Less credit and more inflation: agriculture declares war on new government taxes
Representatives of the agribusiness sector are organizing to block the government's attempt to tax investments in Agribusiness Credit Letters (LCA) and Agribusiness Receivables Certificates (CRA), which finance the sector. Their argument is that the taxation will reduce the supply of credit and increase the price of food.
According to Finance Minister Fernando Haddad, the government intends to tax fixed-income securities that are currently exempt at 5% . In addition to LCA and CRAs, Real Estate Credit Letters (LCI), Real Estate Receivables Certificates (CRI) and incentivized debentures are also in the spotlight.
LCAs and CRAs are securities traded on the financial investment market that generate income for those who hold them and are considered more attractive to individual investors, who do not pay income tax on their income. Both are linked to agribusiness financing.
LCAs are issued by financial institutions, such as banks, for direct financing of rural producers or companies linked to agribusiness, in the form of credit. CRAs are issued by securitization companies based on debts receivable originated from businesses in the sector, that is, they finance agricultural activities indirectly.
For entities linked to agriculture and livestock, the incidence of IR on the income from these securities should reduce the attractiveness of the assets among investors and, therefore, reduce the supply of resources available especially for small and medium-sized rural producers, who depend on consolidated institutions to issue securities.
The Brazilian Agribusiness Association (ABAG) believes that the tax, if confirmed, would compromise one of the main sources of private financing for one of the largest sectors of the Brazilian economy. According to the entity, this would directly affect “the competitiveness, predictability and financial security of rural producers and production chains as a whole.”
“LCAs have been essential for directing market resources to agribusiness, with low risk and encouraging long-term investment,” says the association. “Possible taxation could discourage investments, make credit for the field more expensive and impact production costs, with negative repercussions for society as a whole, putting pressure on inflation and increasing food prices,” it adds.
The Brazilian Agriculture and Livestock Confederation (CNA) highlights that LCAs currently represent the main source of resources for financing rural credit, serving as a backing for the Safra Plan operations.
The entity also highlights that recent changes promoted by the National Monetary Council (CMN) in the rules for this type of issuance have already been hindering the attraction of resources for rural credit. In February 2024, for example, the term of profitability of the title was extended from 90 days to nine months, which slowed the growth of the stock of LCAs.
“This slowdown was only not more pronounced due to the high Selic rate, which continued to attract investors, especially due to the exemption from Income Tax for individuals,” says an excerpt from the CNA analysis.
According to the most recent data made available by the Ministry of Agriculture and Livestock (Mapa), in April 2025, the stock of LCAs totaled R$559.94 billion, an increase of 19% compared to the same month in 2024 (R$469.01 billion). The growth between April 2021 and April 2022, to give you an idea, was 98%.
When presenting the proposal to journalists, Haddad stated that, despite the end of the IR exemption on bonds, investments “will continue to be highly encouraged”, since the 5% rate represents only a third of the 15% that applies to income from other fixed income investments, such as CDBs.
The minister's idea is to promote the changes through a provisional measure (MP), which comes into effect immediately but requires approval from the Legislature to avoid "expiring". Due to the principle of annuality, the new tax rate would only come into effect from January 2026, keeping the current stock of LCAs and CRAs exempt from the tax.
In the National Congress, the negative reaction from agribusiness representatives was immediate . For federal deputy Pedro Lupion (PP-PR), president of the Parliamentary Front for Agriculture (FPA), a fiscal adjustment that reduced public spending would eliminate the need to raise taxes.
“First the government creates a problem, then tries to solve it with more taxes — and, as always, the agribusiness sector suffers. Taxing LCAs makes rural credit more expensive and discourages producers. And what about spending cuts? Not a word,” says the parliamentarian.
“The government’s response is taxation, that is, increasing taxes on LCAs, LCIS, and incentivized debentures, something that works very well in the market and represents a large part of the financing of the agricultural sector. We simply cannot accept this,” he said.
In a video, the congressman says he will “enter into another battle” to show the government that, instead of increasing taxes, “it needs to cut taxes, reduce the government’s budget and reduce public spending.” “So far, the Finance Minister, Fernando Haddad, and no one from the economic team has talked about reducing the size of the State,” he criticized.
The FPA, which brings together 350 parliamentarians, released a note in which it expresses “deep concern with the proposal to tax income from LCAs and LCIs at 5%”.
For the group, the measure compromises an essential source of rural credit, especially for medium-sized producers and cooperatives, and makes financing for the sector more expensive in a scenario of high interest rates and falling commodity prices. “The bill will be paid by the consumer, who will receive the transfer in the price of food,” says the FPA.
The parliamentary front also highlights that agriculture is responsible for almost half of Brazil's trade surplus. "Penalizing the sector is penalizing the country's growth. Balance is needed: adjusting the accounts involves controlling spending and structurally reviewing the budget, not increasing the burden on those who support the economy."
The FPA received support from 18 other parliamentary fronts in criticizing the measures proposed by the Treasury. “The end of the exemption for LCI and LCA directly penalizes small and medium investors, who seek fixed-income alternatives to protect their savings, and discourages financing of vital sectors such as agribusiness and construction, increasing the cost of housing and food,” says a letter signed by the Coalition of Productive Fronts.
The document also cites a survey by Gazeta do Povo , which showed that the government of Luiz Inácio Lula da Silva (PT) has already announced 24 measures to increase or create taxes – not counting the taxes in the new fiscal package.
“The statistic is alarming and undeniable: since January 2023, the current government has increased or created taxes at least 24 times. This means an average of a new tax increase every 37 days.”
In addition to the FPA, the coalition includes the parliamentary fronts of Commerce and Services, Free Market, Entrepreneurship, Biodiesel, For a Competitive Brazil, Waste Management and Circular Economy, in Defense of Tourism, Housing and Sustainable Urban Development, For Women Entrepreneurs, in Defense of Civil Aviation, in Defense of Culture and Entertainment, Ports and Airports, in Defense of Basic Sanitation, Machinery and Equipment Industry, Cooperativism, Health, Logistics and Infrastructure and Sustainable Mining.
gazetadopovo
