Resolution CMN No. 2116 - Establishes the Third Phase of the Japan-Brazil Cooperation Program for the Development of the Cerrados (PRODECER III) - Rural Segment

RESOLUTION NO. 002116

Establishes the Third Phase of the Japan-Brazil Cooperation Program for the Development of the Cerrados (PRODECER III) - Rural Segment.

The CENTRAL BANK OF BRAZIL, in accordance with Article 9 of Law No. 4.595 of December 31, 1964, makes public that the MONETARY COUNCIL, in a session held on October 19, 1994, having regard to the provisions of Article 4, item VI, of the aforementioned Law, and Articles 4 and 14 of Law No. 4.829 of November 5, 1965,

HAS RESOLVED:

Article 1. To establish the Third Phase of the Japan-Brazil Cooperation Program for the Development of the Cerrados (PRODECER III), which shall be governed in the rural segment by the provisions contained in the attached sheets, intended to update MCR 8-3.

Article 2. Operations linked to PRODECER III shall be carried out with support from resources of the Japan International Cooperation Agency (JICA), private Japanese banks, Official Credit Operations of the General Budget of the Union, and counterparty contributions from financial agents and credit beneficiaries.

Article 3. The Central Bank of Brazil is authorized to issue regulations and adopt measures deemed necessary for the execution of the provisions of this Resolution.

Article 4. This Resolution enters into force on the date of its publication.

Brasília, October 19, 1994

Pedro Sampaio Malan
President

TITLE: RURAL CREDIT
CHAPTER: Special Programs - 8
SECTION: Japan-Brazil Cooperation Program for the Development of the Cerrados - 3rd Phase (PRODECER III) - 3 (*)

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1. The program aims for the rational incorporation of previously selected cerrado areas by the Agricultural Promotion Company (CAMPO), destined for the productive process through the use of modern technology that allows for effective productivity.

2. The program's Pilot Project covers an area of approximately 80,000 hectares, in the States of Tocantins and Maranhão, for the cultivation of rice, beans, corn, soybeans, perennial crops, and other rationally planned crops.

3. Federal official banks may be financial agents of the program.

4. The remuneration of the financial agent is established by the Treasury Secretariat of the Ministry of Finance.

5. CAMPO, through an agreement with financial agents, shall exercise the technical coordination of the program, under the supervision of the Ministry of Agriculture, Supply, and Agrarian Reform.

6. Technical assistance is mandatory and comprises:
   a) the technical study, represented by the simple plan, project, or integrated project; b) technical guidance at the property level.

7. Technical assistance is the competence of CAMPO.

8. The cost of technical guidance may not exceed 2% per year (two percent per annum), applied to the outstanding balance of financing destined for fixed and semi-fixed investments, excluding the value of land acquisition, observed that:
   a) they are due after the first year of the operation's validity and must be suspended from the sixth year; b) they are due on June 30, December 31, or upon debt settlement, if early.

9. Beneficiaries of the program are:
   a) rural producers selected by cooperatives under the supervision and approval of CAMPO; b) rural producer cooperatives selected by CAMPO.

10. The following are financeable:

    a) all fixed and semi-fixed investment items admitted in this manual; b) acquisition of plots by cooperatives for own use and for subsequent resale of lots to cooperative settlers; c) the first 4 (four) agricultural operating expenses carried out in the area of cleared lots; d) expenses with the payment of the additional of the Program for the Guarantee of Agricultural and Livestock Activity (PROAGRO); e) in investment credit, expenses for the preparation of technical studies; f) other expenses considered indispensable by CAMPO.

11. The cost of preparing the technical study, for financing purposes, may not exceed 2% (two percent) of the value of investments covered, excluding the value of land acquisition.

12. Investment credit may have the following terms, including up to 6 (six) years of grace period:
    a) fixed capital, including for land investment ........................... up to 15 years; b) semi-fixed capital .................................................... up to 10 years.

13. Agricultural operating credit may have the following terms:
    a) first operating expense in the cleared area, already including up to 6 (six) years of grace period ... up to 15 years; b) operating expense in the 3 (three) subsequent years ................... up to 1 year.

14. The financing limits are as follows, regardless of the borrower's size:
    a) operating, intensive liming, intensive fertilization, and irrigation projects ... up to 100%; b) other investments ..................................................... up to 95%.

15. Financings are subject to remuneration by the Reference Rate (TR), observing the regulation issued by the Central Bank of Brazil, applicable to active and passive operations practiced within the financial market, plus an effective interest rate of 6% per year (six percent per annum).

16. Credit to cooperatives destined for the acquisition of plots for resale of lots to members is further subject to the following conditions:
    a) the budget must correspond to the actual cost of the land, plus expenses with planning of subdivisions, demarcation, measurement, opening of internal roads, reforestation, tax, and documentation, including that related to studies and environmental impact reports; b) the acquired plot must be subject to collateral for the financing; c) the acquired plot must be subdivided and demarcated by the cooperative, based on the plan elaborated by CAMPO, in parcels of 800 to 1,500 hectares; d) the lots must be transferred to settlers by means of a purchase and sale instrument on credit terms; e) the acquiring settler must assume the portion of the outstanding balance of the cooperative's financing, corresponding to the acquired lot, maintaining the first-degree mortgage encumbrance; f) the assumption of the debt must be processed through an amendment signed by the acquiring settler, the cooperative, and the financial agent; g) the cooperative has a period of up to 2 (two) years to process all transfers; h) except for the portion of the loan linked to the lot destined for own use, the cooperative's responsibility for land financing must be extinguished with the transfer of all other lots to settlers.

17. The general rules of rural credit that do not conflict with the special provisions of this section apply to operations.