Agricultural Credit Policy in Brazil: Objectives and Results

Abstract

A number of developing countries have stressed credit policies to achieve agricultural goals. It is frequently difficult, however, to evaluate their effect because the amount of funds involved has been small or their impact has been masked by other development policies. The Brazilian case is revealing because huge amounts of credit have been channeled to agriculture, and credit policy stands out as a key component of agricultural policy. Thus, the Brazilian experience provides insights into what countries might expect if and when they assign credit policies such an important role. Furthermore, commercial banks have been used almost exclusively to supply the credit rather than creating new specialized agricultural credit institutions. Thus, the Brazilian case provides some evidence into how an existing banking system can be used to service agricultural credit needs in a developing country. This paper analyzes Brazilian policy objectives and the impact of credit on agriculture.