Low prices affected the profitability of agricultural cooperatives in 2023 | Business

Large cooperatives lost profitability in 2023 and the outlook is still not for improvement this year. Cooperatives with operations more focused on grains had their results affected by the fluctuation in soybean prices and the increase in logistics costs. Those operating in the meat sector suffered from supply pressure, which prevented price adjustments.

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“Last year was reasonable. Prices fell a lot, but we produced a larger volume than in 2022. This year the price is worse. And we had a drought, production fell significantly for those who planted early soybeans”, said Antonio Chavaglia, president of the board of directors of Comigo. The cooperative predicts a loss of 10% to 12% in soybean production.

Coamo, from Paraná, estimates that it will receive 85 million bags of soybeans in 2024, a 15% drop compared to last year, due to the climate. In 2023, the cooperative received 9.9 million tons of grain, and this year the volume should reach 9.1 million.

At the Regional Coffee Growers Cooperative in Guaxupé (Cooxupé), the drop in international coffee prices and the rise in sea freight negatively impacted results in 2023. Revenue fell 20%, but the cooperative expects improvement this year, with an increase of 7. 7% in origination, for 7 million bags, and with the appreciation of international prices.

C.Vale, which last year had a 36.8% drop in surplus, also foresees recovery. “We hope that the scenario will continue to improve with the reduction in interest rates and inflation,” said Alfredo Lang, president of C.Vale. He estimates 4% higher revenue for the year, at R$24.81 billion. In 2023, C.Vale suffered from the drop in grain prices. In chicken, fish and pork, the results were below expectations. Another negative factor was the explosion in a silo in Palotina (PR) in July, which killed ten people and left ten injured. The cooperative made a provision of R$14 million due to the incident.

Last year, input prices also fell, affecting Coopercitrus’ profitability. “Overall revenue fell 14% compared to 2022, largely influenced by the reduction in input prices, which, on average, fell by around 50%. We moved 18% more volume of goods, but it was not enough for revenue to grow”, stated Fernando Degobbi, CEO of Coopercitrus. For 2024, he estimates an 11% increase in revenue, with an increase in sales of coffee and inputs for citrus and sugarcane.

Cooperatives operating in the animal protein sector mostly had revenue gains, such as C.Vale, Lar, Copacol, Coasul and Frimesa. But almost all of them had a drop in leftovers. Aurora Coop was the only one to have a loss in 2023, of R$137.9 million. The result was due to rising costs and an oversupply of birds, which made price adjustments unfeasible. For 2024, Aurora expects an improvement in profitability. The cooperative sees room to adjust poultry prices. In pork, dairy and processed products in general, demand remains slow, but costs have fallen.

Castrolanda, which has operations in dairy, meat and grains, suffered negative impacts in all areas. Willem Berend Bouwman, chairman of the cooperative’s board of directors, said that in dairy, record milk imports flattened the price paid to producers. In pigs, a recession in the Chinese economy slowed consumption, affecting Brazilian exports to China. For 2024, the cooperative sees a still difficult scenario and forecasts revenue of R$5.1 billion, compared to R$5.5 billion in 2023.

The impacts cited by large cooperatives extended to others. “Practically half of Brazilian agribusiness production goes through cooperatives, which are fundamental for the competitive insertion of small and medium-sized producers in agro-industrial systems”, said Marcos Fava Neves, professor at the administration faculties of the University of São Paulo (USP) in Ribeirão Preto and the São Paulo School of Business Administration at Fundação Getulio Vargas (FGV). In Brazil, there are almost 1,200 cooperatives, 1 million cooperative producers and 250,000 direct jobs created, added Neves