Federarroz warns farmers of risks in new rural credit contracts

The Federation of Rice Growers Associations of Rio Grande do Sul (Federarroz) has issued an alert to rural producers regarding a shift in agricultural financing guarantees. The entity reports that the traditional 'Cédula Rural Pignoratícia' (rural pledge) is being replaced by the 'Cédula de Crédito Bancário' with fiduciary alienation of the harvest.

This change significantly alters the legal standing of farmers. Under the traditional pledge model, the producer retains ownership of the crops while they serve as collateral. In contrast, fiduciary alienation transfers the ownership of the grains to the creditor until the debt is settled.

Federarroz warns that in the event of default, financial institutions may be able to consolidate ownership of the grains through a registry office without the need for judicial action. This allows creditors to sell the production to third parties without a mandatory auction or prior appraisal. The federation advises farmers to carefully review all contract clauses and seek legal counsel before signing financing agreements to understand exactly which assets are being offered as collateral.