Based in São Paulo, Brazil, Terra Futuros, a brokerage firm which operates in the commodities and futures market, plans to launch this year, a Direct Credit Investment Funds (FIDC) to finance Brazilian farmers. To form the capital the organization wants to attract foreign investors.
According to Robert Paterson, who is responsible for the project, the idea is for the fund to have an initial capital of 50 million Brazilian reais (US$ 32 million). With these funds, the company should supply credit to sowing, harvesting and trade of crops, including agricultural product export operations and the import of inputs, like fertilizers.
"We want to grant flexibility to producers, so that they may invest where necessary," said Paterson. Apart from contemplating several kinds of operations, the fund, according to him, should be different from other models of financing as it offers credit to producers in the short term.
"Agricultural credit may take up to three months, as producers need to comply with a series of requirements, and in this period they lack funds. We want to offer instant credit, which should take from one to two weeks for approval," said the executive.
In this respect, as it is faster, the financing should also be more expensive. According to Paterson, payment should contemplate the variation of the dollar against the real, plus interest of between 11% and 15% a year.
He guarantees, however, that there is necessarily no greater risk to the credit, as the potential candidates for the loan were pre-selected among clients at the brokerage company and others whose financial health the company already knows.
According to the executive, Terra Futuros currently has 350 active clients, including producers of several sizes and cooperatives. The main activity is investment in markets, in the BM&F and in the Chicago, New York and London exchanges. Farmers use the futures market for hedge, i.e., to try to guarantee product sales prices.
The establishment of the fund is part of a new business area for the company, which already operates in mergers, acquisitions, initial public offerings, and investor fund collection and placement.
According to Paterson, the company counts on 45 brokers specialized in the agricultural area, with experience in the main Brazilian commodities, like sugar, coffee, cattle, orange juice, soy, maize and cotton. In this respect, he says that the brokerage is prepared to study other operations according to investor demands.
Currently, for example, the company is negotiating a partnership for the financing of the import of fertilizer from North Africa, from Morocco, Libya and Algeria.
The executive stated that, if there is interest by Arabs, Terra Futuros may organize a workshop in the region, and may also bring them to Brazil to improve their operations. "What is hard to know is on what door to knock," he said.
Paterson added that the brokerage is also interested in attracting Arab investors to the Brazilian derivatives and futures market and is prepared to provide consultancy to businessmen interested in investing in the country, like the purchase of ethanol mills, for example. According to him, business intermediated by the company generates a turnover of US$ 11 billion a year.
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