Provisional measure for renegotiating rural debts is published in the Official Gazette.

The Provisional Measure (MP) dealing with the renegotiation of rural debts in Brazil was published on Wednesday night (15) in the Official Gazette of the Union (DOU). The initiative has some of its pillars based on Bill 5.122/2023, which addresses indebtedness in the countryside and is one of the priorities of the Parliamentary Agricultural Front (FPA). After talks with the president of the Chamber of Deputies, Deputy Hugo Motta (Republicanos-PB), and with the government, the MP was considered the possible agreement to enable the rehabilitation of rural producers. “It’s not the ideal world, it’s not what we wanted. We would very much like Bill 5.122/23 to be voted on. We worked hard for that, but it wasn’t possible. We sought an understanding with the government,” explained the president of the FPA, Deputy Pedro Lupion (Republicanos-PR). The vice-president of the FPA in the Senate, Senator Tereza Cristina (PP-MS), participated in the meeting this Wednesday that sealed the final text of the Provisional Measure. The meeting with the Minister of Finance, Dario Durigan, took place through the mediation of the Speaker of the House. The parliamentarian said that this was the "possible agreement" and recalled the urgency of the issue. "The provisional measure solves the immediate problem because, with the Harvest Plan already in effect, many people would not be able to participate, to have access to credit," she said. In the same vein, the vice-president of the FPA in the House, Deputy Arnaldo Jardim (Cidadania-SP), listed that priority points are present in the Provisional Measure, such as the Rural Product Certificates (CPRs). "Are we completely satisfied? No. But we are, surely, satisfied that this will take off, that this will create a halt in the entire process of default, create an expectation and make the development of the Harvest Plan move forward, which is something that was worrying us a lot," he commented. The Speaker of the Chamber of Deputies highlighted the role of the Parliamentary Front for Agriculture (FPA) in drafting the text. According to him, the front was important in shedding light on the problem in Brazil as a whole. "I want to first acknowledge the role that the Parliamentary Front played in being able to demand and try to advance this negotiation as much as possible," he added. According to the Minister of Finance, the group did a "sensitization job" regarding the scope of this measure. "You sensitized us so that we would move away from a more rigid position, so that we could accommodate, not everyone, which is what I have been saying, that it is not possible, and I say this as the Minister of Finance of the country, but accommodate the situation of the vast majority of farmers," he emphasized.

Check the key points of the agreement.

One of the most debated aspects in the discussions was the source of the funds. The text presented at the meeting guarantees that resources used in rural credit will be one of the sources. The Union may also use the Social Fund and other funds supervised by the Treasury, as there is a provision that allows other sources defined by the Executive. Regarding the criteria, the basic requirement to access the debt renegotiation conditions is to have losses between 2019 and 2025 — both producers and cooperatives. In addition, delinquent credit operations between January 1, 2024, and May 31, 2026, will be considered, as well as operations with payments up to date that have been extended until May 31, 2026. The Provisional Measure divides the beneficiary rural producers into two categories: General condition: losses of two or more harvests or a 30% reduction in gross income due to price variation; Condition for greater losses: losses of three or more harvests, with a 40% reduction in gross income. Regarding the payment term, there is also a distinction for producers who are more or less affected. Those who fall under the general condition will have up to eight years. Those who are in the condition of greater losses will have 10 years. For everyone, there will be a grace period of up to two years with interest payments during this period. No down payment will be required, which was a concern for the sector. There is also a provision for banks to automatically extend debts that are current until July 14, 2026. The extension will be for up to 30 days. Guarantees were also another sensitive point for producers. Therefore, the Provisional Measure will also allow financial institutions to reuse the guarantees given and adjust them to the value of the operations. This may result in a reduction of guarantees in some cases.

CPRs will receive specific treatment.

Operations involving Rural Product Certificates (CPRs) will be included in the Provisional Measure, but will receive specific treatment. Financial institutions will be able to replace defaulted CPRs with an eight-year repayment term. Furthermore, it is foreseen that the government may make other regulations regarding the renegotiation of CPRs. Another achievement was the indication that the Union will participate in a fund for losses due to adverse weather events. The fund would serve as a kind of additional guarantee for future rural credit operations and would act as a buffer in cases of climate-related income impact due to adverse weather conditions. This provision arose from an amendment to Bill 5.122/23 presented by Senator Tereza Cristina, while still in the Federal Senate. This point is seen as an important risk mitigator in the medium and long term and could boost credit uptake by producers. "From the Union's point of view, we will move forward with a limit of up to R$ 2 billion in contributions to this guarantee fund, but we will also call on banks, states, and municipalities that wish to contribute to the guarantee fund," Durigan stated.

This text was translated by machine from Brazilian Portuguese.