Credit cooperatives can be efficient tools for financial inclusion by distributing agricultural credit to small-scale rural producers. Due to their proximity to borrowers, cooperatives can deliver benefits that traditional banks cannot, such as lower transaction costs and lower costs of collecting information about producers. This tends to reduce financial risks.
Cooperative credit is currently an option in close to 2500 municipalities in Brazil, with an specially large presence in the countryside areas. Although it is distributed unevenly throughout the country, cooperative credit helps compensate for the scarcity of financial institutions in some regions and assists in fulfilling requirements in the application of rural credit resources.
This brief is the result of a collaboration between Climate Policy Initiative/Pontifical Catholic University of Rio de Janeiro (CPI/PUC-Rio) and the Cooperatives Observer (OBSCOOP) of the University of São Paulo. It aims to analyze cooperatives’ participation in rural credit, addressing both recent developments and potential challenges.