Cotribá (Cooperativa Agrícola Mista General Osório), the oldest agri co-op in Brazil, is seeking court protection for a restructure plan to tackle its debts of R$1.4bn (£205m; $271m).
Founded in 1911, and headquartered in Ibirubá, in the southern state of Rio Grande do Sul, the co-op serves around 10,000 members with 60 sites across 20 municipalities in the state. It offers agricultural services, grain storage, and operates a regional supermarket network.
After an ambitious – and expensive – period of expansion it hit trouble as farmer members suffered five years of crop failures during a period of drought, hitting production of soybeans, corn, and wheat.
The co-op began to pile up debts with suppliers, producers and lenders, and faced protests from farmers seeking payment. Annual revenue, which once reached R$4bn, is expected to fall to R$1bn this year – less than the co-op’s debt.
Now, reports International Valor, new CEO Paulo Goulart, brought in from the finance sector, is working to streamline the co-op and and professionalise its management while seeking judicial approval for a massive court-supervised reorganisation.
Goulart has commissioned audits of the operations of previous administrations, and is looking to sell off assets to reduce the debt.
He has refused to identify assets facing divestment but said they would not include the co-op’s feed mill, opened in 2024. With a cost of R$180m, this was part of the costly expansion plan that coincided with the co-op’s cash crisis, but Golart said it is a strong facility, with an annual production capacity of 200,000 tonnes, and it is in line for further investment.
Meanwhile, nearly half of Cotribá’s 1,200 employees have been laid off, leaving it with 670 employees, with an emphasis on colleagues with strong technical backgrounds.
Employees and members are being given monthly updates on the recovery process.
A key part of this is the work to secure a court-supervised reorganisation, with the co-op struggling to service a R$500m debt to around 30 financial institutions. A legal battle is under way, with creditors opposing claims that agri co-ops are entitled to bankruptcy protection – a measure denied to credit co-ops. But Goulart argues that the law is silent in agri co-ops.
As the legal tussle continues, Goulart has said he will not rule out taking the case to higher courts. “We want a controlled environment for negotiations with the banks, allowing them to reconsider enforcement actions and giving us enough time to make thoughtful decisions,” he told Valor. “Today, enforcement actions are extremely aggressive, and response deadlines are very short in relation to all these demands.”
