Government and entities discuss modernization of rural credit and legal security

The Agricultural Parliamentary Front (FPA), the Brazilian Agriculture and Livestock Confederation (CNA), the Agriculture and Livestock Federations and the entities of the Agro Council met, this Tuesday (2), with the president of the Chamber of Deputies, Rodrigo Maia and the Minister of Agriculture, Tereza Cristina to discuss proposals for modernizing rural credit and legal security for agriculture.

The president of the FPA, deputy Alceu Moreira (MDB-RS), defended the need to move forward on issues such as land regularization and considered that the modernization of rural credit will help bring back producers who are sidelined from the production process due to bottlenecks such as debt.

“We need to modernize credit, lower interest rates and bring back those producers who can add 5% to 8% to our production capacity. We changed a little in MP 897/19, which became law 13.986/20, but we can do more in a complete text in the Chamber of Deputies, removing this hidden partner from our midst.”

At the opening of the video conference, the president of the CNA, João Martins, said that the National Congress is the appropriate sphere to discuss public policies for the sector and that the modernization of rural credit is one of the priorities for agriculture to continue making its contribution to the country , with record harvests and supplying food to Brazil and the world, especially during this pandemic period. “We need a legal framework to modernize the financial system in Brazil and it is in Congress that this must be built”, highlighted João Martins.

Martins also defended the regulation of legal frameworks to provide legal security to producers. “We are increasingly competitive from the inside out, but that alone doesn’t solve the problem. Brazil is already the largest food producer, but we need to consolidate this position and for this reason Congress must build this framework.” The president of the CNA also defended the reduction of interest rates, accompanied by the trajectory of successive drops in the Selic rate. “Today we still have an abusive interest rate, no matter how great the effort to reduce it.”

In a presentation made to the President of the Chamber, the CNA's technical superintendent, Bruno Lucchi, outlined an overview of rural credit in Brazil and reinforced the need to modernize the current model. One of the proposals defended by the agricultural sector is the reduction of administrative and tax costs (CAT), as these costs significantly increase interest rates.

According to the presentation, a small producer, when obtaining financing, ends up paying interest three times higher than the rate initially foreseen in the contract due to the CAT. For the medium producer, this rate is 2,3 times higher than what was agreed upon when contracting rural credit.

Another point presented to Rodrigo Maia, within the CNA's proposals for updating the financial system and rural credit, was the increase in sources of financing for agribusiness, with the participation of external investors and private pension funds, which show great interest by the sector.

In this way, producers would depend less and less on official credit and would have better conditions to obtain resources. The rise in official funding caused, from 2013 to 2019, a reduction of 945 thousand contracts.

For minister Tereza Cristina, the country has a very modern agriculture, but there are still producers who need to be included in this reality of modernizing rural credit. She told participants that the government intends to discuss with the sector a proposal to modernize the Rural Credit Manual and highlighted the approval of Law 13.986/20 (MP do Agro).

"Unfortunately, Covid prevented us from promoting the first wave of modernization of rural credit, but we did not stop and we will continue working to bring advances and we will really need the help of the Chamber in projects that can help bring legal certainty", said the minister.

“The public ability to finance us is decreasing more and more and we need modern tools, with new means of raising funds. And the National Congress is the ideal forum for this debate”, said the president of the Organization of Brazilian Cooperatives (OCB), Márcio Lopes de Freitas.

“We generated more than R$ 700 billion for the government. Don't we deserve a more logical financing?”, questioned the president of honor of Abramilho, the ex-minister Alisson Paulinelli.

Agenda – The president of the Chamber, Rodrigo Maia, recognized the need to modernize rural credit and said that the agenda has a great chance of advancing in Congress.

“Given the importance of agriculture in this pandemic period and the topic, I do not believe that there will be problems in this discussion because there is no controversy and financing is of great importance for the sector and needs to be compatible with its needs to continue producing food”, he said.

Rodrigo Maia also signaled the return of other topics of interest to the sector to debates in the Chamber, such as issues related to pesticides and environmental licensing, in addition to the resumption of discussions on tax reform.

To move forward with the sector's proposals, the president of the Chamber proposed the creation of working groups to discuss credit issues and topics related to legal certainty.

*With information from the Brazilian Agriculture and Livestock Confederation (CNA)