May 10, 2016

Brazil's 2016/17 Harvest Plan Viewed as "Timid" by Farmers

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

The Brazilian President, Dilma Rousseff, and the Brazilian Minister of Agriculture, Katia Abreu, announced last week the 2016/17 Agriculture and Livestock Plan, which is commonly referred to the 2016/17 Harvest Plan. This is the yearly "farm program" in Brazil that consists mainly of subsidized interest rates for production loans and investment loans.

The government announced an 8% increased level of funding for the various programs, but with much higher interest rates than last year. The total funding for the 2016/17 Harvest Plan was put at R$ 202.8 billion, up 8% compared to the R$ 187.7 billion in 2015/16. The big difference though are the interest rates. Last year's plan had interest rates of 7.75% to 8.75% depending on the type of loan and the individual. The 2016/17 Harvest Plan has interest rates of 8.5% to 12% with much of the credit being available at market interest rates, which are much higher.

The loans in the 2016/17 Harvest Plan are divided into two types. The first type is production loans for the planting and marketing of the 2016/17 crops and the second type is for investment loans for such things as equipment purchases. For production loans, there is R$ 115.8 billion available with subsidized interest rates and R$ 53 billion available at market interest rates, which can surpass 20% depending on an individual's financial situation. For investment loans, there is R$ 4 billion available at subsidized interest rates and R$ 30 billion available at market interest rates.

Here are some of the important points of the 2016/17 Harvest Plan: