Brazil-Farm loan problems.

BRAZIL.

FARM LOANS.

Farmers in Brazil, are experiencing problems obtaining finance, for the purchase of additional cattle and paying the rising costs of their expenses.

The farmers have experienced large amounts of debt in recent years, while the rural sector has expanded at an extraordinary rate.

The costs of producing corn, soy and cotton, are expected to increase 42% in 2009, according to industry analysis.

Farmers have been placed in a position where they have to forgo debt re-payments, in order to free up cash for day to day running of their farm properties.

There has been rumors of the re-possessing of tractors and combines, on some large farms.

Michael Cordonnier of the Corn and Soybean Advisory, a consulting firm from Chicago, said "Now many farmers are rationing fertilizer and other supplies, which could translate into lower yields for next year".

Many Brazilian farmers, had hoped a booming grain market as experienced in May, June and July would dig them out of debt.

The slowdown on the farm belt, could slow down the whole economy of Brazil, unless drastic action is instituted by the government.

Many farmers rely on the multi national grain companies for finance, then repay at the time of harvesting.

ADM’s ability to provide credit to farmers in Brazil has not been affected by the credit markets. In fact, this season they have extended farmers more credit than ever before. Each farmer applying for credit is analyzed and, according to company credit policies, granted credit or not."

This is leaving less cash for the Brazilian rural sector.

Bunge has cut their cash advances by 70%, on the normal amounts issued. Stuart Lindsay of Bunge said, "basically we are being a little more selective, so as to better manage our global capital".

The government is to hold meetings with farm leaders and bankers next week.