Rural Credit Policy in Brazil: Agriculture, Environmental Protection and Economic Development

This report by the Climate Policy Initiative/Pontifical Catholic University of Rio de Janeiro (CPI/PUC-Rio) analyzes the role of rural credit policy in Brazil as a tool for increasing agricultural productivity while reducing deforestation. It argues that improving the efficiency and sustainability alignment of rural credit can allow Brazil to expand food production without further area expansion, leveraging existing cleared lands.

• Brazil has the potential to significantly increase agricultural output without further deforestation by utilizing already cleared lands, specifically by converting pasture to cropland and increasing productivity. Research indicates that crop production could increase by 79-105% and beef production by 27% without deforestation, and total production could nearly double.
• Rural credit serves as a primary agricultural policy in Brazil and is shown to increase both labor and land productivity. This intensification leads to an expansion of crop areas and a decrease in pasture areas, which reduces pressures on deforestation. These positive impacts on land use and productivity are most pronounced when credit is directed toward small farmers.
• The Brazilian rural credit system is characterized by fragmentation and complexity, which creates inefficiencies and distortions. For the 2020/21 agricultural year, the system comprised 16 funding sources and 12 programs, each with different terms. This complexity, combined with uneven distribution of financial institutions and rules based on farm size, location, and revenue, hinders producer decision-making.
• Brazil has implemented several mechanisms to align rural credit with environmental protection. Resolution 3,545 of the National Monetary Council (CMN) in 2008, which tied credit in the Amazon biome to environmental compliance and property titles, is estimated to have reduced deforestation by 15% between 2008 and 2011. More recent measures include the ABC Plan and the 2020/21 Agricultural Plan (Plano Safra), which offers up to a 10% increase in working capital credit limits for producers with a validated Rural Environmental Registry (CAR).
• The Central Bank of Brazil is advancing a sustainability agenda through its 'Agenda BC#', which includes the creation of a 'Green Bureau' to track farmers' sustainable practices. The bank has also indicated the possibility of increasing contracting limits for rural credit operations that meet sustainability criteria by up to 20%.

APA

Climate Policy Initiative (2020). Rural Credit Policy in Brazil: Agriculture, Environmental Protection and Economic Development. https://www.climatepolicyinitiative.org/publication/rural-credit-policy-in-brazil-agriculture-environmental-protection-and-economic-development/

Chicago

Climate Policy Initiative. Rural Credit Policy in Brazil: Agriculture, Environmental Protection and Economic Development. 2020. https://www.climatepolicyinitiative.org/publication/rural-credit-policy-in-brazil-agriculture-environmental-protection-and-economic-development/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Rural Credit Policy in Brazil: Agriculture, Environmental Protection and Economic Development |date=7 December 2020 |url=https://www.climatepolicyinitiative.org/publication/rural-credit-policy-in-brazil-agriculture-environmental-protection-and-economic-development/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2020rural, author = {{Climate Policy Initiative}}, title = {{Rural Credit Policy in Brazil: Agriculture, Environmental Protection and Economic Development}}, institution = {Climate Policy Initiative}, year = {2020}, month = dec, url = {https://www.climatepolicyinitiative.org/publication/rural-credit-policy-in-brazil-agriculture-environmental-protection-and-economic-development/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }