Brazil increases government loans for agriculture by 8% for the period 2021-2022

RIO DE JANEIRO, BRAZIL – The Brazilian government announced Tuesday, June 22, that it will provide R$250 billion (about US$50 billion) in public loans for agriculture between 2021 and 2022, an 8% increase over the previous period.

“We feed 1 billion people in the world,” President Jair Bolsonaro said in announcing the loans, alluding to Brazil’s status as a major exporter of agricultural products.

“It is wrong to say that we have burned the Amazon. That is a lie and serves mainly to limit our potential,” he said, alluding to his theory that criticism of his aggressive environmental policies stems from Brazil’s enormous competitiveness in the global agricultural market.

Loans made by federal government banks to large and small farmers responsible for Brazil’s status as a major food exporter will have annual interest rates of 3 to 7 percent, on average 10 percent higher than those in effect in the 2020-2021 period.

According to the Ministry of Agriculture, this is due to the increase in the benchmark interest rates (SELIC) set by the Central Bank to contain growing inflation, which stood at 8.06% per year in May.

The SELIC rate had fallen to 2% over the past five years, a historic low for Brazil, but since last March the Central Bank has gradually raised it and it now stands at 4.25%.

Of the total loans announced Tuesday, R$40 billion (US$8 billion) will go to the family farming sector, which collectively is responsible for about 70% of the food consumed in the country.

According to the Ministry of Agriculture, the loans will be offered to finance production, marketing, insurance, the construction of silos and the restoration of degraded land that will be prepared for low environmental impact agriculture.

“It is a plan that is already painted green and prioritizes low-carbon production,” Agriculture Minister Tereza Cristina Correa said at the ceremony.