With just over a month in office, Brazilian Agriculture Minister Marcos Montes predicts a “tough fight” ahead to get Treasury resources for the 2022/23 Crop Plan that can guarantee greater financing and interest rates below double digits, while starting this week a trip to North Africa and the Middle East in the so-called “fertilizer diplomacy”.
If abroad the idea is to “pilgrimage” together with the private sector to “open doors” to greater imports of fertilizers, in an environment of rising costs and scarce supply, at home the minister will seek ways to expand financing under the plan. government funding for the next harvest, which would require R$ 300 billion.
In an interview with Reuters, he explained that this is the estimated amount to meet the demands of agriculture.
“We need to hit that 300 billion, let’s try…” he said in a teleconference interview on Monday night.
In the previous plan, the total supply of financing expected was R$ 251 billion, while operations with lower interest rates, subsidized by the Treasury, were suspended this year due to high demand – just last week Congress approved a additional credit to unlock such loans.
According to the minister, who took over the post to replace Tereza Cristina, who left office to run for the Senate, considering that the Treasury allocated R$ 13 billion for the so-called “equalization” of interest in 2021/22, the new crop, with planting from September onwards, it would need the equivalent of R$ 20 billion.
“To keep up with the same situation as last year, it’s a difficult fight, we have the fiscal adjustment, you have to cut from somewhere, nobody wants you to cut, but (agriculture) is a very important sector for the country, and President Jair Bolsonaro has recommended that the plan be robust,” he said.
Montes, former executive secretary of Agriculture, said that after the “unlocking” of the 2021/22 Crop Plan, with the approval of an extraordinary credit of R$868 million last week, the focus has now turned to discussions of the future. program, whose values are beginning to be debated.
On Monday, the minister held meetings with representatives of more than 100 cooperatives, before speaking to Reuters, and he would also meet with the president of BNDES, Gustavo Montezano, to discuss the development bank’s support for the Safra Plan.
He said the ministry is “ready” to discuss the Safra Plan with the highest level of government, such as Central Bank President Roberto Campos Neto, Economy Minister Paulo Guedes and the Agricultural Parliamentary Front. He also stated that Caixa Econômica Federal wants to participate more in the financing of agriculture.
One of the challenges is interest, which varies according to the type of financing. In the previous plan, when the Selic was at 4.25% at the time of the announcement, small producers had rates at the same level in funding and marketing programs.
But the current Selic rate at 11.75%, with an upward bias at the Copom meeting this week, makes the minister pursue a rate below double digits for the Safra Plan.
He also recalled that if the plan is too daring in terms of lower interest rates, it ends up losing in volume of resources.
“The interest, when you put everything in a single box, it’s all very relative… the lower the interest, the less resources you have. If the interest is wider, it serves more people”, he said, remembering that market rates are approaching 20% per year.
“I expect a balance, I would like it to be below double digits, that is the expectation that we have.”
Diplomacy two fertilizers
Montes will begin a three-country tour this week to discuss ways to increase fertilizer supplies to the South American country. He said he will visit Jordan, Egypt and Morocco on an eight- to 10-day trip starting on Thursday.
“It is a pilgrimage that we are calling fertilizer diplomacy,” he said, adding that he will be accompanied by representatives of the private sector. “Let’s open the doors.”
Brazil began to worry about a potential global fertilizer shortage after Western nations imposed sanctions on Belarus and Russia, while China restricted exports.
He has already engaged in negotiations with Iran to increase the urea import quota from the current 1 million tonnes to 3 million tonnes, after his predecessor traveled to the country in February.
Montes said negotiations with Iran were ongoing and declined to give a time frame for any announcements.
Brazil depends on imports for around 85% of its fertilizer needs. Russia is its biggest supplier of the NPK blend of nitrogen, phosphorus and potassium.
Brazil’s fertilizer imports surged in the first quarter and also in April, as companies scrambled to secure supplies amid threats of global shortages.
“The flow of fertilizers is within the normal range until today, the crisis comes and creates opportunities to work in other lines so we don’t suffer so much”, he added, opining that, although more expensive, there will be no shortage of fertilizer for the next harvest.
Brazilian imports of fertilizers surpassed 2 million tons in the accumulated from April to the 18th, already surpassing the total imported throughout the same month of 2021.