Project document

PART IV. OTHER ANNEXES

ANNEX V.1 SOURCES OF CREDIT AND FUNDING

1. 
   During the PPG phase a study was commissioned to identify the main stakeholders, their mandates and responsibilities in the project, potential problems and forms of mitigation regarding supply and access to financial resources of various kinds for rural producers in the Alto Sertão of Sergipe. The report listed the various credit lines that are in theory available. The sources of information were various departments at the Ministry of Environment in Brasília and federal and state agencies and institutions in Sergipe, including SEMARH, FUNERH, FUNDEMA, Waters of Sergipe Program, Bank of Brazil, SEDETEC, EMDAGRO, BNB, MST, CFAC, INCRA, BANESE and FIDA.
   

2. 
   In Sergipe, there are 100.606 rural establishments; 95% of them are properties less than 100ha, featuring Family Agriculture/Family Farmers. This is the credit borrower profile of Sergipe ASD. In general, 64% of the family farmers have annual gross family income up to R$ 10,000.00 (~U$ 4,800.00) (IBGE, 2006), fitting in B line of PRONAF credit.
   

3. 
   Generally, Family Farmers have low technical level in sustainable procedures in Brazil. Performance and viability of rural sustainable development with innovation depend on a number of factors and agents needed to form a balanced scenario through the agro-industrial chain, demanding a systemic approach. Moreover, the rural exodus of youth should be mentioned as a challenge to guarantee the innovation and continuity of development processes.
   

4. 
   The main source of credit for small farmers in Brazil is the National Program to Strengthen Family Farming (PRONAF), created in 1996. The program is coordinated by the Ministry of Agrarian Development (MDA) and executed by the Bank of Brazil (BB), the Bank of the Northeast (BNB), the Amazon Bank (BASA) and the Federal Savings Bank (CEF). The interest rates are the lowest in Brazil, ranging from 0.5% for PRONAF Women to a maximum of 4.0%.
   

5. 
   There is also support from PRONAF for non-agricultural rural activities such as rural tourism, handicrafts, agroecology and forestry. Loans from the Constitutional Fund for Financing of the Northeast (FNE) for low-income groups (A, A/C and B) of PRONAF Youth, PRONAF Semiarid and PRONAF Forest only require personal and/or collective group guarantees, without collateral
   

6. 
   In 2012, Sergipe State received about R$ 120M (~U$ 55M) on 41153 contracts of PRONAF credit lines (table 1). The 07 SAS municipalities are responsible for U$ 18M of this amount (table 2). Despite SAS represent about 1/3 of Sergipe incomes of PRONAF, there are limited/none contracts that consider SLM approach and best practices.