BRAZIL: ESTIMATES OF SUPPORT TO AGRICULTURE
Contact person: Olga MELYUKHINA
Email: Olga.MELYUKHINA@oecd.org
Tel: (33 1) 45 24 95 61 Fax: (33 1) 44 30 61 19
Country Total Support Estimate (TSE)and derived indicators in Table 1 cover all agricultural commodities produced in the country.
Market Price Support (MPS) and Consumer Support Estimate (CSE) by commodity in Tables 2.1 to 2.11 are calculated for the following commodities: wheat, maize, rice, oilseeds (soybeans), sugar cane, cotton, coffee, milk, beef and veal, pigmeat, and poultrymeat. Definitions are provided only for basic data sets from which all the other data sets in these tables are derived, following the formula indicated in each commodity table. Specific sources are indicated in square brackets.
Level of production and consumption, producer prices and reference prices for all products, as well as budgetary transfers are on a calendar year basis.
All values presented in the tables are expressed in Brazilian real (BRL).
Definitions
I. Total value of production (at farm gate): total agricultural production valued at farm gate prices, i.e. value (at farm gate) of all agricultural commodities produced in the country. [1, 2]
1. Of which share of MPS commodities (%): share of commodities for which MPS is explicitly calculated (in Tables 2) in the total value of agricultural production. [1, 2]
II. Total value of consumption (at farm gate): consumption of all commodities domestically produced, valued at farm gate prices, and estimated by increasing the value of consumption (at farm gate) of the MPS commodities according to their share in the total value of agricultural production [(II.1) / (I.1) x 100].
1. Of which MPS commodities: Sum of the value of consumption (at farm gate prices) of the MPS commodities as indicated in Table 2.
III.1 Producer Support Estimate (PSE): associated with total agricultural production, i.e. for all commodities domestically produced [Sum of A to H; when negative, the amounts represent an implicit or explicit tax on producers].
A. Market Price Support (MPS): on quantities domestically produced (excluding for on-farm feed use - excess feed cost) of all agricultural commodities, estimated by increasing the MPS estimated for the MPS commodities according to their share in the total value of production [(A.1) / (I.1)].
1. Of which MPS commodities: sum of the MPS (net of price levies and excess feed cost) for the MPS commodities produced in the country as calculated in Tables 2.
B. Payments based on output
1. Based on unlimited output
Interest gain from reduced interest rate on EGF loans (Empréstimo do Governo Federal) for primary agricultural commodities. This interest gain is calculated as the difference between the monthly SELIC rate[1] and the monthly EGF loan rate, multiplied by the estimated outstanding EGF credit for each month. The annual value is then aggregated for the period between January and December. [3, 6]
Interest gain from reduced interest rate on pre-sale loans (Empréstimos Pré-Comecialização). This interest gain is calculated as the difference between the monthly SELIC rate and the monthly pre-sale loan rate, multiplied by the estimated outstanding monthly pre-sale credit. The annual value is then aggregated over the period between January and December. [3, 6]
2. Based on limited output
C. Payments based on area planted/animal numbers
1. Based on unlimited area planted/animal numbers
2. Based on limited area planted/animal numbers
D. Payments based on historical entitlements
1. Based on historical plantings/animal numbers or production
2. Based on historical support programmes
E. Payments based on input use
1. Based on use of variable inputs
Interest gain from reduced interest rate on working capital loans (credito de custeio) provided through the National System of Rural Credit (SNCR)[2], including under the Programme for Strengthening of Family Agriculture (PRONAF)[3]. This interest gain is calculated as the difference between the monthly SELIC rate and the monthly working capital loan rate, multiplied by the estimated outstanding working capital credit for each month. The annual value is then aggregated for the period between January and December. [3]
Interest gain from reduced interest and “good payer” rebates on loans restructured under the Rural Debt Securitisation scheme. The interest gain is calculated as the difference between the monthly SELIC rate and the monthly preferential rate (3% p.a.) for repayment of the restructured loan, multiplied by estimated outstanding monthly debt. The annual value is then aggregated for the period between January and December. The value of “good payer” rebate is equal to 25% of the annual repayment of the principal debt covered by the Rural Debt Securitisation scheme. [5]
