Commodities Shuttle: Resource for the Safra Plan grows, but below the evolution of costs

The Safra Plan for the period from July 2022 to June 2023 will make R$341 billion available to Brazilian producers. This volume of money exceeds by 36% that of the previous harvest plan, a high percentage, but tight to cover the strong readjustments of inputs that took place in the sector in the last two years.

These costs will extend throughout the next harvest, which, according to market estimates, could exceed 300 million tons. This is if the weather permits, which has not been happening in recent years.

The volume of money for funding and marketing released will be R$ 246.3 billion, with growth of 39% in the period. Credit for investments will be R$94.6 billion, up 29%.

Ivan Wedekin, consultant and former secretary of Economic Policy at the Ministry of Agriculture, says that, despite the evolution of resources, they do not cover the increase in costs for producers, which have increased by 50% to 60%.

Regarding resources for investments, Wedekin says that the volume of money is adequate, given the limited resources. The demand for this credit may be lower in the 2022/23 harvest. There will be a trend towards less investment, since the producer will have to finance himself, he says.

The big leap in the plan is in free interest rates, which depend, however, on banks and on the issuance of bonds aimed at agribusiness, such as LCAs (Agricultural Letter of Credit). In general, Safra Plans always fatten the total volume of resources based on this item. This year, the evolution was 69%.

For the former secretary of Agricultural Policy, the volume of credit is short, mainly because producers face this scenario of rising costs. With that, the weight of guaranteeing food security, internal and external, in which Brazil is important, will fall on the shoulders of the Brazilian producer, he says.

The government highlighted the importance and volume of resources for small and medium producers. Pronaf, aimed at family farming, will have R$ 53.6 billion, up 36% compared to last year’s volume. Pronamp, aimed at medium-sized producers, will have R$ 43.75 billion, up 28%.

In a period of fiscal tightening and high interest rates, producers evaluated the Safra Plan as the possible plan. For Márcio Lopes de Freitas, president of the OCB (Organization of Brazilian Cooperatives), the plan turned out better than expected.

Interest rates range from 3% to 12.5%. Family farming producers will pay 5% to 6%; the medium ones, 8%; and the other producers and cooperatives, 12%.

The worst news of the plan, according to Wedekin, is this 12% free interest rate. The Selic rate is heated this year, but could be reduced next year, which would make the producer’s interest higher than the basic market rate. “The National Treasury’s short leash prevailed,” he says.

For the Minister of Agriculture, Marcos Montes, the scenario is extremely challenging, and the Safra Plan rose to the challenge. It will meet agribusiness and government commitments.

Fausto Ribeiro, president of Banco do Brasil, stated that the bank will provide R$ 200 billion in credit in the 2022/23 harvest, a volume 48% higher than at the beginning of the previous harvest. The bank is responsible for 59% of the credit offered to producers.

For José Mário Schreiner, president of the Agricultural Policy Commission and vice-president of the CNA (Confederação da Agricultura e Pecuária do Brasil), it was a robust plan, but the biggest challenge now will be to get these resources quickly into the hands of producers.

Among the capital destined for investments, R$ 5.13 billion will go to the construction of storage. The interest rate ranges from 7% per year, for buildings with a capacity of up to 6 million tons, to 8.5% for the others.

Proirriga will have R$ 1.95 billion available to producers; Inovagro, R$3.51 billion; and the ABC Program (low carbon agriculture), R$ 6.19 billion.