Brazil Increases Funding for CONAB and EMBRAPA in 2025 Budget Proposal

In Brazil’s 2025 budget proposal, CONAB will receive R$300 million and EMBRAPA will gain R$148 million to enhance food security and agricultural research. However, these amounts do not fully meet original funding requests. The Ministry of Planning’s proposed adjustments still lack provisions for boosting rural credit subsidies and insurance, despite concerns about their sufficiency. The outcomes of the Joint Budget Committee’s deliberations are crucial for finalizing these proposals.

Brazil’s Companhia Nacional de Abastecimento (CONAB) is slated to receive an extra R$300 million in the 2025 budget aimed at bolstering regulatory grain reserves, an essential governmental strategy to alleviate food inflation. Concurrently, the Empresa Brasileira de Pesquisa Agropecuária (EMBRAPA) will enjoy an increase of R$148 million dedicated to advancing research projects. However, these allocations do not meet the full requests submitted by the state-run entities.

The Ministry of Planning and Budget has presented the budget proposals to the Joint Budget Committee (CMO) of the National Congress, seeking to amend the 2025 Annual Budget Bill (PLOA) to incorporate the new fund allocations. A vote on these proposals is anticipated for next week, with the possibility of further revisions prior to final approval.

There remains a notable absence of increased funding directed towards subsidizing interest rates on rural credit. Officials within the economic team and the Ministry of Agriculture have expressed concerns that the initial budget of R$14 billion, supplemented by an additional R$4.1 billion through emergency credit in February, may prove inadequate for the 2025/26 Crop Plan.

Moreover, no enhancements have been made for rural insurance, with the premium subsidy program (PSR) maintaining a budget of R$1.06 billion for 2025. Notably, a portion of this budget is already allocated to cover existing policies contracted in 2024 that were affected by last-minute budget reductions, impacting around 10,000 contracts with R$67 million in subsidies involved.

In correspondence with the CMO, Planning Minister Simone Tebet noted that the budget adjustments represented “reallocations requested by the relevant agencies due to shifting priorities or new needs.” This document details the proposed areas of budget increases and the corresponding reductions compared to the original proposal.

The Ministry of Agriculture will experience a R$300 million decrease from its initial allocation of R$527.8 million, earmarked for economic subsidies intended to stabilize agricultural product prices. This amount will be redirected to support CONAB. The government assesses that the entire allocation for price support in 2025 is unnecessary, given the upward trajectory of commodity prices.

Following President Lula’s commitment to enhance food reserves, funding will now be allocated to CONAB. Yet, CONAB President Edegar Pretto previously indicated a request for an additional R$350 million, as reported to Valor on Monday.

The initial 2025 PLOA designated R$189.9 million for stockpiling under the Federal Government Procurement (AGF) program, enabling CONAB to purchase crops only when market prices dip below official minimum thresholds. With the increased funding, CONAB anticipates the ability to procure up to 445,000 tonnes of grains, compared to nearly 230,000 tonnes without the additional funds.

Furthermore, the Planning Ministry proposed the cancellation of R$68 million from the initial AGF subsidy allocation of the Agriculture Ministry, decreasing it from R$234.1 million to R$166.1 million.

In addition to CONAB’s funding, EMBRAPA will see a budget augmentation for research, development, and technology transfer. The Ministry proposed an increase from the initial budget of R$137.4 million to R$285.4 million, although this remains significantly less than the R$500 million request made by EMBRAPA to the federal government.

In its statement to Valor, EMBRAPA asserted the necessity for a minimum of R$320 million to sustain continuing projects, approve new research proposals, and maintain its facilities. Moreover, an additional R$20 million has been requested for the maintenance and modernization of EMBRAPA’s physical infrastructure, cumulatively bringing this budget to R$200.6 million.

Lastly, another proposed budget increase includes R$400 million for the Ministry of Social Development and Assistance (MDS) to facilitate the procurement and distribution of food from small farmers via programs like the Food Acquisition Program (PAA). This initiative will elevate the total food procurement budget to R$1.1 billion, with R$900 million to be managed by CONAB and R$283.6 million by municipalities in collaboration with the MDS.

In summary, Brazil’s 2025 budget aims to strengthen food security through increased funding for key agencies such as CONAB and EMBRAPA, despite some allocations falling short of requests. The proposed funding increases reflect a governmental strategy to address food inflation and support agricultural research, although concerns persist regarding rural credit and insurance affordability. The next stages of review and voting in Congress will be critical for finalizing these budgetary adjustments, ensuring adequate resources for Brazil’s agricultural sectors.

Original Source: valorinternational.globo.com