Brazilian livestock is one of the most important sectors of the economy, generating employment and income for millions of people. Still, there are some challenges that need to be faced by producers, and one of them is the high cost of production. Therefore, many are seeking alternatives to reduce spending and increase their profitability. In this article, we will talk about how consortia can help in Brazilian livestock.
What are consortia?
Consortia are groups of producers that unite to buy inputs and/or agricultural products with better price and payment conditions.
In general, participants in a consortium receive a quota proportional to the size of their property or the number of animals they own, and all members contribute an equal amount each month to the payment of purchases made by the group.
Why do farmers opt for consortia?
Farmers opt for consortia for a variety of reasons. Firstly, consortia allow farmers to share input and machine costs, which significantly reduces operating costs.In addition, consortia offer access to lower interest credit, which also represents an important saving for farmers. Another advantage of consortia is the possibility of joint purchase of products and services, which usually generates significant discounts.Last but not least, consortia offer technical support and expert advice to their associates, which represents a great benefit for those who do not have internal resources to invest in technology and professional training.
How do consortia work?
Consortia are groups of people who come together to buy a common good or service.In the case of livestock, farmers meet in a consortium to acquire agricultural inputs, agricultural pesticides and heavy equipment such as tractors and harvesters.
The consortium works as follows: each member of the group pays a monthly quota for the common fund, which is administered by the bank or the financial institution that manages the consortium.This fund is used to buy the goods or services desired by the consortium members. At the end of the contract, each member receives a certificate of participation, which gives him the right to receive the proportional share of the goods purchased by the group.
What are the advantages and disadvantages of consortia?
Although consortia have several advantages, they also have some disadvantages. Some of the main advantages of consortia are:
Greater bargaining power: By joining, farmers form a block with more bargaining power towards suppliers and industrialists. This results in discounts on inputs, on the purchase of machinery and even on financing;
Control of technologies: By associating, farmers can invest in more sophisticated technologies, usually available only to large producers;
Professional management: Professional management is another advantage brought by consortia. Farmers who participate in groups have access to specialized consulting and can count on the support of qualified employees;
Reduced risk: By being part of a consortium, farmers protect themselves against economic risks, such as fluctuating commodity prices; and
: The adhesion to a consortium allows the rural producer to have greater visibility in the market.
However, consortia also have some disadvantages. One of them is that the costs of maintaining a consortium are very high. Members need to bear the administrative and financial expenses of the group, which can result in reduced profits.In addition, the existence of conflicts between members can also be a significant disadvantage.
What does it take to join a consortium?
To participate in a consortium in Brazilian livestock, it is necessary to have a rural producer registered with the Ministry of Agriculture, Livestock and Supply (MAPA) and an association or cooperative contract.In addition, the producer must have a minimum area of 100 hectares for cattle breeding.
