Brazil’s Farm Minister: 2026 Is the Worst, Then It Gets Better

Brazil’s agriculture minister delivered a blunt assessment in an interview with O Estado de S. Paulo: 2026 will be the worst year in the adverse cycle gripping agribusiness since 2023/24. But Carlos Fávaro, who leaves the ministry in April to return to the Senate, insists this is a transition year — a turning point toward normalization in 2027.

The pressure points are stacking up. Farmer debt is elevated, commodity prices have softened, the falling dollar compresses revenues in local currency, and banks have become highly selective with rural credit. A record harvest is the good news, Fávaro said, along with the absence of major climate disruptions.

A record Plano Safra is coming

The government is building the 2026/27 Plano Safra — Brazil’s annual agricultural financing package, effective from July — as the largest in history. With the Selic expected to fall to around 12%, most credit lines could carry rates of 9% to 10%, down from levels near 20% in the open market.

But cheaper money alone is not enough. The sector needs both lower rates and greater volumes. Many producers technically have access to bank resources — what they have lost is their creditworthiness.

Insurance as the missing piece

To rebuild credit, Fávaro is pushing to universalize crop insurance for every producer accessing subsidized financing. The government would cover 50% of the premium at an estimated cost of R$4.5 billion to R$5 billion (~$800-890 million) — a fivefold increase from the current R$1 billion (~$178 million) budget. Insured crops reduce bank risk, restore lending, and prevent the debt renegotiations plaguing the sector.

The judicial recovery domino

The wave of farm bankruptcy filings is amplifying the crisis. Producers file for judicial recovery, their input suppliers become unable to pay their own creditors, and the credit chain seizes up. Some judges have included rural credit notes in recovery proceedings — something the law does not allow and that destroys the crop-lien system underpinning Brazilian farm finance.

The ministry has asked the Attorney General’s office to recommend clearer guidance to magistrates. For international observers, Brazil’s farm sector is enduring its toughest stretch in years — but the institutional response is being calibrated to match the scale of the problem. This is part of The Rio Times’ daily coverage of Brazil affairs and Latin American financial news.

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