Apr 10, 2015

Ag Organizations want Input in New Harvest Plan for Brazil

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

An assistant secretary in the Brazilian Minister of Agriculture earlier this week confirmed some preliminary details as to what might be in the new Agriculture and Livestock Plan for the 2015/16 growing season (PAP 2015/16). These annual farm programs in Brazil are often referred to as simply the Harvest Plan. He indicated that the funding for the 2015/16 PAP plan could be as high as R$ 176 billion, which if verified, would be R$ 20 billion more than the 2014/15 PAP plan.

In an effort to influence the final details of the PAP plan, three agriculture organizations in the state of Parana sent a proposal to the Brazilian Minister of Agriculture as to what they would like to see included in the new program. These organizations included: the State Secretary of Agriculture (Seab), the Organization of Cooperatives in the state of Parana (Ocepar), and the Agricultural Federation for the state of Parana (Faep).

In their proposal they indicated that it is important to hold down the amount of interest charged on the production loans provided to the farmers. The interest rates on the current loans is 6.5% and they would like to see that rate reduced or at the minimum, remain unchanged. During the 2012/13 and 2013/14 growing seasons, the interest rate on these loans was 5.5%.

They would also like to see the total resources for the 2015/16 growing season to be increased to R$ 207 billion with R$ 180 billion dedicated to commercial agriculture and R$ 27 billion for small family farmers. They feel the increases is justified based on the estimate that the cost of production for soybeans and corn in 2015/16 will increase by approximately 15%.

The proposal they sent to the Minister of Agriculture also included a "wish list" for other programs including:

Needless to say, implementing all of these proposals would be very difficult due to the poor near term economic outlook in Brazil and the fact that the federal government is cutting back on expenditures as the country slips into a possible recession.