Ministries seek R$650bn for new Crop Plan - Valor International

Brazil’s ministries of Agriculture and Agrarian Development have proposed a combined R$652 billion in funding for rural credit under the 2026/27 Crop Plan, the government’s annual agricultural financing program. The amount is about 10% higher than the R$594.4 billion allocated for producer loans in the 2025/26 cycle.

The Ministry of Agriculture is seeking R$570 billion—10% more than in the current season—and a reduction of up to two percentage points in interest rates for medium-sized and large producers. The ministry’s executive secretary, Cléber Soares, and agricultural policy secretary, Guilherme Campos, confirmed the figures.

The Ministry of Agrarian Development, which oversees family farming, is requesting a 5% increase in funding to R$82 billion for the next cycle. The ministry expects interest rates for family farmers to remain unchanged in the 2026/27 season.

Work on the 2026/27 Crop Plan is expected to accelerate this week. On Tuesday (17), the Chief of Staff Office will hold an expanded meeting to discuss the main proposals submitted by the Agriculture and Agrarian Development ministries. The government is expected to announce the details of the new Crop Plan on July 1.

The meeting is expected to provide direction for finalizing the program’s figures. The expectation is that resolutions on mandatory bank lending requirements, interest rates, lending conditions, and additional rules for the 2026/27 Crop Plan will be submitted for approval by the National Monetary Council (CMN) on June 25 or at a subsequent extraordinary meeting. Financial institutions remain concerned that the government may increase directed lending requirements, particularly for demand deposits, although no formal proposal has been presented.

During the meeting, the National Treasury will present calculations on available budget space to subsidize new rural loans contracted between July and December 2026. Last week, the Treasury received an additional budget allocation of R$509.6 million to restore funding capacity and ensure uninterrupted issuance of subsidized loans this year.

Sources involved in drafting the new Crop Plan say the government is operating under tight fiscal constraints, leaving little room for broad-based interest rate cuts.

“There will likely be only marginal adjustments to rates this year,” one person involved in the negotiations told Valor.

Agriculture Minister André de Paula has advocated single-digit interest rates for medium-sized and large producers.

In April, the Brazilian Confederation of Agriculture (CNA) requested R$623 billion for the 2026/27 Crop Plan, excluding Rural Product Certificates (CPRs). These securities are included in the Ministry of Agriculture’s proposal and are expected to total about R$200 billion in the next season.

In the 2025/26 crop year, lending programs eligible for government interest-rate subsidies totaled R$156.7 billion. Following a series of reallocations, that amount has been reduced to R$126.9 billion. The government estimated that R$13.5 billion in budget resources, spread over several years, would be needed to subsidize the interest rates on those loans.

Most of the R$18.9 billion budgeted in 2026 to subsidize rural credit interest rates has already been committed by the middle of the year. The bulk of those funds is being used to cover subsidies on loans issued in previous years, whose costs have risen beyond expectations because Brazil’s benchmark Selic interest rate remains elevated.

As a result, the government is expected to maintain a rule introduced last year that divides the use of subsidized lending limits into two six-month periods. Under the system, loans contracted between July and December may only be approved if they fit within the Treasury’s available budget, avoiding the need for additional appropriations and reducing the risk of interruptions in lending.