IFC, a member of the World Bank Group, has committed $35 million to fund the expansion of Belagricola, a top Brazilian ag inputs distributor and grain originator.
Founded in 1985 as a distributor of ag inputs, Belagricola has expanded over the years to include crop financing, precision farming, grain acquisition and storage infrastructure, and providing technical services to 15,000 farmers cultivating about 3.5 million hectares of farmland.
The financing will be allocated to creating a permanent working capital line of credit, and will provide the financial support for the company to increase its supply of agricultural inputs, technical support and pre-harvest financing for small and medium-sized farmers in the states of Paraná, São Paulo, and Santa Catrarina.
In 2015 agricultural exports accounted for 46% of Brazil’s total exports, generating a $75 billion surplus in the country’s trade balance. Currently, the U.S. Department of Agriculture (USDA) estimates that Brazil will produce 95 million tons of soybeans, while AgRural forecasts 92 million tons, and IFC Stone estimates 93 million tons, according to AgWeb reporting. Despite these numbers, the ancillary industries that support agriculture in the country are lacking.
“First, in South America (especially in Brazil and Argentina), despite its resource and technology leadership, one of the challenges to grow the Ag Sector GDP has to do with its infrastructure,” said Alejandro Quentin, CEO, Pampa Capital. “This is the greatest bottleneck that needs to be resolved, and investment opportunities in logistics, storage and elevation will be highly valuable. Governments have painfully and slowly come to this realization and are taking actions to generate the framework and incentives to attract local and foreign investment in this sector.”
Recently Brazil’s agricultural input providers have been targeted by investors for their potential for growth and offering a high rate of return. Earlier this month Aqua Capital, which focuses on the food, agribusiness, and logistics industries in Brazil and South America, acquired a 60% stake in Rural Brasil, another Brazilian provider and distributor of fertilizers, seeds and pesticides, for an undisclosed amount.
Commenting on the investment in Belagricola, Luiz Daniel de Campos, Principal Investment Officer, Agribusiness Department, IFC Brazil said in a bank statement, “We are pleased to have Belagricola as IFC’s first direct investment in a distributor of agricultural inputs in Brazil. This financing will enable Belagrícola to expand its support to the grain production chain in the regions where it operates, thus helping to boost agricultural productivity.”
To read more about the opportunity that Brazil’s agribusiness sector presents read: Agribusiness in Brazil: Opportunity in the Midst of Turmoil
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Lynda Kiernan