Analysis-Brazil farm auctions explode as rural debt spirals in a changing climate

SAO PAULO - Auctions of farms seized by creditors are soaring across Brazil, according to data compiled for Reuters, as distressed rural credit has grown to almost a fifth of outstanding loans.

Weaker grain prices, towering interest rates and rising input costs, as well as the ravages of unpredictable weather in a changing climate, have led to bankruptcies and seizures of far more farms across Brazil, producers and analysts told Reuters.

Adding to the problems, Brazilian farmers are bracing for a potential "super El Nino" weather pattern, which could damage crop yields and further dent their incomes. Also, Soaring fertilizer prices during the war in Iran have prompted more Brazilian farmers to trim their ambitions for new planting.

The southern state of Rio Grande do Sul, one of the hardest hit by rising farmer defaults, suffered catastrophic flooding in 2024 influenced by climate change and that year's El Niño, according to a study published in January in "NPJ Natural Hazards", a "Nature" journal.

Problematic debts issued under Brazil's rural credit rules more than quadrupled in two years to 171.2 billion reais ($33 billion) at the start of this year, according to central bank data tracking issues such as delinquent loans, defaults, reparceled payments and renegotiations.

Bad debts grew to 19.6% of outstanding farm loans from just 5.5% two years before, the central bank data showed.

"Debt in the agricultural sector is at an extremely delicate moment," Guilherme Campos, secretary of agricultural policy in Brazil's farm ministry, told Reuters.

SELLING THE FARM

Brazilian lenders have gotten more aggressive in seizing farmland as collateral on bad loans, driving up the number of rural properties at auction, according to data from aggregator website Leilao Imovel shared with Reuters.

The volume of those auctions jumped to 14,219 rural properties auctioned in 2025, up 30% from the year before.

Properties seized and auctioned in faster out-of-court procedures almost doubled to 2,398 last year.

Leilao Imovel surveyed about 7% more auction houses in 2025, so the data is not directly comparable, said co-founder Andre Figueiredo. However, the biggest auctioneers have been sharing data since 2019 and there has been a clear trend showing worse financial strains on Brazil's farmers in recent years, he said.

"The volume of rural properties (at auction) has increased significantly," he said, adding that regions focused on producing soybeans and other grains have been hardest hit.

Bankruptcy filings in the farm sector jumped 56% in 2025 after more than doubling in 2024, according to data published by credit agency Serasa Experian.

TROUBLED CLIMATE

Producers are still struggling to recover from a series of shocks, said Serasa Experian's general director for agriculture, Marcelo Pimenta.

Other factors eroding farmers' ability to keep up with their debts, he said, include bad weather, weaker prices for farm exports - particularly soy - and a benchmark Brazilian interest rate that climbed to 15% from 2% in five years.

"The outlook for the future isn't good," he added. "Interest rates are very high and it's uncertain where commodity prices go. The chance of a shock due to climate problems is very high."

One farmer in Rio Grande do Sul, who asked not to be named, said it was a struggle to keep up with "unpayable" interest rates after extreme weather ruined their crops. A credit agency recently seized more than half of their family farm.

"Climate change is significant, it's evident. From one hour to the next we can't produce because of too much rain or too much sun," the farmer said. "The climate factor is what put us in this position."

(Reporting by Oliver GriffinEditing by Brad Haynes and David Gregorio)

Copyright Reuters or USA Today Network via Reuters Connect.

This story was originally published June 15, 2026 at 8:00 AM.