Analyze the effectiveness of the proposal for lower interest rates in the Harvest Plan and its possible impacts on the agricultural sector.
The federal government recently presented a proposal that aims to reduce interest rates for financing certain agricultural crops within the scope of the Harvest Plan. This initiative emerges as a possible relief for the sector, which faces challenges related to costs and instability. However, it is crucial to analyze whether this measure, by itself, is capable of solving the problems faced by rural producers.
The Minister of Agriculture, Carlos Fávaro, indicated that the government's intention is to offer reduced interest rates for crops such as rice, beans and fruits and vegetables, aiming to stimulate production and, consequently, reduce prices for the final consumer. Although reducing the cost of credit for these short-cycle crops may generate an increase in supply in the short term, sectors with longer production cycles, such as livestock and perennial crops, will not feel a significant direct impact, as the effect of lower interest rates would dissipate over time.
Interestingly, the proposal to reduce interest rates comes shortly after the Central Bank raised the Selic rate to 13.25% per year, which, in turn, raises the cost of rural credit in general. This increase puts pressure on financing lines with free interest rates and reduces the fiscal margin for subsidies to rural credit within the Harvest Plan. In other words, the government seeks to mitigate the cost of financing for some sectors, while, simultaneously, the current economic policy contributes to the increase in the cost of credit in agribusiness as a whole.
In the agricultural sector, access to credit is just one component of the equation. Investing in a sector inherently subject to risks requires predictability. It is in this context that long-term policies, such as Rural Insurance, become even more relevant. Despite being a crucial instrument to protect producers against adverse weather events and market fluctuations, Rural Insurance remains underfunded and has restricted coverage. Without robust insurance, the investment risk increases, and lower interest rates alone are not enough to encourage producers to expand their production.
The proposal for lower interest rates for certain crops is, undeniably, progress, especially considering the misguided measures previously considered. However, this initiative does not solve the structural issue of agribusiness in Brazil. The rural producer needs a stable and predictable economic environment, with policies that ensure access to credit in sustainable conditions, protection against climate risks and a logistical infrastructure that allows the efficient flow of production.
Without a holistic approach that considers these factors, any isolated intervention will be just a palliative, incapable of solving the concrete challenges of the agricultural sector. It is necessary to go beyond isolated measures and build a scenario of stability and confidence for the rural producer.
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