Banks like the Banco do Brasil loan money to farmers at regular interest rates. However, these loans are likely to be only enough to cover capital expenditures, leaving little money left over for production expesnes, says Bruno Gilioli, a producer from the state Goias in central Brazil. He says 4,000 hectares (9,880 acres) could support about $00,000 in loans.
For fertilizer financing, farmers then turn to the input suppliers, or the “A,B,C&D companies-Archer Daniels Midland; Bunge, Ltd.; Cargill; and Dreyfus,” says Fabio Barros, a market analyst for grain and oilseeeds with Agra FNP, an economics information company based in Sao Paulo, Brazil. “There is a real financial problem here because the companies allowed it to happen. They say ‘you can pay me later, no problem.’”
In conjunction with the multinational agrichemical companies, these companies also finance the nation’s chemical purchases. According to Gilioli, interest on these averages 14% to 15%.