Gain from interest rate discount on loans restructured under the Financial Assets Rehabilitation Programme (PESA). This gain is calculated by multiplying the interest rate discount by the estimated outstanding annual PESA debt. The discount was set at 2% p.a. between 1999 and 2001, and 5% p.a. from 2002 onwards. [5]
Gain from interest rate discount and “good payer” rebates on restructured loans provided under the PRONAF, PROCERA[4], and PROGER[5] programmes (Federal Laws n°10.462 of 24 May 2002, n°10.696 of 2 July 2003, and n°10.823, of 19 December, 2003). [5]
Insurance subsidy under the government insurance programme PROAGRO. [4]
Insurance subsidy under the Family Farm Insurance programme (Seguro da Agricultural Familiar). [4]
Insurance subsidy under the Crop Guarantee programme (Garantia-Safra). [4]
Insurance subsidy under the Rural Insurance Premium programme (Subvenção ao Prêmio do Seguro Rural). [4]
Compensation of variable input costs to sugar cane growers in the North East region (in 1998-2001). [6]
Budgetary allocations for in-kind input grants to family agriculture (in 2004-05). [4]
Compensation of coffee storage costs (in 2004-05). [4]
2. Based on use of on-farm services
Budgetary allocations for rural extension services. [4]
3. Based on use of fixed inputs
Interest gain from reduced interest rate on investment loans (credito de investimento) provided through the National System of Rural Credit (SNCR) under the general investment credit lines. This interest gain is calculated as the difference between the annual SELIC rate and the weighted average annual interest rate on various investment credit lines, and multiplied by the total estimated outstanding investment credit in a given year. [3, 6]
Interest gain from reduced interest rate on investment loans (credito de investimento) provided through the National System of Rural Credit (SNCR) under PRONAF programme. The interest gain is calculated as the difference between the annual SELIC rate and the weighted average annual interest rate on various PRONAF investment credit lines, multiplied by the estimated outstanding PRONAF investment credit in a given year. [3,]
Interest gain from reduced interest rate on investment loans (credito de investimento) provided through the National System of Rural Credit (SNCR) under PROCERA programme (in effect until 1999). The interest gain is calculated as the difference between the annual SELIC rate and annual preferential interest rate on PROCERA investment credit, multiplied by estimated outstanding PROCERA investment credit in a given year. [4]
Interest gain from reduced interest rate on loans provided for land acquisition under the National Land Credit Programme (Programa Nacional de Crédito Fundiário). The interest gain is calculated as the difference between the annual SELIC rate and the annual interest rate set under the National Land Credit Programme, multiplied by the estimated outstanding credit in a given year. [4]
Interest gain from reduced interest rate on loans provided to Land Reform settlers for construction of basic infrastructure on settled lands (Concessão de Crédito-Instalação aos Assentados) from the Land Fund (Fundo da Terra). These loans are provided for both production (electricity networks, irrigation, cleaning, crop drying and storage, roads for transporting harvested crop, etc.) and community needs (construction of rural schools, health care points, local community centres, public telephone lines, etc); it is assumed that only 50% of total loan allocations under this facility are production-related and only this part is considered in the calculation of interest gain. The interest gain is calculated as the difference between the annual SELIC rate and the annual preferential interest rate on such credit, multiplied by the estimated outstanding credit in a given year. [4]
Interest gain from reduced interest rate on loans provided to family agriculture for production and community infrastructure and services (Apoio a Projetos Municipais de Infra-Estrutura e Serviços em Agricultura Familiar). These loans are provided for both agricultural production and community development (e.g. housing construction); it is assumed that only 50% of total loan allocations under this facility are production-related and only this part is considered in the calculation of interest gain. The interest gain is calculated as the difference between the annual SELIC rate and the annual preferential interest rate on such credit, multiplied by the estimated outstanding credit in a given year. [4]
F. Payments based on input constraints
G. Payments based on overall farming income
H. Miscellaneous payments
III.2 Percentage PSE [100*(III.1)/((I)+(B)+(C)+(D)+(E)+(F)+(G)+(H))]
III.3 Producer NPC For all agricultural commodities the Producer NPC is estimated as a weighted average of the producer NPC calculated for the individual MPS commodities and shown in Tables 4. For each commodity Producer NPC = [domestic price received by producers (at the farm gate) + unit payments based on output] / reference price at the farm gate.
