Brazilian companies hit by floods count losses and look to the future June 1st, 2024

A worker uses a high-pressure hose to remove mud accumulated by floods in a factory © Nelson ALMEIDA / AFP

By AFP - Agence France Presse

Brazilian companies hit by floods count losses and look to the future

Encantado (Brazil) (AFP) - The thriving economy of southern Brazil has been battered by historic floods, with vast farmlands unusable and factories paralyzed.

Even as businesses count the full extent of the damage, they are crying out for aid to help them recover and for measures to deal with future extreme weather events.

“Nobody has had losses like the ones we're seeing now,” said Gedeao Pereira, president of the Rio Grande do Sul Farmers' Federation (Farsul).

“There is widespread destruction, especially in the state's central regions,” he said at a press conference.

The historic month-long floods, attributed by experts to climate change exacerbated by El Niño, have left 169 dead and around 600,000 homeless.

AFP looks at some of the main challenges facing companies in Rio Grande do Sul, one of Brazil's richest states:

Cost accounting

The main sectors in the region are agriculture and manufacturing.

According to a local industrial federation, nine out of ten factories in the state were affected by the floods.

A preliminary survey published by Farsul estimates that large landowners lost up to 25 million reais (US$ 5 million).

However, with the waters still receding, the real cost of the damage in the region of 11 million inhabitants has yet to be calculated.

“As we continue to visit the state, we are increasingly impressed by the level of damage,” said Pereira.

Restoring transportation

Several bridges collapsed in the floods and the roads are in a terrible state, making transporting goods extremely difficult.

Several bridges collapsed in the floods and the roads are in a terrible state, making the transportation of goods extremely difficult and preventing business from resuming

“The most urgent thing is to restore mobility,” said Angelo Fontana, president of the Chamber of Industry, Commerce and Services of the Taquari Valley, a badly affected region northwest of the capital, Porto Alegre.

He told AFP that this would be the first step for companies to get back on their feet.

Fontana is a partner in a 90-year-old company of the same name, which manufactures chemical products in the town of Encantado, on the banks of the Taquari River.

The company, which employs 250 people, has still not resumed production after several of its huge chemical tanks became precariously tilted like Pisa towers due to the force of the water.

More financial assistance

The federal government has announced, among other measures, a credit line of 15 billion reais (US$2.9 billion) with low interest rates and the option of renegotiating existing debt.

However, Pereira told AFP that “longer payment periods of up to 20 years” are needed.

The aid is “positive, but more loans are needed” for producers, said Carlos Joel da Silva, president of the state's agricultural workers' federation, which represents more than 700,000 employees on small farms.

He added that simply treating farmland to make it fertile again is extremely expensive.

Contingency plans

The region suffered four extreme weather events last year, and companies say it's time to create contingency plans to cope with climate change.

The Fontana company drew up such a plan after a flood in 2023.

This time, when torrential rain was forecast, “we removed equipment and electronic components from our machines,” said Ricardo Fontana, the company's director. “That way, we limited the damage.”

Risk of worker exodus

Angelo Fontana said that almost 10% of his company's employees have resigned since the floods, pointing to the risk of an “exodus of workers” in the region.

“We need to give them a solution for housing and stability,” he said.

The threat of extreme weather events could lead some to abandon their businesses altogether.

Da Silva, from the agricultural workers' federation, said that small producers who had barely recovered from several years of drought could be forced to “look for a new land”.

Alexandre Becker, a dairy farmer from the Taquari Valley who has lost much of his cattle's feed, said he would get rid of part of his herd.

“If the winter isn't good for us, the way things are going this year, we won't rule out” going out of business, he said.