04/09/2026News
Renegotiation alone is not enough to free producers from the cycle of debt.
Published on September 4, 2026 at 9:42 AM
Renegotiating rural debt does not necessarily mean regaining the ability to pay it. After successive debt restructurings carried out in Rio Grande do Sul, the real test will be the farms' cash flow: the new deadlines will need to be compatible with the income from the activity and allow the producer to effectively amortize the principal again.
“The main question is whether the renegotiation only changed the payment date or whether it effectively restored the producer's ability to pay the debt with income from the activity,” says Frederico Poleto, Agricultural Data Manager at Serasa Experian.
This assessment gains relevance given the volume of rural credit that needed to be restructured in the state. In June, renegotiated operations totaled R$ 23.2 billion , according to data from the Central Bank (BC), following successive climatic events and different extension and renegotiation measures adopted in recent years.
To assess whether the new commitments are sustainable, Poleto explains that the payment schedule should consider conservative projections of productivity, prices, costs, margins, and working capital needs , while also respecting the revenue cycle of each property.
One of the benchmarks used in risk analysis is the so-called debt service coverage , the ratio between the cash available for payment and the total principal and interest due in the period. When the result is below 1, explains Poleto, it means that the property does not generate sufficient resources to meet its commitments, even after renegotiation.
However, surpassing this level is not enough. It is necessary to maintain a margin to absorb new fluctuations in productivity, prices, and costs – variables that are particularly relevant in an activity subject to both market conditions and the weather.
Signs that the restructuring has worked are beginning to appear after the agreement. Timely payment of the first installments, effective amortization of the principal, stabilization or reduction of the outstanding balance, and recovery of production and operating margin indicate an improvement in the financial condition.
The opposite trend raises a red flag: successive renegotiations , recurring incorporation of interest into the balance , prolonged grace periods without demonstrated amortization capacity, debt growth even after payments, and taking out short-term loans solely to settle previous commitments . New delays with banks or suppliers also indicate that the problem persists.
According to lawyer Guilherme Caprara , a specialist in restructuring and insolvency and founding partner of MSC Advogados, the dividing line lies precisely in the ability to generate cash flow. If the renegotiation changes the due date, but the producer still lacks sufficient resources to pay the debt, an initially temporary difficulty may have turned into a structural debt problem.
Among the signs pointed out by Caprara are the recurring need for new grace periods or renegotiations, increased indebtedness, difficulty in amortizing the principal, and the search for new credit to pay off previous debts.
Therefore, the volume of renegotiated contracts or resources, in isolation, does not allow us to measure the success of restructuring measures. The response will depend on the behavior of operations after the agreements and, especially, on the economic performance of the properties in subsequent harvests .
“Signing the renegotiation is just the beginning of the process. Its effectiveness can only be proven by payment behavior and cash generation in subsequent harvests,” says Poleto.
“ A good renegotiation acts as a bridge to recovery. A poorly structured renegotiation only transfers the problem to a future date .”