{"id":94846,"date":"2025-07-11T13:45:08","date_gmt":"2025-07-11T16:45:08","guid":{"rendered":"https:\/\/murray.adv.br\/?p=94846"},"modified":"2025-07-11T13:52:14","modified_gmt":"2025-07-11T16:52:14","slug":"agricultural-bonds-to-remain-top-rural-credit-source-despite-new-tax","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/agricultural-bonds-to-remain-top-rural-credit-source-despite-new-tax\/","title":{"rendered":"Agricultural bonds to remain top rural credit source despite new tax"},"content":{"rendered":"<section class=\"content--header\">\n<div class=\"row content-head non-featured \">\n<div class=\"medium-centered subtitle\">\n<h6 class=\"content-head__subtitle\" style=\"text-align: center\"><strong><em>Bonds known as LCA expected to exceed R$700bn by 2026 under Crop Plan<\/em><\/strong><\/h6>\n<\/div>\n<\/div>\n<div class=\"content__signa-share\">\n<div class=\"content__signature\">\n<div class=\"content-publication-data\">\n<div class=\"content-publication-data__text\">\n<div class=\"content-publication-data__from\"><\/div>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<p class=\"content-publication-data__updated\">07\/11\/2025<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"content__share-bar-container\">\n<div class=\"content__share-bar\"><\/div>\n<\/div>\n<\/div>\n<\/section>\n<div id=\"mc-article-body\" class=\"mc-article-body \">\n<article>\n<div class=\"no-paywall\">\n<div class=\"mc-column content-text active-extra-styles active-capital-letter\" data-block-type=\"unstyled\" data-block-weight=\"66\" data-block-id=\"1\">\n<p class=\" content-text__container theme-color-primary-first-letter\" data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">Agribusiness Credit Bnds (LCAs) are set to remain the leading funding instrument for Brazil\u2019s rural credit programs in the 2025\/26 season, even with a proposed income tax on their returns. According to government projections, the outstanding volume of LCAs is expected to reach R$728 billion by May 2026, up from the current R$651 billion. Of this total, about 60% is earmarked for financing the agricultural sector.<\/p>\n<\/div>\n<div class=\"wall protected-content\">\n<div class=\"mc-column content-text active-extra-styles \" data-block-type=\"unstyled\" data-block-weight=\"32\" data-block-id=\"2\">\n<p class=\" content-text__container \" data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">The 2025\/26 Crop Plan outlines R$594.4 billion in total rural credit, with LCAs accounting for R$328 billion, or 55% of the funding. In the 2024\/25 cycle, they represented 43% of the total.<\/p>\n<\/div>\n<div class=\"mc-column content-text active-extra-styles \" data-block-type=\"unstyled\" data-block-weight=\"67\" data-block-id=\"3\">\n<p class=\" content-text__container \" data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">Currently, income earned from LCAs is exempt from taxation. However, the Ministry of Finance has proposed a 5% tax on earnings, included in Provisional Presidential Decree 1,303\/2025, which still requires Congressional approval. If passed, the new rule would take effect in 2026. Despite the tax, Gilson Bittencourt, deputy secretary for agricultural policy and agro-environmental business at the Ministry of Finance, believes LCAs will remain attractive to investors.<\/p>\n<\/div>\n<div class=\"mc-column content-text active-extra-styles \" data-block-type=\"unstyled\" data-block-weight=\"30\" data-block-id=\"4\">\n<p class=\" content-text__container \" data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">\u201cThe Finance Ministry\u2019s proposal to impose a 5% tax maintains LCAs\u2019 advantage over other fixed-income instruments while also helping to fund interest rate subsidies in rural credit,\u201d said Mr. Bittencourt.<\/p>\n<\/div>\n<div class=\"mc-column content-text active-extra-styles \" data-block-type=\"unstyled\" data-block-weight=\"83\" data-block-id=\"5\">\n<p class=\" content-text__container \" data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">He noted that high interest rates, particularly the current Selic level near 15% per year, made it unfeasible to keep loan interest rates unchanged in the new Crop Plan. \u201cWe wanted to avoid raising rates, but the numbers had to add up,\u201d Mr. Bittencourt said during a media briefing after the plan\u2019s release earlier this month. \u201cIn agriculture, the lower the rate, the better. But worse than a slightly higher rate is having no funds at all. That was the government\u2019s main concern.