South America Calling

Brazil's Impeachment Brings Maggi to Ag Ministry

Brazil's Senate voted to kick Dilma Rousseff out of the Presidential Palace at 6 a.m. Thursday morning after a 20-hour debate.

Taking over is the market-friendly vice president Michel Temer, who has named Blairo Maggi, the former "Soy King," as his agriculture minister.

The Mato Grosso senator, who executed a last-minute change of parties to take the role, pledged not to change much, saying his predecessor, Katia Abreu, had done "a good job."

Agriculture is one of the few sectors of the Brazilian economy not in crisis amid the deepest recession in the country's history.

"The priority is to take care of farmers and not let this sector, the most important in the economy, which is still doing well, to descend into where crisis and unemployment reign," he told Folha de S. Paulo, a local daily.

The new government's impact on agriculture will depend principally on its ability to contain the current economic crisis and restore stability. Obviously, stability is good for long-term investment prospects, although instability can also provide short-term competitiveness boosts through a weakening Brazilian real.

The Senate suspended Rousseff for 180 days while it assesses the case for impeachment. But given the Senate voted overwhelmingly -- 55 to 22 -- to open proceedings, the balance of probabilities indicates she won't obtain the one-third votes she needs to fight off impeachment with Temer looking likely to continue on as head of state.

Katia Abreu's last major act as minister was to announce the official farm credit budget for the 2016-17 season. The government pledged to make available 202.8 billion reals ($59 billion) in credit, up 8% on last year.

However, it remains to be seen how easy it is to access these funds since the government is in dire fiscal straits and one of Temer's main commitments is to try to bring that under control.

With commercial loans carrying interest rates of 25% or more, this subsidized credit is vital for growers. A tightening of credit could limit grain planting next year.

Certainly, grain farming gets a powerful advocate in the ministry with Maggi's appointment. Since becoming Brazil's largest soybean farmer in the 1990s, his Amaggi group is now one of Brazil's largest grain exporters.

(CZ)

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