Both natural persons and legal entities engaged in rural activities, associations of rural producers and cooperatives of rural producers can benefit from these better conditions of loans and financing.
Generally, the rural activities that can have access to the best loan conditions of the Rural Credit are, in the agricultural branch: cotton crops, peanuts, rice, coffee, sugar cane, carrots, eucalyptus, beans, sunflower, orange, apple, cassava , corn, soybeans, sorghum, tomatoes, wheat and grapes. For the livestock sector: dairy and beef cattle, swine, poultry, goat and sheep farming.
When should I get credit?
The primary agribusiness sector commonly employs huge amounts of capital in agricultural and livestock production: land, facilities, fertilizers, machinery, matrices, animals, inputs, etc. These are large amounts, which in large part take months or years to complete the production cycle and generate results.
Producers who make the correct use of financing generally have a great opportunity at hand to leverage long-term operations and investments. However, although credit may prove to be a great way to maximize profits, it may also be what was lacking to sink rural producers once and for all, when they are seeking financing without any type of planning or financial management.
Knowing how to choose financing that is adequate to the real need of each situation is of paramount importance for these to become allies, and not enemies of the return on capital employed. Financing represents injection of third party capital into production, which can be cheaper than using equity (see future articles on cost of capital). The important thing to note here is that, often, using third party capital in production can ensure the availability of cash in certain periods of opportunity and consequent maximization of agribusiness profits.
The importance of credit unions
This type of financial institution is composed of members, that is, people who are part of the entity and are benefited by it. For this reason, they are both owners and users.
The cooperative members have several advantages, such as the possibility of participating in the management and taking advantage of the products and services offered by the institution. Among the alternatives offered to them are items found in commercial banks, such as:
- current account;
- debit and credit cards;
- financial investments;
The advantage is that all members are viewed in the same way, regardless of their share of participation in the entity’s share capital. In addition, cooperativism is not aimed at profits, but at helping people who are part of the system.
These characteristics guarantee a personalized service that tends to be more positive for rural producers. Cooperatives have their operations authorized by the Central Bank, which also supervises activities.