\u201d<\/p>\n<\/div>\n<div class=\"mc-column content-text active-extra-styles \" data-block-type=\"unstyled\" data-block-weight=\"39\" data-block-id=\"6\">\n<p class=\" content-text__container \" data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">Mr. Bittencourt also acknowledged that a drop in the Selic rate could reduce demand for LCAs, which are currently among the most profitable investment options. Nonetheless, investor familiarity with LCAs may help sustain demand even in a lower-rate environment.<\/p>\n<\/div>\n<div class=\"mc-column content-text active-extra-styles \" data-block-type=\"unstyled\" data-block-weight=\"84\" data-block-id=\"7\">\n<p class=\" content-text__container \" data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">Looking ahead, Mr. Bittencourt said the \u201cideal scenario\u201d for agricultural policy would be a Selic rate of 8.5%\u2014a projection that was common among economists and the government earlier in 2024. In such a scenario, LCAs could be issued at 90% of the benchmark rate plus a spread of up to 3%, resulting in single-digit loan interest rates for market-based credit lines. This would also increase the incentive for banks to use their own funds in rural lending, further easing the fiscal burden of subsidies.<\/p>\n<\/div>\n<div class=\"mc-column content-text active-extra-styles \" data-block-type=\"unstyled\" data-block-weight=\"43\" data-block-id=\"8\">\n<p class=\" content-text__container \" data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">However, Ivan Wedekin, a consultant and former secretary of agricultural policy at the Ministry of Agriculture, warned that taxing LCAs could hurt their competitiveness relative to other instruments, such as bank-issued CDBs, which are already taxed. He also voiced concerns about market confidence.<\/p>\n<\/div>\n<div class=\"mc-column content-text active-extra-styles \" data-block-type=\"unstyled\" data-block-weight=\"38\" data-block-id=\"9\">\n<p class=\" content-text__container \" data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">\u201cTaxing one type of instrument sets a precedent. There\u2019s now a risk that the government could raise the tax from 5% to 10% or even revoke exemptions altogether. That creates uncertainty across the market,\u201d Mr. Wedekin told Valor.<\/p>\n<\/div>\n<div data-track-category=\"multicontent\" data-track-action=\"ultimo chunk conteudo\" data-track-noninteraction=\"false\" data-track-scroll=\"view\">\n<div class=\"mc-column content-text active-extra-styles \" data-block-type=\"unstyled\" data-block-weight=\"22\" data-block-id=\"11\">\n<p class=\" content-text__container \" data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">The Agricultural Parliamentary Front (FPA) has also criticized the proposed taxation, echoing concerns that it could undermine trust in rural credit mechanisms.<\/p>\n<p data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">*By\u00a0Rafael Walendorff, Globo Rural\u00a0\u2014 Bras\u00edlia<\/p>\n<p data-track-category=\"Link no Texto\" data-track-links=\"\" data-mrf-recirculation=\"Article links\">Source: Valor International<\/p>\n<p>https:\/\/valorinternational.globo.com\/<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Bonds known as LCA expected to exceed R$700bn by 2026 under Crop Plan &nbsp; &nbsp; 07\/11\/2025 Agribusiness Credit Bnds (LCAs) are set to remain the leading funding instrument for Brazil\u2019s rural credit programs in the 2025\/26 season, even with a proposed income tax on their returns. According to government projections, the outstanding volume of LCAs [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[26234,11839],"class_list":["post-94846","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-agricultural-bonds","tag-rural-credit"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Agricultural bonds to remain top rural credit source despite new tax - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/agricultural-bonds-to-remain-top-rural-credit-source-despite-new-tax\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Agricultural bonds to remain top rural credit source despite new tax - Murray Advogados\" \/>\n<meta property=\"og:description\" content=\"Bonds known as LCA expected to exceed R$700bn by 2026 under Crop Plan &nbsp; &nbsp; 07\/11\/2025 Agribusiness Credit Bnds (LCAs) are set to remain the leading funding instrument for Brazil\u2019s rural credit programs in the 2025\/26 season, even with a proposed income tax on their returns. 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&nbsp; 07\/11\/2025 Agribusiness Credit Bnds (LCAs) are set to remain the leading funding instrument for Brazil\u2019s rural credit programs in the 2025\/26 season, even with a proposed income tax on their returns. 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