Agribusiness under pressure: the political dispute over credit and the reality of sectoral debt

The convergence among presidential candidates regarding promises of insurance and facilitated credit for agribusiness is not merely an electoral move; it recognizes that the sector, a driver of Brazilian exports, faces a severe financial tightening cycle. With the Selic rate fixed at 14.00% p.a., the cost of rolling over rural debt has become prohibitive for small and medium-sized producers, creating an urgent political need for state intervention to prevent a wave of defaults that could contaminate development bank balance sheets. The current macroeconomic scenario imposes challenges distinct from previous expansion cycles. Although the commercial dollar shows a slight appreciation at R$ 5.1625, exchange rate stability does not offset the impact of high interest rates on working capital. With the return on invested capital (ROIC) in commodity crops often trailing the cost of credit, subsidized loans have become the only survival alternative for lower-liquidity players. Our analysis suggests that the risk lies not only in interest rates but in the fragility of the sector's collateral structure. Investors should remain cautious: with the Selic at 14.00%, cash is the most valuable asset, and it is advisable to prioritize companies with low leverage that do not depend exclusively on public credit promises.