The Vital Role of Credit in the Agricultural Machinery Market in Brazil

Agricultural Machinery Sector

“We have great expectations for the next Moderfrota. This is because we seek as much nationalization as possible…”

Rodrigo Janzen Duck is the general director of Horsch do Brasil, with a degree in management processes. Duck holds a postgraduate degree in economics and management in agribusiness from Fundação Getúlio Vargas, and in advanced executive development from Dom Cabral Academia Global do Agronegócio.

Rodrigo Janzen Duck, general director of Horsch do Brasil

AgriBrasilis – Horsch inaugurated its first factory in Brazil on April 13th, 2023. What is the amount invested and what are the plans for the country?

Rodrigo Duck – We invested more than US$ 61.3 million. The new factory unit covers a total area of 40 hectares, foreseeing future expansions. Horsch operated in a rented structure since 2017.

With the inauguration of the new factory, we hope to consolidate our presence in the Brazilian market, expand our production capacity and offer increasingly innovative solutions for the sector.

AgriBrasilis – What has changed since the company entered the country in 2014? What are the difficulties faced?

Rodrigo Duck – Since the company’s entry into Brazil in 2014, Horsch has faced significant challenges in adapting to the country’s regional conditions. One of the greatest difficulties was adapting equipment for no-till agriculture, that is much more prevalent in Brazil than in other parts of the world.

The off-season presented challenges, such as humid soils and heavy rains, complicating planting. The company was able to overcome these obstacles and adapt its equipment to the conditions of each region, offering innovative technological solutions for farmers. Today, Horsch is consolidated in the Brazilian market.

AgriBrasilis – Horsch’s goal is to expand its operations to which countries in Latin America and why?

Rodrigo Duck – The goal is to expand our operations to other countries in South America. Currently, the Brazilian unit is responsible for the region’s market.

We have identified great growth potential in countries such as Argentina, Uruguay and Bolivia, but we still do not have a defined schedule for these expansions. The current priority is to complete planned expansions in Brazil.

Despite our growing presence in Brazil, we still do not operate in the entire national market and we are working to consolidate our position. Expansion into other Latin American countries will be a natural extension of the success in the Brazilian market.

AgriBrasilis – In the 1Q of 2023, sales of agricultural machinery were 20% lower than in the previous year. Why did this occur? Should this situation be cause for concern?

Rodrigo Duck – The drop in sales of agricultural machinery in the 1Q is a point of attention for the sector. These numbers are for tractors and harvesters, but, although we do not work with these product lines, we understand that the agricultural business as a whole requires high investment and capital.

The lack of attractive lines of credit for farmers, added to the drop in commodity prices, has caused many farmers to hold back on their investments. This situation directly affects the production chain and may compromise yields and profitability of the Brazilian agriculture.

We are looking forward to a Harvest Plan that can adequately serve farmers, encouraging investments in technology and productivity, in addition to offering accessible and attractive lines of credit. In this way, we will be able to ensure a strong and competitive sector.

AgriBrasilis – What are the expectations for the next Moderfrota?

Rodrigo Duck – We have great expectations for the next Moderfrota [Financing for the acquisition of tractors, harvesters, cutting platforms, sprayers, planters…]. This is because we seek as much nationalization as possible, not only to take advantage of the lines of credit offered by the program, but also to create jobs and benefit the local economy. The nationalization of products is important for the local market and for local suppliers.

If Moderfrota did not offer credit lines with the necessary quality, Horsch could continue to import equipment for many years, but we believe that an aggressive Moderfrota is essential to allow farmers to continue investing and developing the sector.

AgriBrasilis – Maintenance costs and used parts have worried farmers. Why did the impact of these costs on farmers’ budgets increase? What are the expectations for the next harvests?

Rodrigo Duck – Maintenance costs and the costs of used parts have been a constant concern for farmers, as they represent a significant impact on the budget.

At Horsch, we have been working with a different mindset, looking for long-lasting parts that allow us to reduce costs per planted hectare and guarantee machine availability in the farms. An example of this are the bearings, that in our case can last for a few harvests, unlike other brands.

Our expectation is to continue developing solutions and equipment that allow farmers to reduce costs per hectare and increase yields. The market is very competitive and we need to stand out through the quality of our products and services.

AgriBrasilis – Has the global shortage of components in the automotive sector been overcome? How did this impact the Brazilian market?

Rodrigo Duck – This shortage has not been completely overcome. Some components still have extended lead times and bulk purchase limitations.

We believe it is possible to overcome this challenge and we will adapt to it. It is important to invest in new technologies and suppliers to accelerate this process.

The shortage of components has impacted the Brazilian market, resulting in increases in the costs of these components and, consequently, in the final price of equipment, in addition to causing limitations in production volume.

Currently, there is no risk of a shortage of spare parts for our planned volume, but it is necessary to plan ahead for future expansion and growth. Even so, we are working to minimize the impact on the farmers, so that they feel as little as possible on their end.



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