New rules on rural credit expand restrictions

The National Monetary Council (CMN) presented changes to the chapter of the Rural Credit Manual (MCR). These are social, environmental and climate impediments set out in CMN Resolution No. 5.081/2023. These new developments affect restrictions on access to agricultural financing.

The MCR codifies the standards approved by the CMN and those published by the Central Bank of Brazil relating to rural credit. Beneficiaries and financial institutions operating in the National Rural Credit System (SNCR) are subordinate to them. All without prejudice to compliance with applicable regulations and legislation.

The first of the new rules, according to lawyer Frederico Buss, from HBS Advogados, is that rural credit will not be granted to anyone who has a business on a rural property that is not registered or whose registration is suspended or canceled in the Rural Environmental Registry ( CAR). The previous wording of this provision provided for an impediment for rural producers. In the new wording, which comes into force in August of this year, the restriction was extended to enterprises located on rural properties without registration or with registration suspended in the CAR.

If the enterprise is in a rural area that is part of a Conservation Unit, and this is registered in the National Registry of Conservation Units (CNUC) of the Ministry of Environment and Climate Change (MMA), rural credit will only be granted if the economic activity is in accordance with the Conservation Unit Management Plan. This rule comes into effect next year; and now the restriction is for rural properties and not just for the project area.

There will also be no rural credit for projects in rural properties that are fully or partially occupied by indigenous communities, approved, regularized or defined as an Indigenous Reserve in the Indigenous Information System of the National Foundation of Indigenous Peoples (Funai). This change takes effect next year; and expanded restrictions on developments on land occupied by indigenous people. The previous wording established restrictions only if the project area was located on indigenous land. However, for the purposes of applying this restriction, only lands occupied by Indians are considered to be those already approved by decree of the President of the Republic, regularized or defined as an indigenous reserve by Funai. In other words, this restriction should not be applied to properties that are the subject of administrative proceedings still being processed with Funai.

Furthermore, according to the expert, the rule of not having rural credit for projects on land occupied and titled by remnants of quilombola communities continues to apply. This part has not changed, so the restriction continues for those who have projects on land occupied and titled by quilombolas. It is important to note that this impediment does not affect rural areas that are subject to administrative proceedings pending discussion at Incra.

Another change is that there will be no rural credit for projects on rural land embargoed by competent environmental bodies, whether from the federal or state government, due to the economic use of illegally deforested areas on the land. And this only applies if the embargo is registered in the list of embargoes in the Registry of Environmental Assessments and Embargoes of the Brazilian Institute of the Environment and Renewable Natural Resources (Ibama). Previously, this restriction was only for projects in the Amazon. Now it will apply to other biomes too. This new rule comes into effect next year.

Finally, the resolution maintains the restriction of rural credit to individuals or legal entities that are registered in the register of employers who kept workers in conditions similar to slavery.

The full document can be read at the link below: