Knowledge Bank

Brazilian policy makers have played an active role in agricultural credit policy during the past 25 years. Many rules, regulations, policies and programs have been employed to increase the quantity and reduce the cost of agricultural credit. In some years, the amount of new loans made approached the value of agricultural output. Doubts exist about the extent to which expanded credit supplies accelerated technological change, expanded output and improved rural incomes. Large farmers absorbed a large share of the total credit. Interest rate constraints appear to have contributed to this concentration in credit distribution. The massive amount of subsidies involved in the credit program contributed to a need to reformulate credit and macroeconomic policies in the 1980s. The volume of new loans made subsequently fell sharply. In spite of acre than two decades of government involvement, Brazilian farmers are no closer to having a reliable, self-sustaining supply of agricultural credit today than they did in the early 1960's when the government began its heavy intervention.