CPR - “CÉDULA DE PRODUTO
RURAL”
CPR - “CÉDULA DE PRODUTO RURAL”
· created by Brazilian Law number 8929, of August 22nd, 1994
· a financial instrument, through which the issuer (a farmer
or a cooperative) sells
his crop prior to the harvest time and receives cash, assuming an
obligation to
deliver certain amount of commodities in a future date at a specified
place.
Released on = September 4, 2004, 2:42 pm
Press Release Author = Dr. Osvaldo Carlos Maia - Attorney at Law
- Foreign
Investments Consulting
Press Release Summary = Banco do Brasil - CPR EXPORT
AGRICULTURE FINANCING IN BRAZIL
Press Release Body = CPR’S MAIN FEATURES
· the issuer receives in advance the correspondent value
in cash
· avoidance of the mismatch between the commodities price
and the indexation of
interest
rates in Brazil
· the issuer may provide guarantees based on real properties
and/or other guarantees
provided by third parties (for example, by Banco do Brasil)
· CPR may be traded at commodities exchanges and/or over-the-counter
· all CPR’s transactions will be settled through the
CETIP, one of the Brazilian
clearing
systems, which will allow the investors to know how much of his
production, a farmer
had
already committed
· it may be modified by amendments
· it may have Banco do Brasil as a guarantor of the farmer’s
performance
TO WHOM MAY IT INTEREST?
· Farmers and Cooperatives (as issuers)
· Exporters and Food Processing Firms
· Trading Companies
· Suppliers of equipments and fertilizers
· Commodities Exchange
· Financial Institutions
· Institutional Investors
· Government Agencies
CPR’S ADVANTAGES
I - TO FARMERS AND COOPERATIVES
· Selling crops in advance
· Assures commercialization of production at a fair price
· Reduces dependence to subsidized credit
· Enables to have a better long term planning of their activities
II - TO EXPORTERS AND FOOD PROCESSING FIRMS
· Anticipated purchase of raw material
· CPR can be transferred through endorsement
· reduces delivery risks, thanks to existing guarantees and
efficient clearing systems
· Motivates quality control programs at warehousing firms
· Enables better financing conditions
III - TO SUPPLIERS OF EQUIPMENT AND FERTILIZERS
· Relieves the effects of harvest seasonalities on their
sales
· enables immediate cash of sales
· reduces sales dependence on existing financing from banks
IV - TO INVESTORS
· Liquidity
· Specific Legislation
· Issues guaranteed by commodities
· Hedged Issues
BANCO DO BRASIL’S ROLE
· Providing CPR’s holders with a performance guarantee
assuring the delivery of the
commodities
· Providing trading companies and/or food processors with
the funding for the
purchase of
CPRs.
BB CPR EXPORT
WHAT IS IT
Commodity Future Note, which the delivery of goods, usually agricultural
commodities, is
guaranteed by Banco do Brasil and funds are paid in advance to the
note issuer. At
the maturity date, the contract will be settled exclusively by the
delivery of the
goods to the note holder.
BB CPR EXPORT is a Banco do Brasil-warranted Commodity Future Note
that guarantees
delivery of the produce to the buyer.
Reference price is the future market of the main Commodities Board
of Exchange
discounted to present value according to the delivery maturity of
the note.
FLOW
1. Producer and buyer agree with terms and conditions of the deal,
as price, delivery,
Incoterms, product’s quality and maturity
2. Producer issues CPR EXPORT
3. Banco do Brasil guarantees the CPR EXPORT by aval and issues
an endorsable
custody certificate
4. Buyer pays in advance and receives a non-negotiable copy of BB
CPR EXPORT and an
endorsable custody certificate
5. Producer delivers goods to the buyer, according to terms and
conditions
6. Buyer receives the goods.
Web Site = http://www.ocmadvocacia.adv.br
Contact Details =
www.ocmadvocacia.adv.br
E-Mail: osvaldomaia@ocmadvocacia.adv.br
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