to expand the business and apply the technology across multiple sectors, including agriculture, logistics, and environmental monitoring. Details of the exit price were not released.
Kieran Finbar Gartlan is an Irish native with over 30 years of experience living and working in Brazil, primarily in the agricultural commodities space. He is Managing Partner at The Yield Lab Latam, a leading venture capital firm investing in early-stage agrifood tech startups. All views, opinions, and commentary expressed are strictly his own.