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BNDES Prorenova provides supports of R$ 4 billion for renovation and implementation of sugarcane farms

01/11/2012

•The new program will carry out indirect operations and will be open until December this year

The Brazilian Development Bank (BNDES) has created a new program to encourage the production of sugarcane by financing the renovation of old sugarcane farms and the expansion of the cultivated area.

The BNDES Prorenova has a budget of R$ 4 billion, and its launch encourages the renewal and expansion of sugarcane farms, key to increasing Brazilian sugarcane productivity and, thus, reducing the industrial idleness of sugar and ethanol production.

The program is open until December 31 this year, and it is hoped that resources will be able to finance the renovation and/or expansion of more than one million hectares of sugarcane.

With the increased availability of raw materials, the expectation is that the production of ethanol will increase between 2 and 4 billion liters from 2013 until 2014, representing growth of over 10% in relation to the current crop.

The BNDES Prorenova operations will be indirect, i.e., carried out through financial agents. For medium-large and large businesses (those with gross operating revenues equal to or above R$ 90 million), the interest rate is made up of the long-term interest rate (TJLP) plus 1.3% for the BNDES’ basic spread. There is also the financial intermediation rate of 0.5% and remuneration to the transfer agent, negotiated between them and the beneficiary.

The program has the BNDES’ maximum participation, up to 80%, in eligible items. The total term is limited to 72 months, including the grace period of up to 18 months.

MSMEs – For micro, small, and medium-sized enterprises (MSMEs), support is already available through the BNDES Automatic (operations under R$ 20 million), with even better terms. Today, the Bank’s basic spread in relation to the BNDES Automatic operations with MSMEs is a mere 0.9%. In such cases, the maximum participation of the BNDES can reach up to 90% in eligible items.

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