Dec 17, 2009
Brazil's Minister of Agriculture To Step Down In April 2010
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
Brazil's Minister of Agriculture, Reinhold Stephanes, announced last week that will leave his position in April of 2010 to run for a seat in the Brazilian Senate from the state of Parana. President Luiz Inacio Lula da Silva appointed him minister in 2007. New presidential elections will be held in Brazil in the fall of 2010, but Mr. Stephanes prefers to pursue a senate seat even though Lula's hand-chosen candidate, Dilma Rousseff, said she would retain most of Lula administration if she won the election.
Even though he came into the position with little fanfare, he is leaving his office after accomplishing a lot during his tenure for the farmers of Brazil. One of his biggest accomplishments was reducing the interest rates on government crop production loans issued to the farmers. For ten years, the interest rate on these loans was set at 8.75%, but he managed to get them reduced to 6.75%. Low-interest production loans are the primary way that the Brazilian government assists the farmers in Brazil. These interest rates may seem high by U.S. standards, but they represent a substantial interest savings compared to commercial loans.
In recent months he has been heavily involved in trying to free Brazilian farmers from their dependence on imported fertilizers. Brazil imports approximately 80% of its fertilizer needs and the high cost of imported fertilizers has been a major problem for Brazilian farmers. He worked with Petrobras to acquire funding for the construction of nitrogen fertilizer plants in Brazil. He pushed hard for more exploration and extraction of phosphorus and potassium deposits throughout Brazil. He helped to establish minimum prices for Brazil's main commodities, sych as soybeans and corn, and he set up a mechanism for guaranteeing these prices for the farmers.
Probably his most contentious relationship has been with the Environmental Minister, Carlos Minc. One year ago, legislation was passed the Brazilian Congress that mandated that every landowner in Brazil must maintain a certain percentage of his or her land as forest. If more than the allowed amount of land had already been cleared, the landowners were given one year to develop a reforestation plan and to have it approved by the Brazilian EPA or face substantial fines.
The grace period for this reforestation plan was scheduled to end on December 10, 2009, but it has been extended for two more years. Under this legislation, land in the Amazon region needed to be maintained as 80% forested, cerrado vegetation needed to be 35% in its native vegetation and the remainder of agricultural land needed to be 20% forested. Stephanes pointed out that it was virtually impossible to comply with the new law without driving many small landowners out of business. He is currently pressuring the Brazilian Congress to correct what many feel are numerous flaws in the legislation.