April 5, 2006

Brazil's planted area for grains could shrink

The area planted with grains in Brazil could shrink 21 percent this year to 36.9 million hectares as farmers either exit the industry in droves or apply for an extension of their loans.

More farmers are returning equipment, extending loans and laying off workers as a result of three successive years of crop losses due to unfavourable weather and falling prices of commodities.

The GDP of Brazil's agribusiness shrank 4.7 percent last year, and is expected to fall further this year.

Farmers are filling out forms with information on their bank debts to notify the National Agricultural Credit Committee of the Brazilian Farm and Ranch Confederation (CNA).

Brazil's agribusiness sector would be facing a great degree of insolvency, said Carlos Sperotto, president of the CNA. The notification and the subsequent request for an extension of payment deadlines is provided for in the legislation that created the agricultural credit.

Prolonging the due dates of the farm debts is only part of the solution for the beleaguered agricultural sector, said Sperotto.

Farmers are hoping a new executive Provisional Measure (MP) for Agricultural Capital Goods providing financing for farms would be able to lift them from their current troubles.