Brazil’s development bank financed more agricultural than industrial companies in 2021

RIO DE JANEIRO, BRAZIL – BNDES (Brazilian Development Bank) was created by the federal government with the mission of promoting Brazil’s industrial park, but today it finances more agriculture and livestock than industry.

Last year, the government-owned development bank gave 26% of its funds to rural producers and 16% to industrials – that’s R$18 (US$3.4) billion or R$11.2 billion in today’s values (adjusted for inflation).

Until some time ago, BNDES spent relatively little on rural activities. In 2009, agribusiness received only 5% of the funds, while industry received 47% – R$14.6 billion and R$134.9 billion in updated values.

The BNDES balance tilted in favor of agribusiness for the first time in 2018. Since then, the industry has fallen further and further behind.

Economists, industrialists, and senators view the new direction of the BNDES with concern. They recall that the industry is in trouble and that agribusiness is already receiving loans from Banco do Brasil. BNDES, on the other hand, argues that part of its current mandate is to support the various productive structures in Brazil, including agriculture and livestock.

BNDES funds, which come mainly from the Workers’ Assistance Fund (FAT), are limited. For agriculture and livestock to receive more from the Bank, at least one of the other sectors of the economy (industry, trade, services, and infrastructure) must necessarily receive less.

The Bank’s turn to agribusiness comes at one of the most critical moments for the Brazilian industry. Among the companies that have recently closed their doors are multinationals such as the pharmaceutical company Eli Lilly, the photography company Nikon, the car manufacturers Ford and Mercedes-Benz, and the electronics companies Sony and Panasonic.

According to the CNI (National Confederation of Industry), the dissolution of the Brazilian industrial park has serious consequences.

“Much of what was produced here is now produced in China. Because of the lack of parts produced abroad, cars were stopped on our assembly lines, which contributed to the rise in prices, and our shipbuilding industry could not supply boats. This dependence on the foreign industry is dangerous. The problem is not that the BNDES supports agribusiness. The problem is that support for the industry is drying up,” he said.

Industry fuelled the “Brazilian economic miracle” between the late 1960s and early 1970s, contributing almost 50% to GDP. The industrial sector now contributes about 20% to the country’s gross domestic product (GDP). Since the creation of the BNDES, the sector’s share of national wealth has never been so low.

Last year, industrialists demanded R$37.4 billion (US$17.4 billion) in updated figures, but BNDES released R$11.2 billion (30%). Rural producers, in turn, demanded R$22.5 billion and received R$18 billion (80%).

“The industrial sector is looking for the resources but is not finding them. It can be deduced that there has been a reorientation of the government’s economic policy towards agribusiness,” Redivo said.

“This is a new fact in the Bank’s history. Until the last decade, the government considered industry as a structuring sector of the economy. Nowadays, it no longer sees it as a priority. I’m afraid I have to disagree with this view”.

“President Jair Bolsonaro is prioritizing the interests of the agribusiness sector because it is one of the sectors that support his government,” says Kliass, adding, “The management of public banks is easy because they report directly or indirectly to the Minister of Economy, Paulo Guedes.”