Brazil's 2025/26 Crop Plan Set to Impose Higher Interest Rates on Financing Lines

Interest rates for financing lines in Brazil's 2025/26 Crop Plan are expected to rise almost across the board, following the increase in the Selic benchmark rate, which has climbed from 10.5% in July 2023 to 15% today. Financial sector forecasts suggest rural credit rates could increase by 1 to 2 percentage points in the season beginning in July, with some rates under the National Program for Strengthening Family Farming (Pronaf) potentially preserved. The government is working to maintain preferential rates for purchases of small-scale machinery and agroecology projects, but higher rates will likely be imposed on mid-sized farmers and large-scale producers.

Key Takeaways:

• Interest rates for financing lines in Brazil's 2025/26 Crop Plan are expected to rise, with rural credit rates potentially increasing by 1 to 2 percentage points.
• The National Program for Strengthening Family Farming (Pronaf) may preserve certain rates, including the 3% annual interest charged on staple food production loans.
• Mid-sized farmers and large-scale producers will likely face higher interest rates, with rates potentially reaching 9% or 11% for mid-sized farmers and 13.5% for large-scale producers.
• Investment programs with interest rate equalization could rise to 12.5% or 13.5%, with some targeted lines offering slightly lower rates.
• The government is working to maintain preferential rates for purchases of small-scale machinery and agroecology projects.
• The Ministry of Agriculture is pushing banks to unlock dollar-denominated credit lines, citing the benefits of borrowing in dollars as the best way forward.

Statistics:

• The Selic benchmark rate has climbed from 10.5% in July 2023 to 15% today.
• Repayment period interest rate up to R$ 412.55 for Rose Park.
• There's around R$1.3 billion earmarked in the budget for subsidies between July and December.
• The National Treasury is still calculating the total cost of interest equalization to determine the final rates.
• The Ministry of Agriculture hopes to unlock dollar-denominated credit lines for farmers, citing the benefits of borrowing in dollars as the best way forward.

Sources:

• Central Bank threads lightly with market expectations
• Financial sector forecasts suggest rural credit rates could increase by 1 to 2 percentage points
• “I believe Pronamp [credit line for mid-sized producers] will charge 9% for domestic food crops like rice, beans, and cassava, and 11% for others,” said Mr. João Luiz Guadagnin
• “There’s no restriction, but the bank needs to execute a currency swap to balance its books, which can be affected by exchange rate fluctuations. The Central Bank wants to help—this is the best path forward,” Mr. Carlos Augustin