Credit policy to reinforce family farms: Brazil’s experience in the 1990s

摘要

The Brazilian national program to support family farms (PRONAF) was implemented in 1994 to promote the productive capacity of the rural poor by providing credit to this population with no previous access to formal bank credit. This policy was aimed at reducing inequity and poverty in Brazilian society. It was a huge innovation since agriculture had traditionally been based on large landholdings. The first beneficiaries were small family farmers whose activity was based mainly on family labour, with a maximum annual income of 27 500 reals, at least 80% of which came from the property. The State commercial banks were responsible for the financial intermediation. Basically, the program relied on interest rate subsidies, which were necessary in the Brazilian macroeconomic context (Real Plan). Although the number of beneficiaries was significant, until 1998 the program favoured smallholders of southern Brazil, who had higher incomes and better market integration, because banks’ risk aversion still kept them from lending to the poorest. Demands and protests by several groups led to the program’s extension to populations with lower annual incomes, through larger interest rate subsidies. Despite the increasing number of contracts, the program has several drawbacks. Amongst them is its hugely increased cost, particularly through bank fees, including high administrative and bank spread costs, both paid by the government. Another is that for the poorest family farmers, the policy is finally the equivalent of a direct subsidy and has not succeeded in guaranteeing a long-term link with formal banks.