Agribusiness is one of the most dynamic sectors of the Brazilian economy, with sustainable growth, record production and growing demand
Investing in agribusiness is a unique opportunity to get involved in one of the most strategic sectors of our economy. With more than 25% of the national GDP and more than half of exports, the sector plays a fundamental role in food security, and has grown at an impressive rate of 3.5% per year in recent decades.
Agriculture continues to break production and revenue records, demonstrating its resilience and growth potential. The demand for food will continue to be strong in the coming decades, in line with projections for population growth in the world. In this scenario, Brazilian agribusiness stands out for its high productivity and competitiveness.
Learn about five ways to invest in agribusiness, even without being directly involved in agricultural production.
Cédula do Produtor Rural (CPR)
CPR is the main private financing title for agribusiness. (Source: Getty Images/Reproduction)
Rural Product Bonds (CPRs) represent the promise of future delivery of an agricultural product. During the investment period, the investor is remunerated with interest on the capital, which is exempt from Income Tax (IR) and Tax on Financial Transactions (IOF). However, the investment is not guaranteed by the Credit Guarantee Fund (FGC).
Fixed income securities can be issued by rural producers or their associations, including cooperatives. In addition to the physical and financial CPR, regulated in 1994 and 2001, the investment has recently gained new modalities: the Digital CPR (made electronically) and the Green CPR (finances preservation actions on rural properties).
Agribusiness Receivables Certificate (CRA)
Agribusiness Receivables Certificates (CRA) work in a similar way to the CRA, with exemption from IOF and IR and without FGC guarantee. However, fixed income securities are issued by securitization companies, which use loans for production, marketing, processing, industrialization or acquisition of inputs and machinery as collateral.
This type of investment can be dispersed, with financing contracts from several rural producers, or corporate, guaranteed by loans from a single company. The return on the investment can be fixed, with a yield known at the time of investment, or post-fixed, which defines an index, such as the dollar or inflation.
Agribusiness Credit Notes (LCA)
Agribusiness Credit Notes (LCA) are issued by financial institutions to raise funds to offer credit to rural producers. Therefore, the investment is also guaranteed by loans to agricultural companies. Exempt from IOF and Income Tax, fixed income investments are not covered by the FGC.
The yields of LCAs are linked to a percentage of the Interbank Deposit Certificate (CDI) rate, which is linked to the basic interest rate of the economy. Generally, a longer investment term and a larger deposit tend to offer better interest rates, that is, close to or higher than 100% of the CDI.
Agroindustrial Chain Investment Fund (Fiagro)
Agroindustrial Chain Investment Funds (Fiagros) were created in 2021 to allow individuals to invest indirectly in rural properties and agribusiness activities. Investments can be made in agricultural credits (Fiagro-FIDC), agricultural land (Fiagro-FII) and shares in companies (Fiagro-FIP).
Profits from Fiagro can be obtained either through the distribution of income or through the difference between the purchase and sale value of the security. However, variable income investments may present losses. A fixed rate of 20% is charged on earnings, corresponding to Income Tax.
Shares of agribusiness companies
Investors who are more accustomed to financial investments can invest in agribusiness through shares of companies in the sector. Although the Stock Exchange (B3) lists only 11 companies in the agricultural subsector, the investment options are broader and can include meatpacking plants, energy companies and paper producers.
Direct trading of shares is a high-risk variable income investment. However, financial institutions offer products, such as exchange-traded funds (ETFs), linked to indexes of agribusiness companies, which help to increase the security of the investment.
Sources: Suno, Forbes, B3