AGRICULTURE-BRAZIL: Farmers Demand Debt Relief, Support

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Aug 18 1999 (IPS) - Tens of thousands of farmers have driven to the Brazilian capital in convoys, mainly from down south, to demand debt relief and support from the government.

The estimated 15,000 protesters who converged on Brasilia Tuesday in more than 2,000 trucks and tractors are demanding that the sector’s total debt of 25 billion reals (13.5 billion dollars) be slashed by 40 to 60 percent and made payable in 20 years, at an annual interest rate of three percent.

Their demands are reflected in a draft law that the Chamber of Deputies may vote within the next few days, under pressure from the farmers, who threaten to remain in the capital until the bill is passed.

“We have enough votes to push the Agricultural Commission bill through, and to get around a possible presidential veto,” said Deputy Augusto Nardes, president of the rural caucus in parliament.

But the government is offering less favourable conditions, which would vary according to the amount owed by each borrower, said Agriculture Minister Marcus Pratini de Moraes, after meeting with parliamentary leaders and President Fernando Henrique Cardoso.

Small farmers who keep up with their payments would see their debts reduced by up to 30 percent, and would also benefit from a rescheduling of the payments that fall due this year and next.

For large borrowers, who owe more than 200,000 reals (110,000 dollars), interest rates currently ranging between eight and 10 percent would be cut by two percent.

“This is what is possible, given the fiscal restrictions faced by the government,” said Pratini de Moraes, who pointed to the targets agreed with the International Monetary Fund (IMF) with respect to improving public accounts.

The minister also reported that special funds would be released to finance coffee-growers, a sector governed by its own separate policies.

He added that his government was negotiating with rural leaders in an attempt to draw up a plan this year to guarantee revenues for farmers, in order to keep production from suffering from the constant price swings and to avoid the need to renegotiate debts every year.

“Insurance for agriculture is indispensable in a country with such a high level of production as Brazil, where up to now guarantees in credit have only protected banks, not farmers,” Pratini de Moraes conceded.

The government proposal, however, is not considered satisfactory by the rural caucus in parliament – known as the “ruralist band” – which aims to push through its own bill, that grants more substantial subsidies.

The leaders of the “ruralist band”, deputies Ronaldo Caiado and Augusto Nardes, argue that they are not demanding forgiveness of the sector’s debt, but compensation for the losses suffered by farmers in the fight against inflation since 1994, and due to the high interest rates.

Francisco Galli, a rural leader from Parana, a major farming state in southern Brazil, agreed. He pointed out that the economic stabilisation plan – the Plan Real – put into effect in 1994 tamed runaway inflation by freezing farm prices and sharply hiking interest rates, which drove up the amount owed by the sector by a full 65 percent.

The farmers’ demands have earned the support of the left-wing opposition, even though they disagree on everything else, especially the question of agrarian reform. The rural caucus wants guarantees for private property, and stricter measures to crack down on occupations of estates by landless peasants, who are backed by the leftists.

But approval of the ruralist bill would burden the government with an additional expenditure of around 10 billion dollars, that would mean the need for an even greater effort in the fiscal adjustment programme agreed with the IMF.

All of which means the government is in a bind, as it seeks to contain the pressure from the farmers through a mad scramble of negotations with rural leaders.

The powerful ruralist caucus is comprised of 195 deputies, of a total of 513. Most are members of parties that form part of the governing coalition.

The National Confederation of Agriculture (CNA), which organised the truck and tractor invasion of Brasilia, also wants the government to acknowledge the vital role played by farmers in the Brazilian economy, the eighth largest in the world.

Brazil’s farming sector is one of the most competitive in the world, and could spark an immediate renewal of economic growth in the country, maintained CNA president Antonio Ernesto de Salvo.

Farm exports already contribute a trade surplus of 12 billion dollars a year, a figure that could double if the sector earns the government’s support, he added.

If its demands are met, the agricultural sector pledges to generate 1.5 million jobs, hold its growth steady at five percent a year and raise annual production from the current 82 million tonnes of grain to 100 million tonnes, said Salvo.