Small farmer credit use in a depressed community of Sao Paulo, Brazil

It was based on interviews with 150 farmers in 1971. The objective was to determine how credit is allocated between size and type of farm and between its various uses. The Brazilian Government"s agricultural credit program was compared to the informal credit market to show how and why they serve the markets they do. It was concluded that the federally subsidized interest rate program reduces credit available to the small and risky client. This client presently is being served by the informal lender. The informal lender primarily operates in the small loan business and is competitive with banks. Based on this result, it was recommended that interest rates on formal agricultural credit be increased. Increased rates could help to finance technical assistance and permit banks to lend to riskier clients.