Recently, Valor Econômico ran a report on the first Fiagro (Investment Fund in Agro-Industrial Production Chains) with a public offering that obtained registration with the Securities and Exchange Commission (CVM).
The Fiagro was created by Law No. 14,130/2021 and aims to allow individuals or legal entities, including foreign ones, to invest in Brazilian agribusiness, in the same way that Real Estate Investment Funds (FIIs) allow investments in commercial properties, shopping malls and logistics warehouses, among others.
According to art. 20-A of the Law, this form of investment may have as assets: (i) rural properties; (ii) ownership interests in companies that explore activities that are part of the agro-industrial chain; (iii) financial assets, credit instruments or securities issued by individuals or legal entities that are part of the agro-industrial chain; (iv) agribusiness credit rights and securitization instruments issued backed by agribusiness credit rights; (v) real estate credit rights relating to rural properties and securitization instruments issued backed by agribusiness credit rights; and (vi) shares of investment funds that allocate more than 50% of their assets in the assets listed above.
Furthermore, the Fiagros may lease or dispose of the rural properties they come to acquire; the shares of the FIAgro may be paid up in real estate and, in the case of foreign investors, there will be the possibility of indirect investment in rural properties.
But after all, is the Fiagro beneficial for the rural producer?
The deficit in Brazilian public accounts, added to the sharp drop in GDP, as well as fiscal restrictions and socioeconomic issues, indicate an increasingly greater scarcity of public resources for the agribusiness sector, especially for the small and medium producer.
And in the face of such restrictions, room arises for investors to inject financial resources for the development of one of the most productive sectors of the Country, by means of the Fiagro.
Fiagro – financing alternative
The Fiagro comes to bring the possibility of reducing the sector’s dependence on public financing and on financial institutions, positioning itself as an alternative for the rural producer, who will be able to finance their activity directly on the Stock Exchange. This will bring relevant benefits in the medium and long term, since producers will be able to be part of the Fiagro investment chain.
Among the benefits that may directly favor producers, we have that those who are indebted and who own assets will be able to make use of the funds to raise resources, settle defaulted operations and resume agricultural production, where the fund may acquire the producer’s rural property, with the option of repurchase or even lease it to the producer themselves for the development of the agricultural activity.
The funds may also acquire agricultural production by means of the Rural Product Note (CPR). Given that, with the mandatory registration of CPRs on the exchange, there may be funds that operate by buying the production of these producers.
There is also the benefit from the use of the new measures brought by the Agribusiness Law (access here the explanatory article on the subject), by means of which some Fiagros may be interested in the use of the Rural Real Estate Note and the Rural Estate under Affectation for the granting of financing to agribusiness.
Therefore, the Fiagro is one more financing alternative for the rural producer – constituting an important source of credit and a tool for strengthening agribusiness –, who will be able to finance their activity directly on the Stock Exchange. And thus, not being restricted to public resources and those of financial institutions, counting on more competitive rates.
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