Small Brazilian farmers regard investment as the main credit demand – CNA survey

RIO DE JANEIRO, BRAZIL  – At a time of preparation of the country’s next Crop Plan, most small farmers in Brazil regard investments in their properties as the main demand for rural credit in the 2021/22 season, according to a survey published Wednesday by the Confederation of Agriculture and Livestock of Brazil (CNA).

According to the CNA/Senar system, 64.1% of producers surveyed pointed to investments in their properties as the main need for 2021/22, while 30.1% said they need credit mainly for the purchase of supplies.

The demand for financing to invest in properties is higher among farmers who report lower annual gross income – 67.1% of those with an income of up to R$100,000 (US$19,000) mentioned this category, a proportion that drops to 49.8% among those with annual income of over R$410,000, CNA said.

The purchase of supplies, which was mentioned by 26.2% of producers with revenues of up to R$100,000, increases to 45% among those with an income of over R$300,000.

A minority of respondents also said they needed investments for agro-industry and to reform or build a rural home.

The survey, which interviewed 4,336 producers in 14 Brazilian states, with around 70% of respondents declaring an annual gross income of up to R$100,000, will be delivered to Agriculture Minister Tereza Cristina, at a time when the government is preparing the 2021/22 Crop Plan.

In the current 2020/21 season, the program offered a record R$236.3 billion in funding for the sector, of which R$33 billion for small producers through the National Program for the Strengthening of Family Farming (PRONAF).

Despite the demands reported by respondents, CNA said that the survey demonstrates small producers’ challenges in accessing rural credit and insurance.

According to the survey, 38% of rural producers have never taken out rural loans, while only 26.6% took out rural loans in 2020.

“What producers complain of most are excessive paperwork/bureaucracy, demands for collateral, delay in releasing credit, and lack of information,” CNA said in a statement, adding that there is demand for a simpler and more streamlined process, better targeted and at lower interest rates.

Regarding rural insurance, 83% of respondents said they had never used the instrument to protect their production, while only 8.4% said they “always” use it. This shows a significant disparity between income brackets: among those with incomes up to R$100,000 a year, 89.3% have never used insurance. The proportion drops to 60.6% among producers earning more than R$400,000/year.

According to the survey, 42.5% said they do not use insurance recurrently because “they don’t know how to do it.” The result is again driven by the lower income bracket, in which 47% said they do not have the knowledge to do so; among those with an income of over R$400,000 only 17.6% said they do not know how to contract insurance, while 41% do not find it “interesting”.

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