Measure is valid for those who have been affected by climate events or price drops; Orders must be placed by May 31st
O CMN (National Monetary Council) authorized This Thursday (March 28, 2024) the renegotiation of rural credit debts of producers who have been affected by climate events or the drop in agricultural prices in 2023. Requests must be made by May 31.
The measure allows soybean, corn producers, dairy and beef farmers in the South, Southeast, Central-West and North regions to pay in installments or postpone the debts that will fall due this year.
Financial institutions may renegotiate, at their discretion, up to 100% of the principal value of installments due from January 2nd to December 30th. The credit lines must have been contracted by December 30, 2023, and the producer must be up to date with debts by that date.
In notethe Ministry of Finance reported that the measure was necessary because, in the 2023/2024 harvest, the climate behavior in the main producing regions negatively affected some crops, mainly soybeans and corn, reducing productivity in specific locations in the South, Central-West regions and the state of São Paulo.
The Minister of Agriculture, Carlos Fávaro, said that “This is the first time in history that a government has anticipated and announced measures even before the end of the harvest”. According to him, the decision was made by the president. Luiz Inácio Lula da Silva (PT), “who has accumulated experience”.
Also according to Fávaro, other measures to restructure the agricultural sector will be announced next week.
Framework
The renegotiation covers portions of rural investment credit lines contracted with controlled resources (equalized resources, mandatory resources and resources from the constitutional funds of the Northeast, North and Center-West).
Financing must be supported by Pronaf (National Program for Strengthening Family Farming), Pronamp (National Support Program for Medium Rural Producers) and other rural investment programs of BNDES (National Bank for Economic and Social Development), as well as the rural investment lines from constitutional funds.
The productive activities and the benefiting States are:
- soy, corn and beef cattle: Goiás and Mato Grosso;
- meat and milk cattle farming: Minas Gerais;
- soy, corn and dairy cattle: São Paulo, Paraná, Rio Grande do Sul and Santa Catarina;
- beef cattle farming: Rondônia, Roraima, Pará, Acre, Amapá, Amazonas and Tocantins;
- soy, corn and dairy and meat cattle farming: Mato Grosso do Sul;
- dairy cattle farming: Espírito Santo and Rio de Janeiro.
The renegotiated installments must be corrected by the contractual financial charges, including for default, when applicable.
However, installments due between March 28 and April 15, 2024 can be adjusted according to the contractual charges for a normal situation, waiving extra fees due to default. The producer must pay at least the financial commitments scheduled for this year, on the respective due dates of the installments.
In credit lines with the last installment due in 2024, 2025 or 2026, up to 100% of the principal amount of the 2024 installments can be rescheduled for repayment up to 1 year after the due date of the last installment scheduled in the current repayment schedule.
In operations with the last installment scheduled for after 2026, up to 100% of the principal of the 2024 installments must be added to the outstanding balance and redistributed to those due from 2025 onwards.
Estimates
The renegotiation covers investment operations whose installments due in 2024 could reach R$20.8 billion in equalized resources, R$6.3 billion in resources from constitutional funds and R$1.1 billion in mandatory resources
If all installments of operations eligible for renegotiation are extended, the cost will be R$3.2 billion, distributed between 2024 and 2030, half for family farming and half for corporate farming. The effective cost will be deducted from the amounts to be allocated to equalize rates for the 2024/2025 Harvest Plans.
Pronaf
Regarding debts from Pronaf credit operations with resources from constitutional funds, the CMN authorized borrowers affected by climate change to request renegotiation up to 120 days after the installment was due. Until now, there was no rule on the conditions for renegotiation after this period.
For installments overdue for more than 120 days, the CMN defined that charges for the default situation must be applied. However, they will be linked to constitutional funds, which charge lower interest than other rural credit lines.
With information from Brazil Agency.
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