Frozen loan disbursement halts Brazil fertilizer, pesticides sales

Date:03-30-2015

Sales in Brazil of fertilizers and pesticides for next year's soy crop have stopped after the main lender for the farm sector, state-run Banco do Brasil, froze disbursement of subsidized loans, farm and industry groups said recently.

"In other years at this time, Banco do Brasil was already taking proposals and even making financing available," said Benjamin de Sousa Junior, the director of the national agricultural input's association (Andav) in the state of Goias.

Farmers are still harvesting a record 2014-15 soy crop, but they are also starting to plan for the next crop, seeking the best prices and rates for delivery.

Banco do Brasil did not respond to a request for comment.

Farm group Aprosoja said loans from federal banks financed 19 percent of its sector's activities in 2014-15.

The government's annual "crop plan" set lending rates at 6.5 percent and next year's rates will likely rise when the new plan is announced in May. Brazil's benchmark interest rate is currently 12.75 percent.

Andav's de Sousa Junior said some lines of credit were available from Banco do Brasil, but at interest rates of 16 percent rather than at a subsidized rate.

Brazil's fertilizer blenders association said the lack of credit is just one of many causes for concern.

"Farmers are waiting for a clearer definition of the exchange rate and prices of commodities and fertilizers," said the association's president Carlos Florence.

Brazil's real has weakened some 16 percent against the dollar so far this year. A weaker currency can help spur exports that are sold in dollars but makes costs of imported fertilizers and pesticides more expensive for the next year.