Brazil to release $4 billion in farm credit

Brazilian President Michel Temer has announced the government-controlled bank Banco do Brasil will release 12 billion reais ($4 billion) in subsidised credit to farmers for the planting, upkeep, harvest, transport, storage and sale of crops.

Brazil’s yearly output of soybeans and corn accounts for roughly 95% of the country’s total grain production by tonnage, and most of the credit will go to commercial farmers of these crops.

The country’s 190 billion real ($60 billion) farm bill for the 2017/18 (July-June) season was announced in July 2017, but the government has been facing a fiscal crisis and often holds back the disbursement of some government spending earmarked for various sectors when it is tightening its fiscal purse-strings.

“We are allocating 12 billion reais in credit to farmers with more accessible interest rates,” Temer said to a room of 400 farmers and leaders in the agricultural sector this week, adding that it “wasn’t without reason that we increased our agricultural exports by 17%” in 2017.

Brazil produced a record 240 million tonnes of grain, predominantly soybeans and corn in the previous 2016/17 season and Temer said the country was on its way to harvest another bumper crop this year.

The funds are a tranche of the total credit that the government earmarks for agricultural loans on an annual basis, and will help producers secure attractive credit through the main farm lender, Banco do Brasil. 

The attractive financing will allow them an alternative to selling soybeans and corn on the spot market to fund their day-to-day operations through the peak of harvest, which is now imminent.

The funds, which Temer said will be made available at an annual rate of 7.5% to 8.5%, will have terms of 14 months.