Brazil’s Government announces 2023/2024 Crop Plan with financing of R$364.22 billion

On Tuesday, Luiz Inácio Lula da Silva, President of Brazil, and Carlos Fávaro, Minister of Agriculture and Livestock, launched the country’s 2023/2024 Crop Plan, which is allocating resources of some BRL364.22 billion to support national agricultural production until June 2024.

Resources intended for rural credit for producers are also included in the National Support Program for Medium Rural Producers (Pronamp) and others. The value of the support reflects a rise of around 27% compared to the previous level of financing of R$ 287.16 billion for Pronamp and other producers.

The 2023/2024 Crop Plan promotes the strengthening of environmentally-sustainable production systems, with a reduction in interest rates for the recovery of pastures and rewards for rural producers who adopt agricultural practices considered more sustainable.

Of the total resources made available for business agriculture, R$272.12 billion will be allocated to funding and marketing, a rise of 26% compared to the previous year. Another R$92.1 billion will be allocated to investments, a rise of 28%.

Resources worth R$186.4 billion (+31.2%) will be at controlled rates, of which R$ 84.9 billion (+38.2%) being at non-equalized rates and R$101.5 billion (+ 26.1%) being with equalized rates (subsidized). Another R$177.8 billion (+22.5%) will be allocated to free rates.

Interest rates for funding and marketing will be set at 8% per year for producers classified in Pronamp, and 12% per year for other producers. As for investments, interest rates vary between 7% pa and 12.5% per annum under the program.

Sustainability

The 2023/2024 Crop Plan encourages the strengthening of environmentally sustainable production systems. Rural producers who have already analyzed the Rural Environmental Registry (CAR) and those who adopted agricultural practices considered more sustainable will be awarded.

The reduction will be 0.5 percentage points in the costing interest rate for rural producers who have the analyzed the CAR under one of the following conditions: 1) In the Environmental Regularization Program (PRA), 2) without environmental liabilities or 3) subject to the issuance of an environmental reserve quota.
 
Producers who adopt agricultural production practices considered more sustainable will also be entitled to a 0.5 percentage point reduction in the costing interest rate. The definition of the list of these practices, as well as rules on how they will be proven by rural producers to financial institutions, will occur after the launch of the Crop Plan 2023/24.

These reductions in the funding interest rate may occur independently or cumulatively, so if producers fulfill the two requirements, they are eligible for a reduction of up to 1 percentage point in their costing interest rate.

In addition, the Program for Financing Sustainable Agricultural Production Systems (RenovAgro) incorporates the financing of investments identified, with the aim of promoting ″Adaptation to Climate Change and Low Carbon Emissions in Agriculture.″

RenovAgro is the new name of the ABC Program. Through it, it is possible to finance sustainable practices, such as the recovery of degraded areas and pastures, the implementation and expansion of integrated crop-livestock-forestry systems, the adoption and use of conservation practices, and the management and protection of natural resources. The implementation of organic agriculture, recomposition of permanent preservation areas or legal reserves, development of systems for generating renewable energy and other practices that involve sustainable production and culminate in low emissions of gases that cause the greenhouse effect can also be financed.

As a novelty this year, RenovAgro is expanding its support for the recovery of degraded pastures, focusing on their conversion to agricultural production, with the lowest interest rate for corporate agriculture being 7% per year.

Starting this year, the Program for the Modernization of Agriculture and Conservation of Natural Resources (Moderagro) will also finance soil correction, with the use of mineralizing limestone and phosphate.

In terms of costing operations, the practice of forest management can be financed with up to a 2-year payment period.

However, RenovAgro is not the only program that finances sustainable production practices. Other programs, such as Inovagro, Proirriga, Moderfrota and Moderagro, also offer incentives to low-carbon agricultural production.

Medium Producers

Supporting medium-sized rural producers is also highlighted in this year's Crop Plan, through the greater availability of funding and investment resources.
 
In addition, the annual gross income limit for inclusion in Pronamp increased from R$2.4 million to R$3 million, taking into account the rise in prices of agricultural products.

Those included in Pronamp will have lower interest rates for the acquisition of agricultural machinery and equipment through the Program for Modernization of the Fleet of Agricultural Tractors and Associated Implements and Harvesters (Moderfrota). Access to Moderfrota resources will have an interest rate of 10.5% per annum for Pronamp, with no funding limit. For other producers, the interest rate remains at 12.5% per annum.

The financing limit for investments in Pronamp increased from R$430,000 to R$600,000 per beneficiary/year.

This year's Crop Plan also offers an increase of 25% to 30% of the requirement for directing mandatory resources to rural credit operations at financial institutions. In the case of Pronamp, the sub-requirement for funding increased from 35% to 45%.

Warehouses and Irrigation

The Program for Construction and Expansion of Warehouses (PCA) will see a rise in the volume of resources of 81% for the construction of warehouses with a capacity of up to 6,000 tons, and of 61% for warehouses with greater capacity. The objective is to strengthen the financing of investments necessary for the construction of new warehouses, in order to increase installed static storage capacity.

Another highlight is the 30% increase in amounts earmarked for the Financing Program for Irrigated Agriculture and Protected Cultivation (Proirriga), which finances investments related to all items connected to irrigation systems, including electrical infrastructure and for the construction of a water reservoir. It also makes it possible to finance the acquisition, implementation and recovery of equipment and installations for the protection of crops related to olericulture, fruit growing, flower growing, coffee growing and the production of seedlings of forest species.

Interest Equalization

Gilson Bittencourt, Undersecretary for Agricultural Policy and Agro-environmental Business at the Ministry of Finance, said that it will be necessary to supplement the 2023 National Treasury budget with R$ 1.5 billion to start equalizing interest rates for the 2023/24 Crop Plan.

According to Bittencourt, the government has already drafted an agreement for the presentation of an amendment to a PLN in process at the National Congress to make the extra contribution. The project will need to be voted on, approved and sanctioned. Bitencourt's expects this to happen next week.

Therefore, the start of the 2023/24 Crop Plan, on July 1, will only cover resources without government subsidy, as well as those controlled and with no interest.

For Geraldo Mafra, Andav's Institutional Relations Officer, the plan’s announcement meets, in parts, the expectations of the sector, but still requires necessary adjustments. ″It is important to note the non-mention and non-recording of funds for the Rural Insurance Premium Subsidy Program (PSR) in the Crop Plan, an important and fundamental budget for rural producers and a fundamental instrument of Public Policy for the Government. We hope that Mapa includes these improvements,″ he said.