Get to know Finapop, a brand new project to sponsor small farmers

Low interest rates for those who loan, and good returns for the investors are part of this popular financing movement

Translated by: Thiago Moyano

Brasil de Fato | São Paulo (SP) |
MST organic rice crops in Viamão, Rio Grande do Sul - MST

While small farmers are responsible for producing 70% of the produce that feeds Brazilian families, they are not always able to access the financing they need to continue their production. Common obstacles are the interest rates charged by banks that can be up to 400% a year, bureaucratic criteria that is hard to meet, and deadlines that are poorly suited to the farmers' production dynamics.

Oscar de Moura, a farmer from the Filhos de Sepé settlement, in Viamão, Rio Grande do Sul, is part of the co-op that is responsible for the largest organic rice production in Latin America. He says that despite such high productivity, the co-op faces difficulties to access a credit line that would allow the expansion of their distribution, as well as the improvement of their production.

“Some of our families seek credit at the bank in order to have some working capital. But we know how the bank works: they loan the money under whatever interest rates they want, and you have to meet their criteria to be able to access the loan. The grace period, for instance, is very tight. This also hinders the development of the families' production,” the farmer reports.

It is not a bank, it is not a capital venture. It's people who are paying attention to the injustices in this country.

With this scenario in mind, a popular financing movement aimed at investing in small farmers was launched by the economist Eduardo Moreira, in partnership with the Landless Rural Workers’ Movement (MST by its Brazilian Portuguese acronym). The project, called Finapop, proposes to bring together investors and projects that need funding.

“Finapop is a popular financing movement. It is not a bank, it is not a venture capital. It's people who are paying attention to the injustices in this country, and want to contribute for the better," states Moreira. 

First Stage

According to the proposal, the financing and investment conditions are attractive to both those who want to invest and those who want to loan the money: interest and return rates are between 4 and 5% a year. This way, whoever invests their money would get more than the return from a savings account, while the co-ops will have a more flexible, less bureaucratic mechanism.

The first beneficiary of the program was the Nova Santa Rita Agricultural Production Co-op (Coopan), in the homonymous municipality, also in the state of Rio Grande do Sul. "This kind of loan is important for settled families, for small farmers, because the investment is being made by those who believe in this kind of organization, in the organization of small farmers," says Milton José Fornazieri, one of the farmers part of Coopan. 

In this first stage, R$1 million were allocated to the construction of a new slaughterhouse in the settlement, which already has its own production of pork. The goal now is to complete construction by February, and start producing numerous products, namely salami, smoked meat, and sausage, among others.

“The next two projects that we are going to study to invest in are from the northeast, so we can look at this region in the country, one of cocoa and chocolate production, and another one of honey. Two extremely beautiful MST projects,” explains Eduardo Moreira.

In addition to investing in expanding production, another ambition of Finapop's projects is the possibility of reinvesting in local development projects. “This is really something that no bank has done. That small bakery that delivers food in schools, that association that does low-level processing of fruits. Small projects that make a big difference in the lives of those families,” says Fornazieri.

The current political climate, as well as the pandemic that aggravate the conditions of production in the countryside are also reasons that reinforce the need for an independent credit line, which does not depend on public financing, nor on banks.

“Finapop appears at a time of uncertainty on the direction that Brazil is taking. We know that we will resist, that we will be producing, but we do not know what the conditions will be to continue producing, if we will have the necessary conditions to do so. So, with this alternative we have a guarantee counting on these investors that believe in our process,”completes the farmer.

Edited by: Rodrigo Chagas