Negotiations around the new Safra Plan could last until June 30, according to ministry

Agricultural entities celebrated the approval by parliamentarians, last Tuesday (1st), of the Congressional Bill (PLN 04/21) that reconstitutes the budget allocated to the 2021/22 Harvest Plan and presented their demands. The Safra Plan is the main public credit policy for farmers. The matter was discussed at a public hearing of the Agriculture, Livestock, Supply and Rural Development Committee of the Chamber of Deputies.

Director of the Credit and Information Department of the Ministry of Agriculture, Wilson Vaz expects the release of the Harvest Plan for the 20/2021 biennium to be released on June 2022th, but said that it is possible for negotiations to continue until June 30th. The new plan was supposed to come into force on July 1st.

Wilson Vaz was one of those who celebrated the approval of PLN 4/21, which will also allow the reopening of credit lines under the current Harvest Plan (2020/2021). Hiring had been suspended at the beginning of May. “We still have R$9,5 billion to be contracted from the 2020/2021 Harvest Plan,” he informed. According to him, with these latest contracts, the total value of resources in the current Safra Plan should reach almost R$250 billion. Of this amount, R$11,5 billion were resources from the National Treasury.

With rising production costs, interest rates and inflation, Vaz said more Treasury resources would be needed in the new plan. "To do the same thing as last year, without changing the interest conditions and financing terms, we would need at least R$15 billion in budgetary resources to carry out the same Harvest Plan. We are aware that we do not have that availability today" , he said.

Given this, according to him, all demands cannot be met, and the Ministry of Agriculture's guidance is to give priority in the new Harvest Plan to support small and medium-sized producers, as happened in the current plan. Furthermore, the idea is to prioritize the granting of credit to finance the adoption of sustainable technologies and practices, irrigation programs, construction of warehouses and technical assistance. The government wants to continue encouraging the expansion of private financing mechanisms.

Treasury Resources 

Undersecretary of Fiscal Management at the National Treasury Secretariat, Adriano Pereira de Paula said that the government's priority at the moment is health and support for the vulnerable population. Regarding the resources for the next Harvest Plan, he stated: "We are negotiating and we will try to reach the best possible term."

"The blanket is short, the resource needs to cover gaps from previous years, and some priorities will have to be placed", assessed the deputy Jose Mario Schreiner (DEM-GO), who requested the hearing. In his view, the priorities of the new Harvest Plan include: storing agricultural production within properties; programs such as low-carbon agriculture and others that guarantee sustainable agriculture; agricultural funding programs, as production costs have increased; and the expansion of rural insurance.

Now for the deputy Zé Silva (Solidarity-MG) more predictability is needed to provide legal certainty for investors. "The lack of planning is a plague that the sector still faces", he stated

Industry demands 

Bruno Lucchi, technical director of the Brazilian Agriculture and Livestock Confederation (CNA), hopes that the new Safra Plan will not be delayed and that resources will be available to producers on July 1st. The entity defends budget predictability and the guarantee, this year, of a budget of R$15 billion for the equalization of interest rates and R$1,6 billion for the economic subsidy for rural insurance.

Coordinator of the Agricultural Branch of the Organization of Cooperatives of Brazil, João Prieto called for the resumption of the Safra Plan agricultural financing subsidy programs suspended in May, with the approval of PLN 4/21. He defends, in the new plan, the maintenance of the credit architecture in force in the current plan, and also asked that the lines destined for investments be prioritized, "because they are important for the sector and for the communities where the cooperatives are located, generating income and employment ". Among other proposals, he also defended a robust budget for rural insurance, with an allocation of R$1,5 billion for the rural insurance program.

For the advisor to the National Confederation of Agricultural Workers (Contag), Décio Sieb, the approval of PLN 4/21 is not enough. "We need to make an effort, Congress and government, to guarantee resources for the conclusion of this harvest and for the next harvest, so that we do not arrive in January of next year and have difficulties", he highlighted. He asked for an update to the investment ceiling and differentiated interest rates for the National Program for Strengthening Family Agriculture (Pronaf).

President of the Brazilian Association of Soy Producers, Antonio Galvan defended investment in harvest storage. "There is no point in having a bigger harvest without having somewhere to store the production safely. This is, in principle, our biggest demand", he pointed out.

Participation of private banks 

At the hearing, the head of the Department of Regulation, Supervision and Control of Rural Credit and Proagro Operations, of the Central Bank, Cláudio Filgueiras Moreira, highlighted that the Agro Law (Law 13.986 / 20, arising from MP 897/19), approved last year), allowed large producers to be served by credit from private banks, through uncontrolled resources. The idea now, according to the Central Bank representative, is to further simplify and modernize rural credit regulation.

"That the resources reach the producer, in the right amount, in a timely manner. There is no point in arriving resources after the moment the producer needs them. Therefore, we have to make the credit granting part simpler and more fluid. And invest so that the Producers who can seek free resources continue to do so and others are supported to the correct extent by government plans and government programs."

Director for Rural Credit Affairs at the Brazilian Federation of Banks (Febraban), Rafael Baldi highlighted that the volume of credit made available by private banks to rural producers increased by more than 20% from the previous harvest year to the current one. But, according to him, the big villain that prevents resources from reaching rural producers is the process that must be followed to contract resources.

Febraban suggests the creation of an official database that allows financial institutions to access producers approved by the ministry for targeted credit. Baldi asks that the producer, and not the bank, be responsible for the correct direction of resources. According to him, today supervision is the responsibility of the banks.