Banco do Brasil guarantees US$37 billion for rural producers

RIO DE JANEIRO, BRAZIL – Banco do Brasil’s (BB) president, Fausto de Andrade Ribeiro, affirmed yesterday that the institution would have R$200 billion (US$37 billion) destined for the Harvest Plan 2022/23.

In applying this amount, the priority will be the final producer. The increase for agribusiness credit lines was 44% this year. But the total volume distribution will be from 80% to 85% for the rural producer and from 20% to 25% for agribusiness.

“The business concerning rural production has aroused interest in many people. New farmers are looking for resources, and I hope that the amount that is being allocated is enough to meet everyone’s needs,” said Ribeiro in an interview with the program CB.Agro, produced in partnership by the Correio Braziliense and TV Brasilia.

According to the president of BB, the distribution of rural credit lines may begin in the coming weeks since it only awaits the approval of the bill (PLN 14), currently being processed in Congress.

After the presidential sanction of the bill, the Ministry of Economy will draw up a decree to authorize the Federal Budget and National Treasury Secretariats to make the transfers to banks and equalize the cost of credit lines.

For this reason, according to Ribeiro, the producers must start looking for credits and planting the crop in a suitable period as soon as the resources are released.

The information meets the concern of the financial institutions that were insecure about the lack of news from the government.

“It is a significant number, which aims to support the rural man, especially those who are already our clients. So, the message is to stay calm, look for a branch of Banco do Brasil, and you will be very well assisted. We will have enough resources to contribute to the 2022/23 harvest that has just started,” he said.

Check out the main parts of the interview given to the local politics editor of the newspaper, Ana Maria Campos:

Will the Bank of Brazil release R$200 billion credit for rural producers? Can you tell us more about your expectations for the 2022/2023 Crop Plan?

Supporting agriculture and cattle breeding is the vocation of Banco do Brasil. The institution has 213 years of history, and for a good part of this time, it has financed rural people. Our history is linked to agribusiness, especially when Brazil went through the coffee or sugar cane cycle.

In 1936 we had our first agribusiness credit portfolio. In 1964, the Rural Credit Manual, which today gives all the guidelines for rural business, with the norms in force, was born inside the bank. Last year, the initial forecast was R$135 billion in Brazilian agribusiness. The demand was so great that we ended the 2021 and 2022 harvests with R$153 billion.

The business concerning rural production aroused interest in many people. New farmers are looking for resources, and I hope that the resources that are being allocated will be able to meet everyone’s needs.

How will the budget distributed to Banco do Brasil be subsidized? Will there be resources for everyone?

Of the R$241 billion in credit announced by the federal government, Banco do Brasil is able to allocate at least R$200 billion to rural workers. Of these, 30% are with resources that we call equitable.

It means that there is an interest rate differential between the market rate – Selic is around 13% – and the lower rates practiced in rural businesses. The National Treasury does the compensation for this differential. When the government allocates resources for the entire Harvest Plan, it talks about equitable resources.

Of our R$200 billion allocated to the countryside, only 30% depends on this. We will seek resources from other sources and serve our producers with a mix of funding solutions to allocate credit lines to rural producers in the cheapest possible way.

Together with the Harvest Plan, the bank launched the “Carreta Agro” (“Agro Truck”), an itinerant rural advisory service. What can rural producers expect from this instrument?

It is an additional product to improve the quality of farming. Many times, the large farmer has a resident agronomist on the property. With the small farmer, however, the difficulty is greater.

The small farmer has crops that have been passed from father to son. What we want this truck to do is to bring knowledge to these people. Knowledge of the Banco do Brasil itself because we have more than 600 agronomists on our staff.

The objective is to bring information for the producer to know when to plant, when to harvest, and what is the best method to use in farming so that he can have a maximized, optimized production in this period.

The tours will bring knowledge on crops, vegetable production, coffee production, pest control, diseases, and, finally, the best practices will emerge aligned to the man in the field.

How are you managing rural credit to comply with environmental protection and global goals?

We know that this is an intense schedule, a profound debate. We are being demanded by society not to deforest, and we want to do it in the best way. This demand is international, but it also comes from our children, from society in general, from Brazil and abroad. The best way to increase production without deforestation is by applying technology.

The technology allows the producer to leverage in the field, preserving the environment. It is known that Brazil has 66% of preserved areas. Which country has large preserved areas and generates so much employment and income in society?

We are an example, and this is the result of a stringent Forestry Code, which requires farmers to have, in addition to the planting area, a preservation area of native forest. And this percentage oscillates from north to south of Brazil.

Is there any incentive, plan, or credit line that benefits the producers who preserve the most?

How can we encourage good practices? We offer training and financial solutions. It is sure that of this 66% of our preserved territory, 33%, half of these areas are permanent protection and legal reserves. The other 33% are indigenous reserves and national parks.

But, focusing on this half of 33%, we see the following: there are costs for Brazilian agriculture to preserve exactly this 33%. There is a cost of preservation of these areas, estimated by Embrapa at around R$15 billion, to facilitate that there is no illegal extraction of wood, that there is no risk of fires, and that animals do not invade.

How does the farmer seek compensation for this? Today, it is only through the price of the products that he sells in the rest of the area where he produces. And the bank created a solution called CPR Preservation, which is, in fact, a financial line that seeks to compensate for the value that he could generate profitability in that area.

We make a loan different from a regular line of credit, in which the collateral is the standing forest. In other words, the bank offers a solution to help the rural producer preserve his property.

And are there prohibitions on releasing resources to those who do not obey the environmental rules?

There is a mechanism, a strict internal control policy in the company, which searches with the Ministry of Agriculture and Cattle Raising, and other ministries responsible for the matter for the registration of areas that conform with the current legislation.

We automatically avoid giving credit to farmers practicing things outside the current norms. It is a work with the environment coming out of the Ministry of Agriculture, making it operational, putting into practice this plan that the government says will go down in history.

Why will it go down in history?

It is already in the history of Banco do Brasil. We are raising the financial conditions. The cake that is going to be shared with all our clients. In 2021, we will contribute around R$100 billion, and we have already made a bold move to R$135 billion. Now, it’s R$200 billion, a significant number which aims to give support and back up rural workers, especially those who are already our clients.

So, the message is to stay calm, go to a Banco do Brasil branch and you will be well attended, and we will have enough resources for the 2022/23 harvest that has just started. I believe that this was a lesson learned by the current government.

The important thing is to say this: for us to repeat at least what was produced in the last harvest, there will be resources for everyone. We expect to be able, at the Banco do Brasil, to work with rates lower than the market rates, to serve everyone, including expanding the number of farmers in this country.

You said before that last year’s harvest started with R$135 billion and ended up with R$153 billion, a significant increase. Will it be possible to have even more resources besides the R$200 billion being optimistic?

Hopefully, we will have this pleasant surprise because the purpose of the bank is to serve its clientele. If we have demand higher than this, we will have to seek resources in several ways, and the bank has the capacity; it has instruments to seek more resources and to lend.

With information from Correio Braziliense