The role of cooperatives in agriculture

Agricultural cooperatives are organizations formed by farmers who come together to achieve common goals. Members seek better prices when buying inputs, technical advice, labor protection and much more.

Law No. 5.764/1971 regulates Brazilian cooperatives and seeks to help the country’s agriculture, especially in smaller and family productions. In this article, we’ll understand how cooperatives boost the primary sector and strengthen the country’s commodities market. Have a good read!

The strength of agribusiness in Brazil

The Organization of Brazilian Cooperatives (OCB) is the institution that represents national cooperatives in any sector. On its Somos Coop Movement page, the company reported that more than 50% of the Brazilian grain harvest comes from cooperatives and that more than 70% of the cooperative membership is made up of family farmers.

The agricultural market is extremely important in Brazil and the work of cooperatives seeks to guarantee even better resources for the sector. According to Cepea, agribusiness accounted for 23.8% of the country’s GDP in 2023. This significant share was driven by 1,185 agricultural cooperatives and more than 1 million cooperative members in this segment, according to current information from the Coop Yearbook.

In the economy, cooperatives are responsible for huge movements. In 2022, the financial indicators of agricultural cooperatives reached 267 billion in assets, an increase of 16% over the previous year.

These figures demonstrate the strength of Brazilian cooperativism. In addition, the association system also has numerous other advantages in practice. Below, we’ll understand the relationship between cooperatives and rural development and how they strengthen the national commodities market.

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The role of cooperatives in Brazilian agriculture

Cooperatives are responsible for numerous benefits for the farmers who are part of them. Among the main ones is the reduction of risks that can affect producers’ yields and profits. The association uses collective strength to ensure better negotiations, as well as disseminating information and technologies that combat pests or unpredictable problems, as was the case during the pandemic.

See the main benefits that cooperative members enjoy:

Access to resources

With the organization of the cooperative, producers have access to high-quality products, equipment, and materials at a lower cost. Large-scale purchasing also facilitates negotiations and improves producers’ competitiveness in the market.

Total Logistics

Cooperatives are also responsible for the entire logistics chain for buying and selling grain. This work ranges from the supply of fertilizers and seeds to the storage and delivery of the final grain to the market.

Product price management

Many cooperatives use technology and trading values to help price agricultural products. Some only intermediate transactions, while others work with more advanced systems, using derivatives and futures contracts.

Technical advice

Cooperatives are also responsible for helping producers and seeking better quality crops. With this, the organizations generally share educational content, new technologies on the market, important updates, management techniques, as well as methods that improve productivity and preserve the environment.

Labor guarantees

Security and quality of life are also benefits of cooperatives. The legislation makes it possible for producers to gain pensions, life insurance, medical and educational plans and more.

Valuing Products

Through cooperation, farmers can add value to their assets. It is possible to increase profitability by processing food or certifying organic products, for example.

According to the OCB, the main segment in which agricultural cooperatives operate is inputs and supply goods, which account for 65% of their activities. A cooperative can operate in more than one segment, but the main ones are: inputs and supply goods, non-industrialized products of plant origin, non-industrialized products of animal origin, services, industrialized products of plant origin, industrialized products of animal origin, technical schools.

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The impact of cooperatives on the Commodities Market

With all these advantages that cooperatives bring to farmers, the results are substantial in the commodities market. The work guided by the principle of collectivity generates countless benefits for grains and crops and is also reflected in the national economy. See some examples below:

Guarantees grain quality

Cooperatives help producers and this work has a direct impact on the quality of the grain they deliver. Cooperatives help maintain a high level of excellence and also act as storage centers for crops, processing and delivering the grain they receive.

Improving national productivity

National crop yields tend to grow with the technical help of cooperatives. This means a larger stock of rice, coffee, soybeans, and countless other commodities.

The number of bags exported increases.

With better productivity, the Brazilian commodities market is also able to increase the number of bags exported. This is reflected in the strength of the national economy, the appreciation of the currency and trade relations with other countries.

Influence on national GDP.

Agribusiness accounts for almost a quarter of the country’s GDP. The better the agricultural production, the better the GDP for the year. That’s why cooperatives play a fundamental role in moving and strengthening Brazil’s domestic economy.

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Risk management in the agricultural market

Cooperatives play a fundamental role in risk management for their members. With their help, farmers can achieve better results for their crops. Here at Hedgepoint, we also understand how price fluctuations influence this sector.

Learn about the benefits of relying on a company like Hedgepoint to manage the risks of agricultural cooperatives in this market:

• Protection against price volatility;
• Stabilization of the profit margin.
• Improved financial planning, with expert assistance.
• More stable and reliable commercial relations.

Talk to a Hedgepoint specialist  and find out more about our advantages!