CNA proposes subsidy plan to encourage corn production

The Secretary of Agriculture, Tereza Cristina, is closely observing increased corn prices in the foreign and domestic markets. Despite the recent correction that occurred on the Chicago stock exchange, the fall has not yet reached Brazil, and pressure on the margins of the poultry and pork industry – and on meat inflation – remains. The Secretary has already announced an increase in the costing credit limit for the corn producer for the next summer harvest (2021/22). Still, she wants to implement other measures to encourage advanced planting.

In this context, the Ministry of Agriculture and Food Supplies (CNA) proposed to create a federal subsidy program, along the lines of rural insurance, for contracting corn put options on the futures market, providing price risk coverage to producers to cover costs and provide a margin compatible with that of soybeans, which are currently more attractive. With R$ 350 million in subsidies, it would be possible to double corn production in the South, estimates the entity.

With this instrument, the producer could look for a grain broker and buy options for the future sale of corn at a certain price. The government would subsidize part of the premium, determined daily by B3, for contracting these options. On the expiration date, if the price is below the fixed price, the farmer exercises the right to sell at the higher price. If it is below, he can choose to trade on the physical market. The legal provision for the measure was included in Agro Act 13,986, which was initially used for coffee.

Source: Valor Econômico

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https://valor.globo.com/agronegocios/noticia/2021/05/26/cna-prope-plano-de-subsdios-para-incentivar-produo-de-milho.ghtml

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