The agriculture industry has revolutionized over the past few decades by leveraging innovative technologies. However, agriculture still struggles with the credit culture.
Often, news of farmers suffering from the credit culture is common across the globe. In many instances, they end up paying more than they have to, making a farmer’s life miserable.
Bernardo Fabiani the CEO, and Co-founder of TerraMagna, came up with a brilliant way to help farmers access fair credit. The company works with an exclusive technology that allows granting credit to distributors and producers faster than the traditional market at fairer rates.
Let’s unveil how TerraMagna is revolutionizing agro-credit and taking the Brazilian agriculture market to new heights.
Triumph Over Modern Drought
Brazilian agribusiness, to function, needs credit. And that credit is scarce. In the 1970s, Brazil imported commodities to feed its people. Today, it is a production power, the largest exporter of soybeans, corn, and other crops. This evolution began with a state policy that used official resources to provide the needed financing, which is no longer sufficient like any market matures. Insufficient government subsidy made the agribusiness look for other ways of financing. However, Brazil has a data blackout in the rural field – which often lacks a basic internet connection.
TerraMagna was created to eliminate this information gap between those who need credit to fund or invest in a crop and the financer – be it a retailer that does a forward sale, bank, securitization company, or a capital market investor seeking more profitable options.
Through the utilization of satellites, government data, and artificial intelligence, TerraMagna analyzes and monitors agricultural warranties, from seeding to harvesting. This is a way to solve the fact that Brazil does not have much information about crop fields to measure risks.
Up Until Now
TerraMagna is reinventing how credit is underwritten, provided, and collected in Brazilian agriculture by leveraging technology and alternative data sources to transform a risky and volatile process currently done by less sophisticated players into a simple and safe experience.
The goal of TerraMagna is to provide access to fair and simple credit to farmers, retailers, and industries. Through this, investors have high-yield, collateralized, market-uncorrelated, high-volume assets to invest in.
Since its institution in 2017, it has gone through some important milestones. It is the first Brazilian company to be invested by Yield Lab and was chosen as one of the 100 most potential startups in Brazil by Pequenas Empresas & Grandes Negócios magazine for three consecutive years (2019, 20 and 21).
Recently, TerraMagna was in a US $2 million round led by OneVC with participation from Maya Capital, Accion Venture Lab, and key angel investors. The idea, which started with three engineers with big dreams, is now a company with more than 130 employees.
Steady Growth During Pandemic
Unlike other sectors of the Brazilian economy, agribusiness continued to grow, even during the pandemic. Brazilian agribusiness had a gross domestic product growth of almost 17% in agro, compared to two years ago. The sector opened more than 61 thousand new job opportunities, the best performance since 2011.
While this growth is remarkable, even during an economically complex period, the agriculture market still lacks sophistication, technology, credit – the area in which the company operates. This leaves room for innovative ideas to be applied in the segment, with significant potential for growth and positively changing the lives of millions of families, which is precisely its objective.
TerraMagna utilizes several technologies to follow all the evolution points of a crop, from seeding to harvesting, measuring previously intangible risks for the financier.
In addition, with the recurrence of the analysis, the company makes it possible for unavoidable problems (such as weather) to be predicted and, most important, for data-based actions to be taken during the crop cycle, preventing debts from rolling over for consecutive years.
This process brings lucidity for granting credit to the farmer’s various needs. It allows them to pay rates according to the risk presented by his production, by the conditions of his city, specifically, and not by a market average that will always be expensive to offset the intrinsic risks involved.
Trust is the foundation of everything TerraMagna does. It believes in the power to simplify and only brings positive things to one’s daily lives: the organizational climate improves, the employees feel part of what it does, and coexistence is simpler.
That’s how the company keeps itself aligned in fighting the battle.
Concepts such as free communication between all sectors, transparent processes, assertive organization, and planning are the reasons it constantly achieved exponential growth. Without these values, the company would certainly still be many steps behind.
Backing Up the Community
Much of TerraMagna’s innovation comes from its exclusive technology and market intelligence that allows it to understand better the risk offered in each production and, if necessary, to charge that farmer better without harming their sustenance resources.
As a company, TerraMagna ensures that it is always the most correct, fairest option to finance the farmer. In a recent case, it worked in a barter operation where the farmer paid 56% interest a year to fund his production. However, with the company’s expertise, he paid half that percentage, directly receiving the impact of almost a 30% increase in his profit.
Branching Out Fruition
Bernardo expresses that all input sales in the Brazilian agriculture market are 74% self-financed through forwarding sales from retailers to farmers. TerraMagna lets the retailer worry only about the core of their business – selling inputs – without having to play the obligatory role of the financier. The TerraMagna team is the ones who do the financing.
Through this, the company’s goal is to become the ultimate platform for financing agriculture in the Brazilian market and any underdeveloped agriculture. It could take the same solution to the rest of Latin America (except for Chile) and Africa or Eastern Europe.
Sprouting Aspiring Entrepreneurs
Bernardo says, “In the entrepreneurial environment, especially when we talk about startups, it is common to hear the term “build fast and break things.” But it’s essential to understand that in agribusiness, when you do this, you’re not breaking an app in a person’s hand, neither a customer experience only, you’re breaking a family’s recipe.”
“The level of seriousness, of responsibility you must have in agribusiness is incomparable with the lightness with which venture-backed technology companies are used to working,” concludes Bernardo.