Opinion – Marcos de Vasconcellos: The government’s electoral desperation helps agriculture attract its money

Three months before the first round of elections, the federal government encourages an opening of public coffers to forceps. The most obvious example is the PEC dos Auxílios —also dubbed PEC Kamikaze or PEC do Desespero—, which has deservedly occupied the headlines in recent days. For those who invest or want to invest, there is yet another recently announced initiative that needs to be on the radar: the Safra Plan.

The infamous PEC do Desespero, you may already know, will serve to distribute money to truck drivers and taxi drivers, while increasing the amount paid in Auxílio Brasil and Auxílio Gás, piercing, or rather, demolishing the ceiling on public spending.

Thus, Jair Bolsonaro and Paulo Guedes, in full contradiction, while raising interest rates —to reduce demand and control inflation—, try to distribute money outside the spending ceiling, generating distrust in the international market and increasing demand. The expected effect of this is, guess what, more inflation.

In addition to this unorthodox maneuver, which should influence the strategy of national and international players, the Safra Plan, announced on Wednesday (29), needs to be in the focus of those looking for investment opportunities.

There has never been as much funding for agricultural production in the country as is now being announced. There are R$ 340.8 billion to promote Brazilian agricultural production, which means an increase of 36% in relation to the last harvest.

And the opening of faucets to irrigate the agro comes precisely at the moment when we beat the record of production in the fields.

According to Conab (National Supply Company) and IBGE (Brazilian Institute of Geography and Statistics) forecasts, the 2021/2022 harvest of grains, oilseeds, legumes and cereals will be a record, between 3.5% and 6.5% above the last.

According to the IBGE, the growth in the estimate is explained by the performance of corn, wheat and soybean production. Corn, with the sum of its two crops, should total 112 million tons. It is a growth of 27.6% in comparison with what was produced last year.

There is no lack of space to grow. Brazil has the potential to at least double its planted areas (about 9% of the territory) through the conversion of underutilized pastures. In other words: without the deforestation of additional areas and keeping 66% of our territory destined for conservation, according to data from the FAO (United Nations Food and Agriculture Organization).

The competitive advantage is such that the country has a greater potential for agricultural expansion than all other continents (except South America) combined.

The Safra Plan is, in a practical summary, a program to guarantee credit lines to producers. With the lack of inputs — such as fertilizers — caused by the War in Ukraine, the amounts allocated to the program are essential to envision the next steps for the sector.

It is important to note that most of the increase in the new plan came from the line of interest-free resources, that is, which are guaranteed, but offered at market prices. This credit profile increased by 69%, and it is the one that usually irrigates large producers.

In resources with controlled interest, that is, in cheaper money than what is available on the market —offered for initiatives such as family farming and the restoration of legal reserves—, the increase was 18%.

The new Safra Plan also increased, from 50% to 70%, the possibility of using LCAs (Agribusiness Letters of Credit) resources. The government’s idea is that the measure generates greater participation in the private agricultural finance market.

With the opening of faucets amid record production, the new Safra Plan should create good paths for investors looking to take advantage of the current favorable moment for production, the high demand for food, generated by the global crisis that has dragged on for more than two years. , and the soaring dollar, which improves exporters’ profit margins, despite the higher cost of inputs.