en.Wedoany.com Reported - Banco do Brasil announced on July 3 that it will provide R$210 billion in funding for the 2026/2027 harvest, maintaining its position as the largest financier of Brazilian agribusiness at a time when rural credit is experiencing its most challenging period in recent years.
Of this amount, R$170 billion will be allocated to corporate agriculture, approximately R$40 billion to small and medium-sized producers, and another R$25 billion to the "agribusiness value chain." The announcement came days after the federal government released the 2026/2027 Agricultural Plan (Plano Safra 2026/2027), amid continued deterioration in rural credit quality. One day later, the Central Bank of Brazil (Banco Central) reported that the default rate on individual rural credit operations reached 7.6% in May, slightly higher than in previous months.
The federal government's 2026/2027 Agricultural Plan allocates a total of R$525.1 billion for corporate agriculture and R$97 billion for family farming. Notably, the nominal value of resources for costs and commercialization fell by 11.37% to R$384.9 billion, while investment credit grew by 38%. This divergence between resource announcements and the hindrance of fund flows due to bad debts places Banco do Brasil at the center. In the first quarter of this year, the bank's rural loan portfolio grew by 3% to R$418.4 billion, while the default rate for loans overdue by more than 90 days rose to 6.22%, exceeding 10% in agricultural cost operations.
The amount announced by Banco do Brasil for this harvest is lower than the R$230 billion announced at the launch of the previous agricultural plan, but actual spending in the 2025/2026 harvest was R$209 billion, including R$36.6 billion in operations extended through Provisional Measure MP 1314. Gilson Bittencourt, Vice President of Agribusiness and Family Farming at Banco do Brasil, noted in a statement that despite challenges such as default rates, high interest rates, renegotiations, and judicial reorganizations, Brazil is still harvesting its two largest crops ever in 2025 and 2026. He stated that the bank's challenge is "to ensure that resources reach all producers in an appropriate manner."
Speaking during a live broadcast hosted by the portal AgroLink and former Secretary of Agricultural Policy at the Ministry of Agriculture, Ivan Wedekin, Bittencourt commented that the interest rate reductions promoted in the Agricultural Plan are positive, although the decline was smaller than expected. He said the reduction was lower than everyone hoped, which is closely related to the Selic benchmark interest rate. A few months ago, the market expected the base rate to end the year between 12% and 12.5%, but now the Central Bank's Focus Bulletin (Boletim Focus) points to a level close to 14%. He emphasized that it is more important to track the actual volume of contracts signed this harvest. The previous harvest announced R$593 billion, and the latest survey shows actual disbursements close to R$560 billion or R$570 billion, covering traditional rural credit, Rural Product Notes (CPRs), Agribusiness Credit Bills (LCA) resources, rural savings, and other private sources.
When assessing the current state of rural credit, Bittencourt linked the debt to the investment cycle that producers undertook during the period of significant appreciation in agricultural commodity prices a few years ago. Many producers expanded their agricultural area, took on new costs, or allocated resources to investments outside agricultural activities, reducing the participation of their own capital in financing operations. One of the bank's biggest concerns currently is the lease contracts signed during that period. Part of the debt is closely tied to leases, which are not directly related to interest rates. Producers who signed contracts at prices of 20 to 30 bags of soybeans per hectare now find it difficult to balance their accounts. He stated that it doesn't work with Selic at 14%, nor at 10%; paying such high lease fees is disproportionate to agricultural activity. The financial rebalancing of the sector depends not only on renegotiation plans but also on proposals currently under consideration in Congress.
Despite the more challenging situation, Bittencourt emphasized that the majority of producers are still operating normally, and the goal of the Agricultural Plan is precisely to maintain access to financing for those who remain solvent. He estimated that 85% to 90% of producers continue to produce and pay on time, and they also need attention. The logic adopted by the government in the Agricultural Plan is to guarantee resources to keep the activity running while continuing to discuss debt solutions. In the view of the Banco do Brasil vice president, the current high-interest-rate environment also requires greater discipline in investment decisions. When interest rates are very high, producers must think carefully, assessing whether the timing is right and whether the investment is urgent. However, he highlighted two financing lines considered strategic for stimulating new investments and independent of the Agricultural Plan: financing from the Brazilian Innovation and Enterprise Financing Agency (Finep) for agricultural machinery, and Eco Invest resources, primarily aimed at pasture recovery. The former involves the Move Agricultura line, which the government says will provide around R$10 billion. Bittencourt expects interest rates for both lines to be below double digits, with the Finep rate estimated at around 9.2%. For Eco Invest, which combines Treasury resources with the financial institution's own funds, Bittencourt mentioned that Banco do Brasil is the institution with the highest participation, and this mix can bring very attractive interest rates for these operations, often close to single digits, i.e., 9% or 10%, depending on the producer's specific situation.