III.4 Producer NAC [1+(III.2)/(100-(III.2))]
IV. General Services Support Estimate (GSSE): total budgetary expenditure to support general services provided to agriculture [Sum (I to O)].
I. Research and development
Budgetary allocations for agricultural research, including general research, environmental projects and commodity-specific research. [4, 6]
J. Agricultural schools (including academies, institutes)
Budgetary allocations for agricultural education and extension services. [4, 6]
K. Inspection services
Budgetary allocations for control and prevention of crop and animal diseases, animal product safety, sanitary control and education, and related miscellaneous activities. [4, 6]
L. Infrastructure
Budgetary allocations for construction and maintenance of rural electricity networks, water supply and road networks, irrigation, dams and drainage systems, development of port facilities and storage systems, and miscellaneous infrastructure works. [4, 6]
Implementation of the agrarian reform – public funds allocated to the National Institute of Colonisation and Agrarian Reform (INCRA)[6] for acquisition of lands for agrarian reform; development of basic infrastructure on lands involved in agrarian reform; maintenance of rural cadastre; land demarcation and titling; information system for the agrarian reform; juridical support; and related miscellaneous activities. [4, 6]
M. Marketing and promotion
Budgetary allocations for promotion of Brazilian agro-food products, organisation of fairs and exhibitions, information campaigns, and related miscellaneous activities. [4, 6]
N. Public stockholding
Budgetary allocations to the National Food Supply Company (CONAB) to cover the cost of depreciation and disposal of public stock of agricultural products purchased under the Federal Government Purchase Programme (Aquisição do Governo Federal). [4, 6]
O. Miscellaneous
GSSE as a share of TSE
V.1 Consumer Support Estimate (CSE): associated with agricultural production, i.e. for the quantities of commodities domestically produced, excluding the quantities used on-farm as feed – excess feed costs [(P) + (Q) + (R) + (S); when negative, the amounts represent an implicit tax on consumer].
P. Transfers to producers from consumers: associated with market price support on all domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(P.1) / (I.1) x 100].
Q. Other transfers from consumers: transfers to the budget associated with market price support on the quantities imported of domestically produced commodities, estimated by increasing the transfers calculated for the MPS commodities according to their share in the total value of production [(Q.1) / (I.1) x 100].
R. Transfers to consumers from taxpayers
Premiums to commercial buyers of agricultural products participating in the PEP programme[7]. Under the PEP, the government offers commercial buyers of agricultural commodities – processors or other downstream agents – a premium, which covers the difference between the minimum guaranteed price and the price the buyer is willing to pay. Participants in the programme are those buyers who bid for the lowest premium at regional auctions. Receipt of the premium is contingent on paying agricultural producers the minimum guaranteed price. [4]
Risk premium (Prêmio de Risco Subvencionado) to commercial buyers of agricultural products participating in the Private Options Programme (PROP). [8] This instrument is analogous to the Government Sell Option[9], but in this case it is the private agent who acts as a product buyer. Under the PROP, the government pays private agents a “risk premium” if the market price falls below the option execution price.
S. Excess Feed Cost: associated with market price support on quantities domestically produced and used on-farm as feed as calculated in Tables 2. [8]
V.2 Percentage CSE: (V.1)/[(II)-(R)]
V.3 Consumer NPC: For all agricultural commodities the Consumer NPC is estimated as a weighted average of the consumer NPC calculated for the individual MPS commodities and shown in Tables 2. For each commodity Consumer NPC = domestic price paid by consumers (at the farm gate)/ border price (also at the farm gate).
V.4 Consumer NAC: (V.2) / [1 - (V.2)]
VI. Total Support Estimate: [(T)+(U)+(V)] or [(III.1)+(IV)+(R)]
T. Transfers from consumers: -[(P)+(Q)]
U. Transfers from taxpayers: [(III.1)+(P)+(IV)+(R)]
V. Budget revenues: [(Q)]