Sao Paulo — According to Reuters, agricultural machine manufacturers are working with banks in Brazil to avoid a repeat of slumping sales when public financing is expected to run out next year, said the head of John Deere Brazil.
The Brazilian government’s moves to reduce its role in the sector disrupted one of the world’s largest markets for agriculture machinery earlier this year. A government-sponsored financing package for farmers ran out earlier than expected in 2019, leaving a gap of credit in the sector that hit the sales of tractors, combines and other equipment.
“The money had run out, and we had 90-120 days with very low sales activity,” said Paulo Herrmann, president John Deere Brazil.
Herrmann said he expects credit from the so-called Crop Plan, a government annual policy that extends subsidized financing lines, will end around March of next year, a couple of months before a new package becomes available.
“But this time the government already said that there will be no more money, so the companies in the sector are working on alternatives along with banks,” he said.
The Deere executive said he agrees with the government move, despite the problems seen this year and possible difficulties in coming months when Crop Plan money runs out.
He said economists see a stable environment for inflation in Brazil, with a possible new reduction in the benchmark SELIC (Special Clearance and Escrow Service) short term interest rate potentially easing the transition to more private financing for agricultural equipment.