Opportunities of Irrigation in Brazilian Agriculture

Irrigation plays a fundamental role in modern agriculture and is essential for ensuring food security and sustainability. Cristiano Oliveira, Associate Professor at the Federal University of Rio Grande and head of research at Rivool Finance highlights that irrigation provides a stable water supply, mitigating risks from irregular rainfall and prolonged droughts, resulting in more productive and higher-quality harvests.

According to Oliveira, irrigation enables the cultivation of high-value crops that would otherwise be unviable. However, Brazil faces challenges in maximizing the use of these technologies compared to global agricultural leaders, emphasizing the need for strategic investments to promote competitiveness and sustainable sector growth.

"In 2023, the irrigated area in Brazil corresponds to only 13.2% of its arable land, a percentage lower than that of the United States, which reaches 19.3%, and China, which leads with 21.2%. The European Union also surpasses Brazil, with 13.4% of its agricultural land under irrigation. Despite gradual growth from 12.3% in 2010 to the current 13.2%, the expansion of irrigation infrastructure in Brazil still lags behind its global competitors," he says.

Irrigation can increase agricultural productivity by up to 300%, depending on the crop and climatic conditions. Embrapa studies show that drip irrigation in horticulture can double productivity. This improvement not only accelerates the return on investment but also provides significant financial returns, making irrigation a highly profitable activity despite initial challenges.

"Thus, investment in irrigation presents a strong case for adopting private credit in Brazil, aligning with its characteristics such as expected returns and maturation periods. The potential returns from irrigation investments are considerable, ranging from 15% to 50% per year, with a payback period that can vary between 1 and 5 years, depending on the system and scale of implementation. These factors make irrigation an attractive sector for private investors and financial institutions," concludes Oliveira.