Brazilian Rural Producers Fail to Pay R$3.4 Billion in Debts
BRASILIA, BRAZIL – In order to ease the financing of debts to rural producers in Brazil, a “Provisional Measure” is in progress in the National Congress. The first stage has already been successful, with approval by the Chamber of Deputies. The bill’s fate now rests on the Federal Senate.
Called the “Agro Provisional Measure – PM”, it was drafted by Deputy Pedro Lupion and will have to be examined by the Senate Plenary by March 10th. “We will discuss it with the president of the Federal Senate, Davi Alcolumbre, and the goal is to make a concentrated effort in Congress so that the proposal is voted without vetoes,” said the president of FPA, Deputy Alceu Moreira.
Among the PM’s main points is the Solidarity Guarantee Fund (FGS) – which benefits rural producers and can be offered as a guarantee to the banking network for the settlement of rural credit debts.
“The proposal eliminates the maximum limit for association and the Fund allows a joint guarantee to the producer for the renegotiation of debts arising from credit operations. It also encourages the creation of producer associations and the use of collective resources to settle debts, which will help reduce default,” Alceu said.
Unpaid debts
Data from the Central Bank show that the default of rural producers in the country with financing overdue for more than 90 days totaled R$3.4 billion, or 1.34 percent of the R$254 billion granted by the financial system in 2018.
Fractional Land Pledge
To simplify and provide security to those who wish to invest in the production of foodstuffs, the vice-president of the Parliamentary Agricultural Front (FPA), Deputy Sérgio Souza, stressed that the Agro PM also establishes the system of segregated holdings. “This proposal allows rural producers to divide the land to give as collateral in bank financing. The measure currently imposed forces farmers to pledge their whole property – even if the credit is less than the value of the property,” he said.
Favorable deputies
Deputy Domingos Sávio, a member of the FPA,emphasizes that the PM came “at the right time” to encourage competition and reduce the cost of capital for the producer. “This measure is a great start for us to pursue the discussion of appreciation and defense of rural producers in Brazil”.
In effect since October 2nd, 2019, PM 897/19 provides the means to increase the rural credit offer. The measure also eases the issuance of agribusiness bonds and enables private financial institutions to operate rural credit with interest equalization.
Land Tenure
During the meeting held this week, Deputy Lucio Mosquini called on legislators to consider the significance of Provisional Measure 910/19 on Land Tenure, which is being discussed by the Joint Committee.
Three public hearings have already been held to discuss the subject. “We need to focus all our efforts on this issue in the Committee because after the report’s discussion and voting stage, the text will proceed for consideration in the Chamber and Senate Plenaries”.
The matter deals with the cutting of red tape in the regulation of land tenure on federal lands. “The plan is to speed things up because we cannot fall victim to any political friction,” Mosquini said.
Among the items that make up the measure is the inclusion of the permission to use the land as collateral for loans related to the activity developed on the property. It also enables the regulation of the old titles signed until December 10th, 2019 and establishes the compulsory Rural Environmental Registration (CAR) in the regularization proceedings.
“The PM also establishes remote monitoring (drones and satellites) as a means of proving effective cultivation practice, occupation and direct exploitation, as well as awareness of the land tenure network,” concluded the deputy.