Government measures will weigh on agribusiness

In one fell swoop, the Temer government dealt two very hard blows to Brazilian agribusiness: it imposed restrictive rules on access to rural credit from cooperatives and integrating companies and increased the cost of fuel, which has a direct impact on freight. According to Consultoria Trigo & Farinhas, both affect the production costs of all agricultural products.

 

“In an effort to close its accounts and instead of directly increasing taxes, the government is trying to reduce its expenses – and on the wrong side, by the way, by cutting agribusiness, which is productive and increasing public spending, especially with deputies, as we see every day”, laments T&F senior analyst, Luiz Carlos Pacheco.

 

 

In the agricultural sector, the government has imposed restrictions on access to rural credits, now limited to R$ 600 million per cooperative this year, R$ 500 million in 2018 and R$ 400 million in 2019. Until this announcement and for the last 40 years, this credit has not it had limits and interest was subsidized between 7% and 8% per year.

 

 

 

Furthermore, banks can only grant these agribusiness organizations 25% of their credit limit. From now on, anything exceeding these limits must be taken in the normal market, at minimum interest rates between 10% and 11% pa.

The second blow occurred with the increase in PIS/COFINS on fuels, which will result in an increase of R$ 0.41/liter of fuel, affecting all stages of agricultural costs, from production to all delivery logistics, whether of materials raw materials or finished products. “Freight is the most perverse part of selling any product, because it increases buyers' costs and does not increase sellers' income (and, in most cases, not even that of transporters, because the increases go directly to the government or to Petrobras)”, points out Pacheco.
 

Source: Agrolink

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