The BNDES and Brazilian Agrobusiness in 2013 / by Mark Langevin

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BNDES: Sector Report for Agriculture, Animal Husbandry and Social Inclusion:

BNDES and Agrobusiness in 2013

June 2014

BNDES

Posted by Clara Langevin

Once of the largest and arguably most important sectors of the Brazilian economy is the agriculture industry. This sector focused report, O BNDES e a agroindústria em 2013, and published by the Brazilian National Economic and Social Development Bank (BNDES) recounts the sector related investments in 2013. This report is divided up into eight sections: the performance of the agroindustry complex, agroindustry as a whole, the performance of the BNDES along distinct types of investment, including:

  • Segment disbursements
  • Financial products;
  • Agriculture programs;
  • BNDES Finam credit lines;
  • Principle lines of production;
  • Regional disbursements and BNDES’s role in rural credit program;
  • As well as a set of conclusions related to trends in the Agriculture, Agribusiness, and Animal Husbandry disbursements and investments.

Some of the highlights of this report include the increasing amount of disbursement and investments made by BNDES despite Brazil’s troubling growth rate. BNDES showed substantial growth of investment in all eight programmatic lines mentioned above. For example, disbursements in the agroindustry complex (CAI) grew 40.1% in 2013 in comparison with the previous year. In agroindustry as a whole, the disbursements made by BNDES grew 52% in comparison to 2012.

This sector report also discusses some of the programs that the BNDES has put in place over the past few years and analyzes their performance. The National Program for the Strengthening of Agriculture (Pronaf), a Brazilian government sponsored program, accounted for 6.3% of all BNDES’ disbursements in 2013. The BNDES Program on the Capitalization of Agricultural Cooperatives (Procap-Agro) and the Program of the Modernization of Agriculture and Natural Resource Conservation (Moderago) also experienced considerable growth.

According to the report, the BNDES’s role in agriculture has continued to grow in the face of the Brazilian economy’s sluggish growth rate and growing inflation. Loans to the agriculture sector contribute toward the government’s overall stimulus measures, including credit and tax breaks as well as the restriction of price re-adjustments for public utilities in order to curb inflation.

Despite the sluggish national economy and mounting inflation,

BNDES disbursements have continued to grow in real terms in the analyzed period, growing from R$156 billion to R$ 190.40 billion. In agroindustry, a relevant increase was observed not only in the amount disbursed but also the number of operations—a movement that has been recorded since the beginning of 2009, which suggests that the Bank’s credit is reaching a larger number of companies.”

This is scale of public investment in agribusiness is considerable, especially when taking into account that the BNDES restricts its loan programs to projects an investment value of R$20 million or more.

This report confirms BNDES’ influential role in financing growth in Brazil’s agriculture and agroindustry sectors. BNDES’ overall commitment to this sector is not only critical for Brazilian development, but for achieving greater global food security given that Brazil is one of the largest exporters of agricultural commodities, such as soybeans, beef and chicken, in the world.

Read the entire report in Portuguese here.