South America Calling
Alastair Stewart South America Correspondent

Monday 05/19/14

Brazil Announces $70 Billion Farm Credit Plan

Brazilian President Dilma Rousseff on Monday announced the farm credit plan for the 2014-15 to the general contentment of the agricultural sector.

The government will offer R$156.1 billion ($70.3 billion) in subsidized farm credit for next season, which gets under way in July. That's up 14.7% on the year before.

Out of this budget, cost, operating and marketing credit will account for R$112 billion and investment programs will get R$44.1 billion.

"We see this as a good plan, meeting the sector's demands for increased funds, increased limits and compatible interest rates," said Ricardo Tomczykm, vice president of the Mato Grosso Soybean and Corn Growers Association (Aprosoja-MT).

The plan offers subsidized operating credit at 5% to 5.5% per year. Access to credit at these levels is valuable to farmers as commercial credit is offered at 25% and over.

The latest plan increased the amount of official credit for costs each farmers can take out to R$1.1 million from R$1 million last year and for marketing credit to R$2.2 million from R$2 million.

This will attend to the needs of small- to medium-sized farmers, but obviously Mato Grosso soybean farms have to resort to commercial credit as well.

For 2014-15, soybean margins are less enticing than in recent years, but analysts still expect Brazil to plant 3% to 5% more next season as a consequence of the opening of new land to production, which is a three- to five-year process.

Farm leaders were relieved that the government maintained its farm insurance subsidy budget at R$700 million, which Brasilia estimates is enough to finance 25 million acres of crops. Farm leaders were concerned that the government's commitment to insurance was waning.

The government brought forward the announcement so as not to conflict with the soccer World Cup, which kicks off in Sao Paulo in 26 days.


Posted at 2:51PM CDT 05/19/14 by Alastair Stewart
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