The global credit crunch is slowing Brazil's roaring agricultural sector -- at a time when more food, not less, is needed around the world. A steep drop in global crop prices and rising costs of farm supplies, combined with tighter credit, are causing the slowdown in one of the world's fastest-growing breadbaskets reports The Wall St Journal. Many Brazilian farmers had hoped a booming grain market would help them dig out of debt and become more competitive with American farmers, long the global leaders in farm productivity. But now, strapped for cash, Brazilians are reducing the size of their crops and even forgoing debt payments. In the past several years, amid surging global demand for grain, farmers plowed up land at a feverish pace to plant soybeans, and roads were carved into the countryside to move the goods. Climbing grain prices through the first half of 2008 accelerated the growth. Now, growers are finding it harder to get loans sufficient to cover the rising costs of fertilizer, pesticides and seed. Unlike in the U.S., where farmers depend on loans from private banks and the government, Brazilian farmers get as much as 40% of their financing from agriculture companies. That could drop to as low as 25% this year,as the volatile commodities market and the global financial crisis have increased the risk and expense ,and big grain companies are reining in lending.
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