The Impact of Rural Credit on Agriculture and Land Use

This report by the Climate Policy Initiative analyzes the impact of rural credit on agricultural production and land use across Brazilian biomes from 2002 to 2018. It finds that increased credit supply generally boosts agricultural production and productivity while reducing deforestation pressures, particularly in the Amazon and Cerrado, by shifting land use from pasture to crops.

• In the Amazon biome, increased rural credit leads to an expansion of crop area and a reduction in pasture area, which results in a net reduction of total agricultural area and a corresponding increase in preserved native forest. While agricultural production increases, crop productivity decreases, potentially because expansion occurs on lands with inferior technology or suitability. Conversely, cattle productivity increases despite the reduction in pasture area.
• In the Cerrado biome, rural credit has a similar effect to the Amazon by expanding crop areas at the expense of pastures, thereby reducing deforestation pressure on native vegetation. While crop production increases, crop productivity remains stable, suggesting the region already utilizes highly productive techniques. Cattle productivity shows a relevant increase in response to more credit.
• The impact of rural credit varies across other Brazilian biomes: in the Mata Atlântica, it leads to reduced crop area and increased planted forests with gains in crop and cattle productivity; in the Pampas, it expands crop area, production, and productivity without significantly affecting cattle; and in the Caatinga, it reduces pasture area while increasing both crop and cattle productivity.
• Rural credit has a significantly larger positive impact on grain production than on other crops. A 1% increase in municipal credit supply is associated with a 0.28% increase in the production value of grains and a 0.38% increase in land productivity for grains. In contrast, other crops show no significant production increase and a reduction in land productivity, possibly due to competition for resources with the grain sector.
• Rural credit is a critical component of Brazilian agribusiness, with government plans annually establishing credit amounts that represent nearly 30% of the country's total agricultural production value. For the 2019/20 agricultural year, the government earmarked R$ 223 billion for rural credit, of which R$ 191 billion was borrowed.

APA

Souza, P., Mourão, J., & Assunção, J. (2021). The Impact of Rural Credit on Agriculture and Land Use. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/01/DQ-The-Impact-of-Rural-Credit-on-Agriculture-and-Land-Use.pdf

Chicago

Souza, Priscila, João Mourão, and Juliano Assunção. The Impact of Rural Credit on Agriculture and Land Use. Climate Policy Initiative, 2021. https://www.climatepolicyinitiative.org/wp-content/uploads/2021/01/DQ-The-Impact-of-Rural-Credit-on-Agriculture-and-Land-Use.pdf.

Wikipedia

{{cite report |last1=Souza |first1=Priscila |last2=Mourão |first2=João |last3=Assunção |first3=Juliano |title=The Impact of Rural Credit on Agriculture and Land Use |publisher=Climate Policy Initiative |date=January 2021 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2021/01/DQ-The-Impact-of-Rural-Credit-on-Agriculture-and-Land-Use.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{souza2021impact, author = {Souza, Priscila and Mourão, João and Assunção, Juliano}, title = {{The Impact of Rural Credit on Agriculture and Land Use}}, institution = {Climate Policy Initiative}, year = {2021}, month = jan, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2021/01/DQ-The-Impact-of-Rural-Credit-on-Agriculture-and-Land-Use.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }