Ministry of Agriculture intends to further democratize agricultural credit

In a hearing on Wednesday (22/05) at the Agriculture Committee of the Chamber of Deputies, Minister Tereza Cristina (Agriculture, Livestock and Supply) announced that small and medium-sized Brazilian producers will have more resources available in the 2019/2020 Harvest Plan , which will be announced on June 12th, compared to this year.

The minister said that it is the government's decision to give priority to producers who take up to R$500 per year in agricultural credit, which represents 96% of the more than 5 million Brazilian farmers.

“We are going to democratize credit more”, announced the minister to the deputies. “We are going to put more resources into small and medium-sized producers. The larger ones will have to pay a little more (in interest), but for these we are trying to modernize the financing tools a little more.”

Tereza Cristina said that, despite the budgetary difficulties, the next Harvest Plan will have, at least, the same R$220 billion allocated in the 2018/2019 agricultural year. For agricultural credit subsidies, the government will allocate, according to her, around R$10 billion to R$10,5 billion, which confirms the effort to maintain current values.

Pronaf (National Program for Strengthening Family Agriculture), also aimed at small producers, will have more than the R$30 billion it received in the current Safra Plan. She praised the Minister of Economy, Paulo Guedes, and his team for their attention to the Ministry of Agriculture in the Safra Plan negotiations, and said that all of Mapa's demands are being met.

The minister also confirmed that there will be R$1 billion for rural insurance, more than double the R$440 million this year, and stated that she hopes that, with less risk in operations, private banks will be able to offer more agricultural credit at lower interest rates, contributing to improving financing for Brazilian agribusiness, which accounts for almost 50% of exports and 21,4% of the country's Gross Domestic Product (GDP).

Tereza Cristina also announced to deputies that, on Monday (27/05), she will meet with the president of the Central Bank, Roberto Campos Neto, to discuss new financial mechanisms that will make it possible to increase resources for agricultural credit in the country. At the beginning of her presentation, the minister recalled that rural credit is insufficient in Brazil, and very concentrated in the hands of a few producers.

The number of contracts has been falling year after year, both for funding and for investments. Of the more than 5 million producers, 89,2% have properties of up to 100 hectares and only 1% have more than 1 thousand hectares. As a result, 92% of rural establishments generate only 15% of the value produced in the Brazilian countryside and the remaining 8% produce 85% of the value.

“The big challenge is to make these 92% (of establishments) able to produce more. Look what we can grow with agriculture in our country. That has to be our biggest concern, putting these people into production, creating income for the country and giving dignity to these families”, said the minister.

The minister stated that the ministry's main priority will be to improve the technical assistance offered to small producers, which she considers essential for them to be able to generate more income and improve production. According to her, technical assistance does not exist in many states, because state governments use funds transferred by the Union to pay for gasoline and other expenses, and the funds never reach those who need them in the field.