The Brazilian government is raising funding for farmers of about $57.7 billion to sustain a large deficit of produce this 2019 to 2020.
Because the funding is still limited, Agriculture Minister Tereza Cristina Dias said that the government is looking into more financing sources to help farmers produce more crops this year. While funding will be provided, large producers will face a higher interest of 7 to 8 per cent.
The Brazilian government is charging more in interest to balance out the federal budget. In addition, President Jair Bolsonaro will also publish a decree defining the new agricultural financing and conditions set for producers.
According to Momagri, Brazil has long been considered an agricultural powerful, importing massive agricultural products since the 1970s. The country lands on the world’s five largest agricultural producers, exporting soybean, tobacco, coffee, cane sugar and more.
Agriculture is one of Brazil’s biggest driving force of the economy, with more than $77.5 billion net per year. Despite its weak government support, the agricultural sector is still striving, boosting crop produce each year.
Besides export goods, the country also has massive domestic consumption of nearly 79 per cent of the crops. Given this big demand for agricultural products, the sector needs support in terms of funding for the newest farming technology and more.
What the Brazilian government is doing is providing extra funding for farmers who need assistance to produce more crops. Manpower or labour eats up all the cost, plus supplies and fertilizer.
Right now, the government vows to issue debt certificates and issue funding in US dollar to ease purchase by foreign investors.
US-China Trade War is still on-going and Brazil is among the nations that supply China and US of premium quality soybeans and sugar. To benefit from this situation, the government is planning to increase supply for export.