BNDES launches more competitive rural credit in dollars for Brazil's agro-export sector

The National Bank for Economic and Social Development (BNDES) approved the use of a fixed rate, in US dollars, for operations under the BNDES Rural Credit product for the acquisition of agricultural machinery and equipment. The objective is to expand and diversify agricultural credit alternatives at more competitive costs for this intensive exporting segment.

Currently, rural producers have three types of basic financial costs when forming the final rate for financing BNDES Rural Credit: Selic Rate, TLP (BNDES Long-Term Rate) or BNDES Fixed Rate. With the creation of a line with a fixed rate in dollars, the expectation is for a credit potential of more than R$2 billion per year for operations that use this financial cost. The novelty should contribute to the expansion of mechanization, renewal and technological updating of the fleet of agricultural tractors and harvesters, enabling greater productivity in the field.

President Aloizio Mercadante highlighted that, to receive rural credit in dollars, the farmer must present receivables in dollars. “We don’t want to transfer exchange rate risk to the farmer. It is a very favorable, fixed condition that allows for planning and security. We want innovative, digital, precision agriculture to reduce costs and risks. We have a very promising path, for a sector that exported R$159 billion last year. Brazil’s strength on environmental issues and the presence of President Lula opens doors for more solutions to emerge and markets to be opened,” he explained.

The Minister of Agriculture and Livestock, Carlos Fávaro, stated that “Brazil has returned to the international scene and the demand is very high, which creates opportunities to sell more, creating jobs in Brazil. We need to look for alternative costs, the BNDES team understood the logic and this line solves this demand for the exporter without generating costs for the National Treasury”, he concluded.

BNDES financial director Alexandre Abreu said: “We found a situation that suited perfectly for producers with receivables in dollars. Taking advantage of a good moment for international funding in which the BNDES preserves its normal earnings and can offer a cheaper fixed rate, at 7,59% per year, plus exchange variation, for the acquisition of machinery and implements for agricultural activities”, he clarified.

The new line will have total terms ranging from 25 to 120 months and a grace period of up to 24 months. Furthermore, this new financial solution will have a final cost to the rural producer of around 7,59% per year, plus exchange rate variation, which is extremely competitive compared to similar solutions available on the market.

To obtain financing, the rural producer must seek one of the financial agents accredited by BNDES (https://www.bndes.gov.br/wps/portal/site/home/instituicoes-financeiras-credenciadas/), which currently has more than 70 institutions, including public and private banks, regional development banks, cooperative banks and credit unions, in addition to car manufacturer banks. On the BNDES website (https://www.bndes.gov.br/wps/portal/site/home/transparencia/consulta-operacoes-bndes/credito-rural-desempenho-operacional), it is possible to observe statistics of main financial agents that operate the rural credit line.

Created in 2020, BNDES Crédito Rural is a non-subsidized financial product that uses BNDES resources in a complementary manner to the Federal Government's Agricultural Programs (PAGF). PAGFs rely on equalizable resources from the National Treasury and are subject to high demand from the Brazilian agricultural sector, which causes rapid budget consumption. As BNDES Crédito Rural is not subject to equalization, it acts to make funding more stable and predictable for the sector, which will be able to count on the new modality with resources raised in foreign currency. The expectation is that BNDES Crédito Agrícola in Dollars will be available to customers at financial agents from May onwards.

With this further strengthening of credit policy, BNDES continues towards greater intensification of production, adoption of good practices and sustainability, contributing to the country's advancement in economic, social and environmental issues.

BNDES Crédito Rural has already approved, in three years, R$11,2 billion in credit in more than 25 thousand operations, with the participation of 20 financial agents (banks and credit cooperatives). Around 98% of operations approved under BNDES Crédito Rural are for micro, small and medium-sized companies, which represents 90% of the total amount financed.

Agriculture

BNDES's strategy in agriculture has focused on supporting investments that generate increased productivity and sustainability through the dissemination of new technologies, and thus contribute to the expansion of food, energy and export security.