Determinants of Rural Credit Access in Brazil

Rural credit plays an important role in the agriculture development of a country. For Brazil, in particular, studies indicate that rural credit policies have fostered the growth of agricultural production and provided access to modern technologies to both family and non-family farmers. In this context, this article aims to analyze the main determinants of farmers' access to rural credit in Brazil, considering the years 2006 and 2017, and looking for differences between family and non-family farmers. To reach that goal, logit models were estimated, using municipality data. The article considers demographic characteristics of the farmers (such as formal education, age, and gender), their location across Brazilian regions, the type of crop or livestock they managed, agricultural technologies used, and the distance from their farms to the state capital. Our findings show that the Southern Region is favored in borrowing rural credit, reinforcing the concentrated and unequal nature of rural credit policy in Brazil. Additionally, for both family and non-family farmers, the results indicated that the coefficients associated with the intensity of soybean and coffee plantation in a municipality were the main determinants in increasing the probability that farms belonging to that municipality would access credit. Looking on livestock production, the coefficient related to pig farming showed the highest marginal effect in both years analyzed, when considering the categories of producers (family or non-family), compared to poultry and cattle farming. The effects of distance on the probability of access to rural credit differ from those found in other studies, as our results show that the greater the distance from the municipality to its state capital, the higher the probability that establishments in that municipality will access rural credit. The study's conclusions have important implications for the formulation of agricultural credit policy in Brazil. If the goal is to ensure a more equitable distribution of rural credit across Brazilian regions, it is suggested that some regions (particularly the North Region excluding the Matopiba) would specialize in the production of certain crops, especially soybeans and coffee, or would these regions be supported with other agricultural policies, such as the Minimum Price Guarantees Policy for Socio-biodiversity Products (PGPM-BIO) and more specific agricultural research dealing with its peculiar climate and natural vegetation.