Forecasts of a potential super El Niño are prompting SLC Agrícola, the Brazilian biggest farm company, to take a more conservative approach to investment decisions ahead of the next crop season, according to Chief Executive Officer Aurélio Pavinato.
The weather phenomenon typically brings lower rainfall to central, northern and northeastern Brazil, where the company’s farms are concentrated.
“Based on historical patterns, what we know is that rainfall will be weaker,” Pavinato said. “The question is whether that reduction will be severe enough to affect production.”
Pavinato noted that forecasts remain imprecise at the local level, including for the company’s own farming areas. Faced with a higher degree of uncertainty, SLC has opted to proceed cautiously.
“We’re going to spend less and make some adjustments to crop management,” Pavinato told reporters after attending the World AgriTech South America Summit in São Paulo.
“The priority is to preserve cash and offset any potential loss in yields if that scenario materializes. We’re cautious, but not alarmed,” he said, citing reduced fertilizer use among the measures being considered.
Pavinato added that SLC is better positioned to weather an El Niño event than it was in previous cycles.
“Compared with the 2016 El Niño, when we were hit hard in Bahia, we are better prepared today, with more irrigation and more mature soils,” he said.
The company has also become more geographically diversified, with a larger footprint in Mato Grosso and operations in Maranhão, he added.
The story was translated with the assistance of artificial intelligence
