The Role of Cooperatives in Rural Credit

The document examines how credit cooperatives in Brazil serve as critical distribution channels for rural credit, particularly for small and medium-scale producers. It highlights that while total rural credit fell by 14% in real terms between 2013/2014 and 2018/2019, cooperative lending grew by 51.3%, increasing its market share from 11% to 17.5%. The brief attributes this success to the cooperatives' proximity to borrowers, which reduces transaction costs and information asymmetry. It also details the interbank relationship where commercial banks use cooperatives to meet regulatory requirements for rural credit distribution. Geographically, cooperative presence is strongest in the South, Central-west, and Southeast, while remaining scarce in the North and Northeast.

• Credit cooperatives experienced significant growth during a period of general economic decline in rural financing. Between the 2013–2014 and 2018/2019 agricultural years, cooperative lending saw a real growth of 51.3%, reaching R$ 33 billion, while the total volume of rural credit funds fell by 14% in real terms.
• Cooperatives play a vital role in financial inclusion for smaller producers due to their operational structure and proximity to borrowers. They typically provide loans for lower average amounts than banks and have a higher proportion of funds directed toward the National Plan for Strengthening Family Farming (Pronaf) and the National Program to Support Medium-sized Rural Producers (Pronamp).
• The distribution of cooperative credit in Brazil is characterized by strong regional disparities. High shares of total credit (between 25% and 35%) are distributed by cooperatives in Rio Grande do Sul, Paraná, and Espírito Santo, whereas cooperative credit represents less than 5% of lending in all Northeast states.
• Cooperatives act as an essential distribution channel for commercial banks to satisfy regulatory mandates. Private banks often transfer the remaining funds and the task of application to cooperatives to meet requirements for directing a percentage of deposits and rural savings to rural credit at controlled rates.
• Cooperatives focus more heavily on financing production costs compared to other financial institutions. In the 2018/2019 agricultural year, 72% of cooperative funds went to production costs, compared to 59% for public banks and 43% for private banks.
• Credit cooperatives benefit from specific tax exemptions and a tiered regulatory framework. They are exempt from income taxes and the Social Contribution on Net Profits (CSLL) for cooperative actions. The Central Bank of Brazil categorizes them into 'full', 'classic', and 'capital and loan' cooperatives, with different prudential regimes based on operational complexity.

APA

Assunção, J., Costa, D. R. D. M., & Souza, P. (2020). The Role of Cooperatives in Rural Credit. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/PB-The-Role-of-Cooperatives-in-Rural-Credit.pdf

Chicago

Assunção, Juliano, Davi Rogério de Moura Costa, and Priscila Souza. The Role of Cooperatives in Rural Credit. Climate Policy Initiative, 2020. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/PB-The-Role-of-Cooperatives-in-Rural-Credit.pdf.

Wikipedia

{{cite report |last1=Assunção |first1=Juliano |last2=Costa |first2=Davi Rogério de Moura |last3=Souza |first3=Priscila |title=The Role of Cooperatives in Rural Credit |publisher=Climate Policy Initiative |date=July 2020 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/PB-The-Role-of-Cooperatives-in-Rural-Credit.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{assuno2020role, author = {Assunção, Juliano and Costa, Davi Rogério de Moura and Souza, Priscila}, title = {{The Role of Cooperatives in Rural Credit}}, institution = {Climate Policy Initiative}, year = {2020}, month = jul, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/07/PB-The-Role-of-Cooperatives-in-Rural-Credit.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }