Another Brazilian input distributor files for bankruptcy protection

Date:10-11-2024

With debts nearing BRL700 million, Portal Agro Group becomes the latest company in Brazil's agricultural input distribution sector to file for bankruptcy protection. 

Recently, a Brazilian court accepted a similar request from agricultural input distributor Agrogalaxy.

Portal Agro Group, based in the state of Pará, filed a confidential petition with the court on September 5, 2024. After a preliminary review, the judge overseeing the case lifted the confidentiality of the proceedings and summoned the Public Prosecutor's Office and major creditors to weigh in.

The filing cites the "crisis in Brazilian agribusiness, characterized by high input prices and subsequent fall in commodity prices, resulting in losses for companies and partners" as the cause of the group's financial situation. Portal Agro Group, operating since 2008, sells agricultural inputs to approximately 250 farmers.

According to the court documents, the group claims it was caught off guard by the drop in commodity prices that season due to increased international grain stocks and subsequent cost increases, resulting in "poor profitability." 

The court has ordered a 45-day suspension of executions and prohibited any form of retention, seizure, attachment, sequestration, search and seizure, and judicial and extrajudicial constraint on the company's assets.

Experts consulted by AgroPages say this situation raises further concerns about the challenging moment agribusiness faces in Brazil. Some economists working in the Brazilian agribusiness sector even mention the possibility of a "domino effect" in the industry, with these bankruptcy protection requests generating more apprehension in the sector.

Lavoro Assures Financial Stability

In light of this situation, Lavoro, a giant in the input distribution sector, has come forward to address speculation by affirming its continued financial stability. 

In a statement to the market, the Lavoro group reaffirmed "its commitment to transparency and accuracy of its financial information." It also guaranteed the fulfillment of its obligations to partners and assured the continuity of operations.

"Lavoro is fully capable of meeting its financial commitments. All of Lavoro's financial data is publicly disclosed, audited by independent companies, and registered in accordance with SEC (Securities and Exchange Commission) requirements, the regulatory body of the U.S. capital market. The company's results and balance sheets are available on our website for public consultation," the company stated.

"Lavoro's leadership, along with its more than 3,000 employees, remains firm in its mission to support rural producers in Brazil and South America, contributing to the growth of a sector that generates jobs and prosperity for the region," Lavoro said in conclusion.

(Editing by Leonardo Gottems, reporter for AgroPages)