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Cederural (State Council for Rural Development) of Santa Catarina confirmed the extension of FDR Fund installments for onion farmers affected by the price crisis of the 2025/2026 harvest. The measure impacts 1,305 contracts totaling over R$ 4.2 million and serves 15 municipalities that declared economic emergency, including Ituporanga, the “Land of the Onion”. The state is a national leader in production with an estimated 600,000 tons, but oversupply drove down prices and compromised producers’ income.
The state that feeds Brazil with 600,000 tons of onions per year is watching its own farmers go bankrupt one after another. Santa Catarina, the national leader in bulb production, is facing a crisis that has already led 15 municipalities to declare economic emergency because oversupply has driven prices down to levels that do not cover production costs. The estimate is a reduction of R$ 100 million in plantation revenue this year, a figure that could make the activity unfeasible for hundreds of families who depend exclusively on onions to survive.
The situation became so critical that the state government had to act quickly. Cederural confirmed that the installments of the FDR Fund (State Fund for Rural Development) due until the end of 2026 will be extended until the end of the contracts, benefiting 1,305 financings totaling over R$ 4.2 million. The measure provides financial relief so that producers do not lose their properties due to default while waiting for prices to recover, but it does not solve the structural problem that caused the crisis: Brazil produces more onions than it can consume.
The 15 municipalities that declared economic emergency
According to information released by the NDMAIS portal, the onion crisis most severely affects cities that depend on the crop as their main economic activity. Ituporanga, in the Alto Vale do Itajaí, became the “Land of the Onion” by concentrating a significant part of Santa Catarina’s production, but now it is also the epicenter of an emergency that has spread to 14 other municipalities: Alfredo Wagner, Atalanta, Aurora, Bom Retiro, Caçador, Chapadão do Lageado, Frei Rogério, Imbuia, Lebon Régis, Leoberto Leal, Petrolândia, Rio das Antas, Urubici and Vidal Ramos.
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The declaration of economic emergency is not just symbolic: it allows municipalities to access state and federal resources to support struggling farmers and justifies measures such as the debt extension that Cederural has just approved. The 15 affected cities concentrate a significant portion of Santa Catarina’s onion producers, and the financial collapse of these farmers would have a ripple effect on local commerce, services, and municipal revenue.
Why onion prices plummeted even though production was good
The paradox is that the 2025/2026 harvest in Santa Catarina was technically successful: the state expects to harvest about 600,000 tons of onions, a volume that consolidates its national leadership. But the oversupply in the Brazilian market, combined with the entry of imported products, drove down prices to levels that do not cover the cost of production, which includes seeds, fertilizers, labor, and logistics.
The mechanism is well-known in agriculture: when all producers have a good harvest at the same time, abundance pushes prices down. The problem is that farmers cannot simply stop selling because onions are perishable and need to be commercialized before they spoil. The result is a rush to sell production at any price, which further drives down quotations and turns a record harvest into a loss for those who planted.
The debt extension and what it means for producers
The measure approved by Cederural extends the installments of the FDR Fund due between March 1st and December 31st, 2026, incorporating them at the end of the contracts. There are 1,305 contracts totaling over R$ 4.2 million in financing for investments in properties and improvement of production processes, executed by Sape in partnership with Epagri.
The Secretary of Agriculture and Livestock, Admir Dalla Cort, explains that the measure provides more peace of mind for farmers to face the current period of low prices. “With the extension, they gain time to organize their finances and continue producing,” he states. The support is important, but it doesn’t cover monthly expenses: a R$ 100 million reduction in crop revenue means that many families will have to seek other sources of income while waiting for the next harvest.
The garlic crisis accompanying the onion crisis in Santa Catarina
Onion is not the only crop in difficulty. Santa Catarina is also Brazil’s third-largest garlic producer, with an estimated 8.8 thousand tons in the current harvest, and the same problem of low prices due to excess supply affects producers in this segment. The concentration of two simultaneous crises in crops that share a producer profile and region exacerbates the financial impact, because many farmers cultivate onion and garlic as a way to diversify and end up losing on both.
The situation reveals a structural fragility of small-scale agriculture in Santa Catarina: the dependence on a few crops in regions where climate and soil favor production, but where there are no mechanisms for supply regulation or price insurance to protect the producer when the market collapses. Farmers plant in the expectation of prices that were sustained in the previous harvest, but have no guarantee that the market will remunerate their work.
What needs to change to prevent the crisis from repeating
The extension of debts is a necessary palliative, but it doesn’t solve the root cause. To prevent the onion crisis from repeating with every abundant harvest, Brazil would need regulatory instruments such as buffer stocks, forward sales contracts, and price insurance that guarantee minimum remuneration to the producer regardless of market behavior at harvest time.
While these mechanisms do not exist, farmers in Santa Catarina depend on market luck and the government’s willingness to act when a crisis sets in. The state that produces 600,000 tons of onions per year and feeds tables across Brazil cannot ensure that its own producers survive from one harvest to the next, a paradox that exposes how much Brazilian family agriculture operates without a safety net.
Did you know that onion farmers in Santa Catarina are going bankrupt despite a record harvest, or did you think that producing a lot always means profiting? Tell us in the comments if you noticed a change in onion prices at the supermarket and what you think the government should do to protect those who plant.
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