In Brazil, barter has emerged as an alternative financing mechanism amid tightening credit constraints and reduced government support for agriculture. Under this arrangement, farmers receive inputs before planting and repay with a portion of their future harvest, creating a bargaining environment between producers and input suppliers. Despite its importance, there is limited theoretical analysis from the farmer’s perspective. This paper develops a model based on Nash bargaining to examine how exchange terms are determined. The results indicate that barter outcomes depend on farmers’ risk preferences, bargaining power, and macro-financial conditions. More risk-averse farmers accept less favorable terms to reduce uncertainty, while weaker bargaining positions further diminish their share of the surplus. Additionally, higher interest rates increase the relative attractiveness of barter compared to traditional credit, reinforcing its role in imperfect rural financial markets.
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