July 2, 2015

Credit from Brazil's 2015-2016 Harvest Plan now Available

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

The new 2015-2016 Harvest Plan took effect yesterday, July 1st, and now Brazilian farmers can start applying for production loans under the new plan. The plan provides for R$ 147 billion in production and marketing loans. Of the total, R$ 94 billion will be available at subsidized interest rates of 7.75% for medium size producers and 8.75% for large producers. Another R$ 53 billion will be available with market interest rates in the range of 17% to 23% depending on the circumstance for each individual farmer.

The 2015-2016 Harvest Plan also has R$ 38 billion available for investment in equipment purchases and R$ 2 billion available to increase ethanol storage.

Thus far in 2015, Brazilian farmers have been relatively slow in purchasing their needed inputs for the 2015/16 growing season due to a number of factors including: low commodity prices, a lack of credit, higher interest rates, higher input costs, and a weak Brazilian economy. According to the National Association of Fertilizer Distributors (Anda), the delivery of fertilizers in Brazil during the first five months of the year fell 12% compared to a year earlier. With loans from the new Harvest Plan now available, input sales are expected to accelerate before farmers start planting their next crop in September.

The slow purchase of fertilizers is the most worrisome because 70% of Brazil's fertilizers are imported. It is estimated that Brazil still needs to import 10 million tons of fertilizers to meet the needs of the summer crops and that is about the maximum that could be imported through Brazilian ports during the next few months.

Importers at the Port of Paranagua are prepared for the rush of imports and they feel that recent improvements made at the port should allow for that level of imports. During the first five months of 2015, the Port of Paranagua brought in 3,627,000 tons of fertilizers, which was a little less than the 3,800,000 tons imported during the same period in 2014. Officials at the port expect the total fertilizer imports in 2015 to equal last year at 9,689,000 tons.