Mar 16, 2010
Only 11% Of Production Loans In Mato Grosso Came From Banks
Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.
According to the Mato Grosso Institute of Agricultural Economics, only 11% of the production loans used by farmers in Mato Grosso to plant their 2009-10 crops came from the Bank of Brazil or other banks. The vast majority of the loans originated at the multinational grain companies or the farmers used their own financial reserves to plant their crops.
The amount of bank financing was limited in 2009-10 for a number of reasons. First of all, if a farmer took advantage of a government program and rolled over his old loans from prior years, he was not eligible for new financing through the Bank of Brazil. Additionally, farms that were also considered to be with the official Amazon Region need to qualify for a government issued environmental license before the owners were eligible for further loans from the Bank of Brazil. The application process for this license is quite complicated and many farmers have not been able to meet the requirements for the license.
As a result, most farmers in Mato Grosso were forced to seek loans from the grain companies at higher interest rates and higher costs. The farmers do like doing this and the grain companies do not like acting as a bank, but both were forced into this partnership due to the lack of official financing on the part of the government.