Brazil to increase 2010/11 farm budget

Brazil is increasing the 2010/11 farm credit budget by 8% for its agricultural sector, with more lending to reduced-carbon farming and new silos, according to the agriculture minister.

 

The government has increased the availability of rural credit significantly over the past eight years. The budget is expected to total around BRL100 billion (US$54 billion), much of which will provide farmers with loans to cover their costs until harvest time when they have crops or livestock to sell. If confirmed, that would be a 7.5 billion, or 8%, rise over last year.

 

Agriculture minister Wagner Rossi said there would be no increase in interest rates for sums lent. Most of the rural credit provided by the government last year was lent at a rate of 6.75% per annum.

 

"We managed not only to make sure there would be no interest rate increases for any programme, but that some would be reduced," Rossi said.

 

Loans for investments in more environmentally friendly farming, which featured in the previous harvest plan, will account for about BRL3 billion (US$1.6 billion) of the total.

 

The other BRL2 billion (US$1.1 billion) will be available for investments that reduce farms' carbon footprint through reforestation of land and switching from nitrogen fertilisers to the use of nitrogen fixing organisms, particularly for grains and cane.

 

The government hopes 15 million hectares of neglected or degraded land will be recovered and that it can add a further three million hectares to the current six million hectares of farmland which is planted with commercial forest.

 

The grains sector will also see extra funds aimed at enabling individual farmers to install silos on their own farms - a response to the glaring lack of storage volumes evident this year as farmers struggled to store a record soy crop.

 

Rossi said the limit for these loans would be fixed at BRL1.3 million (US$700,000) per producer, which he calculated would be sufficient to store the equivalent of 50,000 bags of soy.