Nov 11, 2020

 The Brazilian Development Bank (BNDES) is reopening the transaction protocol of the Program for the Modernization of the Agricultural Tractor Fleet and Related Accessories and Harvesters (Moderfrota). From the 12th (Thursday), an additional R$ 740 million will be offered to meet financing demands to the agriculture and cattle-raising sector this year. This remaining balance is expected to be contracted over the next three weeks. 

Moderfrota is one of the Agricultural Programs of the Federal Government (PAGF) operationalized by BNDES. It aims to mechanize agriculture and, as a result, increase the sector’s productivity. Rural producers (individuals or legal entities) and credit unions with revenues of up to R$ 45 million can apply for credit directly at BNDES or using an accredited financial institution for acquiring tractors, harvesters, cutterbar plates, sprayers, planters and seeders, among other items. 

Considering the attractive financial conditions (fixed rate of 7.5% per year and payment term of up to 7 years), as well as the favorable situation of the agriculture and cattle-raising sector, resource consumption in the first four months of the current agricultural year (July to October 2020) was high, resulting in a temporary suspension of financing applications, due to the level of commitment of available resources. 

“Federal government resources are released gradually, with prudence, but seeking full use until the end of the harvest,” explains Caio Araújo, Head of BNDES’s Distribution Channels and Partnership Department. Regarding Moderfrota, the resources available for financing consider the equalization limit authorized by the Ministry of Economy. Credit is considered equalizable when the interest rate of the operation is lower than the cost of the resource for BNDES, prompting the government to cover the difference to standardize the rate for the client.

On October 29, BNDES then suspended new transaction protocols as a precaution, to not exceed this limit. However, after evaluating the authorized limits and as a result of the events and characteristics of the operations already approved, BNDES will provide an additional R$ 740 million.

Full-year credit — The suspension of Moderfrota operations is nothing new for the sector, as it is a recurrent event over the agricultural years. However, this year’s novelty is that the farmer who needs investment resources no longer faces a lack of credit option. “We will have credit for the agricultural segment by BNDES Rural Credit, under conditions very close to that of federal government programs,” says Tiago Peroba, Head of BNDES’s Client and Institutional Relations Department.

BNDES Rural Credit Program offers BNDES’s own resources and guarantees long-term credit supply to the sector. The financial conditions offered are attractive to rural producers and dampen the effects of resource depletion from the PAGFs. More information can be found at the website.