Brazil’s federal savings bank to offer record US$7 billion in agribusiness loans in 2021/22

RIO DE JANEIRO, BRAZIL – A newcomer in the operation of federal subsidies in rural credit, Caixa Economica Federal (Brazil’s federal savings bank), universally known as “Caixa”, will provide R$7 (US$1.4) billion for equalization operations in the 2021/22 Harvest Plan. Another R$28 billion in the bank’s own resources complete the R$35 (US$7) billion to be offered for rural loans from July 1, a record amount for the bank.

The focus will be to assist family farmers and storage and irrigation lines, according to the institution’s president Pedro Guimarães. He said that the entrance in the segment is “natural” and reinforced that he wants to make Caixa “the Brazilian agribusiness bank” in a few years.

The executive said that the government’s request to start the Plano Safra (Harvest Plan) was larger, R$15 billion.

To start operating the equalization, Caixa reinforced its team and expanded to 80 the number of branches focused on agribusiness to be opened throughout the country. The figures for the 2020/21 harvest, which did not rely on subsidies, also encourage the bank. Around R$10 billion were released for producers in more than 5,000 contracts, 102% more than in the previous cycle. In investments, the disbursement reached R$1.3 billion, an increase of almost 2,000%.

Focus on investments

“Caixa’s focus is investments, because all banks offer working capital,” said Guimarães in an online event. The resources will mainly support the construction of silos and warehouses, a priority of the Ministry of Agriculture, and irrigated agriculture.

The executive highlighted that Caixa will work with the neediest producers, those who don’t have access to other banks and with recently regularized properties, who didn’t have available credit. One of the novelties is the launching of Pronaf+Easy, with measures to reduce the bureaucracy of financing for family farmers.

Of the R$35 billion, R$10 billion will be allocated to the various investment lines, which also include the acquisition of machinery, innovation, and low carbon agriculture projects. Another R$8 billion will go to post-harvest cycle lines, such as commercialization and industrialization, storage, price guarantee, and product transformation by cooperatives. The costing lines, mainly from PRONAF, will have R$17 billion.

Minister of Agriculture Tereza Cristina said that the subsidy value can be adjusted mid-crop year if performance is above estimates.

Gains for small producers

According to the Minister, the participation of Caixa in the National Program for the Strengthening of Family Farming (PRONAF) can be a gain factor for small producers, an area considered the “most difficult” to act due to the need of knowledge and capillarity.

Tereza Cristina also said that the entrance of Caixa in the application of equalized resources and in the search for the “farming stamp” generated “healthy competition” that will be reverted in benefits to rural producers.

“Caixa’s decision to work on the financing of Brazilian farming and ranching created an expectation, and other banks also came to us. Last year we were despondent because we didn’t have as many institutions, and next year we want more. Rural producers will benefit from this,” she added.

Bank spreads have already been slightly reduced for the next Harvest Plan due to greater competition for equalization. Altogether, 12 banks should apply the R$13 billion set aside by the Treasury for rural credit subsidies in the 2021/22 season.