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June 8, 2018

Brazilian Government Releases its 2018/19 Harvest Plan

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The Brazilian President along with the Minister of Agriculture, released the government's 2018/19 Harvest Plan on Wednesday morning. The annual farm bill is officially known as the Agriculture and Livestock Plan 2018/19 (Plano Agricola Pecuario 2018/19 - PAP), but it is popularly known as the Harvest Plan (Plano Safra).

The total funding for the plan is R$ 194 billion, which represents an increase of approximately 3% compared to last year. Of the total, R$ 151.1 billion will be available for production loans with R$ 118.8 of that having interest rates controlled by the government and R$ 32.3 billion with market interest rates negotiated between the producer and the financial institution. There will be R$ 40 billion available for investment in machinery and infrastructure. Farmers may start applying for credit on July 1st.

Two other parts of the program include R$ 2.6 billion for marketing assistance for farmers and R$ 600 million to subsidize crop insurance.

For the production loans, the interest rates will be 6% for medium size producers with gross receipts of R$ 2 million or less and 7% for larger producers. For equipment and infrastructure investments, the interest rates will be in the range of 5.25% to 7.5%. The interest rates in general are about 1.5% less than last year.

Brazilian farmers are coming off of the 2018/19 growing season generally well capitalized. The Minister of Agriculture indicated that approximately 50% of Brazil's agriculture production does not depend on subsidized credit programs from the federal government, but on resources from the producer himself.

In the 2018/19 Harvest Plan, there will also be resources for livestock producers, aquaculture, on-farm grain storage construction, conservation programs, low carbon agriculture, crop-livestock-forestry integration, and other programs.

The Harvest Plan is an annual program for Brazilian producers with the vast majority of the resources dedicated to subsidized production loans and loans for equipment and infrastructure improvements. In contrast, the U.S. Farm Bills are 5-year long programs with the majority of the funds dedicated to food assistance programs for lower income Americans.