Almost one million contracts will benefit from a longer period to pay debts

Almost 1 million credit contracts were covered by the federal government's decision to extend the execution of debts owed by producers in the Northeast Development Superintendency (Sudene) area for one year due to the drought. This region comprises all states in the Northeast and the north of Minas Gerais and Espírito Santo, totaling 1.989 municipalities. The extension of the payment deadline mainly benefits small farmers with debts of up to R$15.

The measure, made official by Provisional Measure 707, of December 30, 2015, was taken based on studies by the Ministry of Agriculture, Livestock and Supply (Mapa), which had been receiving demands from the sector. Thousands of farmers lost their ability to pay due to successive drops in production caused by the severe drought that hit the Northeast Region in the last four years.

According to Mapa's Agricultural Policy Secretariat, at Banco do Nordeste alone, 950 credit contracts - totaling R$12,1 billion - are irregular, but cannot be executed due to the extension of Law 12.844. The total number of operations governed by law in this bank is 1,07 million, with a stock of R$14,5 billion. Banco do Nordeste is the main financing institution in the region. The number of contracts in other banks is not significant.

In the credit line of up to R$100, 93% of the contracts covered are for up to R$15, which shows that the biggest beneficiaries of the extension are small producers in the semi-arid region. The number represents 56% of the total stock of this line.

According to the Secretary of Agricultural Policy, André Nassar, producers who have not settled their debts by December 31, 2015 will not be able to be foreclosed on by the bank throughout this year. This, he assesses, will guarantee breathing space so that they can recover their payment capacity.

“Neither the banks nor the government want producers to be executed. We want to solve the problem because farmers are in default due to the inability to pay caused by the drop in production”, says the secretary. “If the producer ends up being executed, he is thrown out, has to give all his guarantees to pay the debt and ends up no longer being a producer.”

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The extension of Law 12.844 suspends for one year the forwarding of rural credit operations for registration in active debt and for judicial collection from producers. The provisional measure does not represent debt forgiveness, but an extension of the deadline for payment, which would expire on December 31, 2015.

All credit operations (funding, investment and commercialization) of up to R$ 100 thousand contracted until December 31, 2006 in the Sudene area are covered. Also included are contracts worth up to R$200 with resources from the Constitutional Financing Funds of the Northeast (FNE and FNO), closed until December 31, 2006.