Brazil will boost subsidized credit lines to farmers by a fifth to 140 billion reais ($67 billion) in the upcoming 2013/14 season, a senior government official confirmed to Reuters on Wednesday, as the government seeks relief for stubbornly high inflation in the country.
The annually revised budget for agricultural finance will be announced officially on June 4 and will feature a reduction in the benchmark interest rate to 4.5 percent from 5.5 percent under the existing plan, the source said, declining to be named as he was not authorized to divulge the information.
Brazil is the world’s top grower of coffee, sugar and orange juice and is expected to become the No. 1 soy producer this year. It is also a top exporter of poultry and beef. Many loans are taken out and repaid within a year once harvests are sold.
Critics say smaller farms that produce fruit and vegetables consumed locally by a population of nearly 200 million are shortchanged on access to credit as the government prioritizes loans to producers of export crops, making domestic food needlessly expensive.
More support for small-scale producers could help boost output and lower prices. The source did not provide a breakdown by sector of how the loans would be allocated.
The official also said 25 billion reais, or nearly a sixth of the budget, would be reserved for boosting warehousing capacity around Brazil. Insufficient storage space has at times left Brazil with low stocks, limiting the government’s ability to control prices by buying or selling grains.
With large swathes of unused farming land available and yields rising steadily throughimprovements in seeds and select breeds of plants, Brazil is planning for long-term expansion in agriculture to feed a growing global population.
China is the country’s top buyer of soybeans, most of which is used as a source of protein forlivestock.
($1 = 2.0940 Brazilian reais)