May 19, 2015
Release of Brazil's 2015/16 Harvest Plan Postponed
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
The release of the 2015/16 Brazilian Agriculture and Livestock Plan, commonly known as the Harvest Plan, which was scheduled for today, May 19, has been postponed until probably June 3. The postponement is believed to be due to the Brazilian government still sorting through difficult fiscal decisions. The Brazilian economy is in recession and local, state, and the federal government are slashing budgets and letting go thousands of workers. At the same time inflation is expected to be 8.5% in 2015. As a result, there are a lot of difficult decisions to be made probably including the level of funding for the 2015/16 Harvest Plan.
The Brazilian Minister of Agriculture, Katia Abreu, announced on May 12th that the new Harvest Plan was complete and that they were only waiting for President Rousseff to schedule the announcement. The Minister indicated that interest rates on production loans would increase from the 6.5% charged in 2014. Speculation is that the new interest rates will be in the range of 8.5% to 9% and maybe even as high as 9.5%. These higher interest rates will add to the cost of producing the 2015/16 crops which is already expected to be up 10% compared to 2014/15.
Farm organizations have asked the Minister to announce the new Harvest Plan as soon as possible to allow enough time for Brazilian farmers to plan their 2015/16 crops and purchase the needed inputs. Details of the plan such as interest rates, credit limits, minimum prices, and crop insurance could have a significant impact on farmer decisions, so they would like to see the plan as quickly as possible.