The ministry’s main challenge in negotiations with the Ministry of Finance is to secure the budget required to equalize interest rates over the long term. The Treasury’s spending on credit subsidies has risen significantly with the surge in the Selic benchmark rate, which jumped from 10.5% in July 2024 to 14.75%. That rate could change again following the Central Bank’s Monetary Policy Committee (COPOM) meeting scheduled for tomorrow, potentially increasing rural credit subsidy costs further.

“Our main goal is to maintain all the interest rates we’ve managed to achieve, especially for food production,” MDA Executive Secretary Fernanda Machiaveli told Valor. Current interest rates under the Family Farming Plan range from 0.5% to 6% per year, with lower rates for small machinery purchases (2.5%), agroecological activities (2%), and staple food production, including rice, beans, cassava, and milk (3%).

Increased mandatory allocation of funds raised from cash deposits by banks—from 30% to 31.5%—and a higher share of those funds directed to family farming—from 30% to 35%—will help secure more low-interest resources without increasing government spending on subsidies, said José Henrique da Silva, director of Financing, Protection and Support for Family Productive Inclusion at the ministry.

“We save public funds when requirements are higher. This was our initiative to ensure more money for family farming at a lower cost,” Mr. Silva said.

“The challenge is to ensure that food production continues to grow with support from federal financing. We already have enough resources to provide interest rate equalization, and the government has chosen to ensure that food is financed at special rates,” Ms. Machiaveli added.

While the ministry has not disclosed funding figures for the new plan, it expects to surpass the R$76 billion made available under the current 2024/25 cycle, which ends June 30. As of May, R$60.2 billion had been disbursed to family farmers—an increase of 5.5% over the same period in the 2023/24 cycle and nearly 21% more than the equivalent 11-month stretch in 2022/23. The executive secretary called the outcome a “success.”

In some financial institutions, subsidized Pronaf credit for production costs has already run out, indicating strong demand, Mr. Silva said. Despite this, the full amount initially offered is unlikely to be disbursed due to reallocation and adjustments during the cycle. “We expect the final total to reach R$65 billion by the end of June,” he added.

For the new Family Farming Plan, expected to be launched in the final week of June, the ministry plans to spotlight the sector’s role in addressing climate emergencies, especially as Brazil prepares to host COP30 this year. The initiative will include new credit lines, improved access to climate-related programs through revised rules on limits, interest rates, and eligibility, and incentives for transitioning to agroecological models.

The ministry wants to demonstrate that, although family farming is among the sectors most vulnerable to extreme weather events, it can be part of the solution due to its diversified production, natural resource preservation, and move away from chemical inputs. While farmers in Brazil’s semi-arid northeast have long adapted to drought conditions, other regions are also in need of climate-related support, Ms. Machiaveli noted.

The goal is to create “a Safra Plan that views family farming not only as a solution to hunger and a producer of healthy food, but also as a key to tackling the climate emergency through a more sustainable production model that can now be financed,” Ms. Machiaveli said.

On launch day, the ministry expects to sign several decrees signaling its climate commitments. One will establish the long-discussed National Program for the Reduction of Pesticides (Pronara), which still faces internal resistance within the federal government.