MercoPress. South Atlantic News Agency

Brazil launches US$ 65bn 'handouts' for the 2022/23 farming year

This coming farm year credit in 36% higher that 2021/22, and includes big agro-business enterprises, small and medium sized farmers

The Brazilian federal government launched last week the 2022/2023 agribusiness financing plan (Plano Safra), which will provide a total of Reais 340.8 billion (some US$ 65 billion) in credit to support the agri-business industry during the next twelve months.

According to the Ministry of Agriculture, the amount represents a 36% increase from the previous year, in which Reais 251 billion (some US$ 47.9bn) were made available to the farming sector.

The new program was announced during a ceremony at the Planalto Palace with the presence of president Jair Bolsonaro, minister of Agriculture Marcos Montes, and other top authorities. Of the total resources made available, Reais 246.28bn (some US$ 47b) will be allocated to funding and marketing, a 39% boost over the previous year. Another Reais 94.6bn (some US$ 18bn) for investments equivalent to a 29% growth.

Credits with controlled interest rates, Reais 195.7 billion (some US$ 37,3bn) and with market rates, Reais 145.18bn (some US$ 27,7bn), and with no interest up to 32% of the loan, Reais 115,8bn (some US$ 22,1bn) about USD 27.7 billion), particularly at harvesting time.

The new agribusiness financing plan also expanded, from 50% to 70%, the possibility of using resources from Agribusiness Letters of Credit (LCA). The LCA is a fixed income security issued by banks to finance agribusiness activities. According to the Bolsonaro government, expectations are for the measure to generate a more significant share of private agri-finance with the expansion of securities.

Resources for small farmers rose 36% through the National Program for Strengthening Family Agriculture (Pronaf), totaling Reais 53.61bn (some US$ 10.23bn), with an annual interest rate of 5% (for food production and socio-biodiversity products) and 6% for other produce.

For medium-sized farmers, sponsored by the National Support Program for Medium Rural Producers (Pronamp), Reais 43.75bn (some US$ 8,35bn) will be made available, a 28% increase from the previous harvest, with an interest of 8% a year.