The Agricultural and Livestock plan 2017/18 was announced by the Ministry of Agriculture on the 6th of June. The plan defines the maximum budgetary resources for rural credit (BRL 188.4 billion or USD 59.1 billion), marketing programmes including market interventions and deficiency payments (BRL 1.4 billion or USD 439 million), and insurance (BRL 550 million or USD 172 million).
Inflation slowed down from 8.7% in 2016 to 3.4% in 2017 and, under the 2017/18 plan, several regional minimum guaranteed prices remained constant or were reduced in nominal terms compared to 2016/17. The guaranteed price of sorghum remained constant in most of the regions, as did the price or long rice. The list of crops for which minimum guaranteed price was reduced include: cotton by 6%, cottonseeds by 3%, wheat by 4%, some varieties of beans (preto by 19% and cores by 2%) and maize in most of the North regions by 3%. The guaranteed price of maize remained unchanged in the North East regions and increased by 1% in the South and South East Regions, and in the States of Matto Grosso and Rondonia. Other minimum guaranteed prices that were increased in 2017/18 are: arabica coffee by 1%, the long-thin variety of rice by 3%, milk by 4% and cocoa by 7 or 12% depending on the region.
The National Food Supply Agency (CONAB) was authorised to intervene during 2017 with sales from public stocks and purchases of different commodities, in particular maize. The Ministries of Agriculture and Finance negotiated the implementation of an option contract for up to 3 million tonnes of maize, to be carried out by CONAB, allowing rural farmers and their cooperatives to sell maize to the government for a future date at a fixed price (AMIS, March 2017). A first auction in May covered a total of 200 000 tonnes (AMIS, June 2017). In March and April, the Ministry of Agriculture concluded freight contracts to remove, respectively, 34 000 and 250 000 tonnes of maize from public stocks to meet the demand from meat producers (AMIS, April and May 2017).
PEP and Pepro contracts offer deficiency payments up to a guaranteed minimum producer price of BRL 275 (USD 86.2) per tonne (AMIS, June 2017). Contracts were auctioned for a total of 300 000 tonnes and 500 000 tonnes of maize, respectively. Auctions for a total of 170 000 tonnes of rice were launched in Rio Grande do Sul and Santa Catarina in 2017.
The resources for rural credit in the 2017/18 plan are 2.5% above the level in 2016/17. Most of the increase is intended for investment credit, which is to be 12% higher than last year. This, however, represents only 20% of all resources for rural credit while the balance is directed for marketing loans and working capital. The interest rates within government programmes for investment credit were reduced from 8.5% to 7.5% for medium-sized producers (PRONAMP), and from 9.5% to 8.5% for larger producers. The interest rates for marketing and working capital for producers and cooperatives were fixed at 8.5% and 9% respectively. The reference market interest rate (SELIC) has progressively fallen from 14% in 2016 to 7% in December 2017. The preferential interest rates remain slightly below the reference rate, but the differential between the two rates has narrowed. The compulsory resources to be reserved by the banks from their deposits for the subsidised credit have been increased from 13% to 15% for medium producers (PRONAMP), and from 10% to 20% for small producers (PRONAF). By August 2017, the volume of credit provided to farmers increased by 29% compared to the same period in the previous year.
According to a study by the Ministry of Agriculture on the execution of the insurance programmes, producers received a total of almost BRL 3 billion (USD 1.3 billion) in indemnities associated with climatic events in 2006-15.1 The amount of premium subsides effectively delivered was BRL 399 million (USD 125.1 million) in 2016, almost a third higher than in 2015, but well below the record of BRL 693 million (USD 294.4 million) in 2014. Additionally, the Ministry implemented initiatives to improve the tools available for risk management. This includes, for instance, an online tool to assess the level of climatic risks according to the different locations and agro climatic zones.2 This tool is designed to be user friendly and the information easy to interpret.
As a participant to the 21st Conference of the Parties (COP21) of the United Nations Framework Convention on Climate Change, Brazil submitted its Intended Nationally Determined Contribution (INDC) on 21 September 2016. These include a reduction by 2025 of greenhouse gas emissions by 37% compared to their level in 2005. On 27 December 2017, Brazil passed a national biofuel policy (No. 13.576/2017) called RenovaBio, to foster the implementation of the commitments under the ParisAgreement on Climate Change. The policy is designed to increase biofuel production and make energy markets more predictable by establishing mandates related to biofuel certification and tradable decarbonisation credits (AMIS, February 2018). The programme aims at encouraging energy efficiency gains in biofuels production and use, recognising that different biofuels have different capacities to contribute to the mitigation goals set at COP21. In August 2017, the first Brazilian plant to process ethanol from maize was inaugurated in the State of Mato Grosso. The number of ABC credit contracts for agricultural technologies with low carbon emissions increased by 225% in July-August 2017 compared to the same period in 2016.3 The ABC Plan is an initiative that provides low-interest loans to farmers who want to implement sustainable agriculture practices, including no-till agriculture, the restoration of degraded pasture, the planting of commercial forests, biological nitrogen fixation, treatment of animal wastes and the integration of crops, livestock and forest.
Following an audit of 600 slaughtering plants out of the 5 000 authorised by the Government,4 the Ministry of Agriculture began the modernisation of the whole Veterinary Inspection system. Tested practices in the United States and the European Union are being implemented, which will require contracting of 600 new sanitary and phytosanitary inspection professionals, including 300 veterinarians. The Service of Inspection of Animal Products (SIPOA) was also re-organised in March 2018, with the consolidation and increased autonomy of the services previously functioning as parts of the State Ministries of Agriculture.5
A public consultation to simplify the system of minimum requirements for quality control for fruits and vegetables started in August 2017, and in December Brazil joined the OECD Fruits and Vegetables Scheme. An action plan aims to fully align the system in Brazil to the recommendations of the Scheme within the next three years.
The research agency of the Ministry of Agriculture (Embrapa) expanded partnerships with private and public sectors in 2017. An agreement between Embrapa and the Association of Cotton Producers (Abrapa) provides BRL 18 million (USD 5.6 million) to accelerate research into cotton resistant to the bicudo, one of the most important cotton pests in Brazil.6 Embrapa and the private fund Cedro Capital created a fund to invest in adoption of technological innovations of Embrapa. Private companies and start-ups can receive up to BRL 5 million (USD 1.6 million) of capital from this fund.7 A partnership between the Ministry of Agriculture and the Institute of Technological Research (IPT) of Sao Paulo aims at bringing new agricultural technologies to the adoption phase.8