What Will Happen If Farmers Can't Get Credit? Brazil is the third largest producer of wheat, so what happens if farmers can't get credit? Brian Willott, a farmer in Brazil and former commodities analyst, talks about why frozen credit lines spell trouble for the global food crisis.
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What Will Happen If Farmers Can't Get Credit?

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What Will Happen If Farmers Can't Get Credit?

What Will Happen If Farmers Can't Get Credit?

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Brazil is one of the leading producers of two very important crops: soy and corn. But lately, frozen credit has made it nearly impossible for farmers there to afford the basics that they need to grow those crops. Brian Willott farms 2,000 acres of soybeans just outside Bahia, Brazil. He joins us now by phone.

Welcome, Brian, and can you explain for us how the credit situation there in Brazil has affected you and other farmers?

Mr. BRIAN WILLOTT (Soybean Farmer, Bahia, Brazil): Credit's a big problem right now. No farmer can survive today without credit, and since the credit crunch hit, everyone's credit has either been cut, delayed or more expensive. And it's got everyone here quite worried.

COHEN: What do you use loans for? How important is it? What do you use it to buy?

Mr. WILLOTT: Credit's a basic input, just like fertilizer or fuel or labor. Farmers here need credit to be able to buy their fertilizer, number one, which is much more expensive than it used to be. Seeds, pesticides, everything - to have money to pay your employees every month. And so, when credit's delayed or not available, especially on fertilizer, it gets very complicated to be able to raise a crop. Nobody in modern agriculture can farm without credit.

COHEN: And what's your credit situation like right now?

Mr. WILLOTT: I have credit, but it was delayed. I've never had trouble getting credit here in Brazil. I've always paid my bills, and so credit's available for me. But this year, the credit promises were made, but then the credit wasn't going to arrive until it was too late to order the fertilizer and actually work out the logistics of receiving it. And so it's changed my plans a lot this year.

COHEN: And timing is really essential for farmers. So, how is that going to play out there with your 2000 acres of soy?

Mr. WILLOTT: The 2,000 acres I'm going to plant this year are technically for another farmer. I'm not going to farm anything in my own name this year. And that's common enough, really; I'm not alone in that. Total acreage of corn and soybeans could easily be down this year in Brazil. Most people expect there to be less corn, a lot less cotton, and also less of some of the food crops like rice and edible beans. So, it's caused everyone to plant less than they normally would.

COHEN: Where do all of those crops grown in Brazil - corn, wheat, and soy - where do they get exported to?

Mr. WILLOTT: Mostly, China would be one of the major trading partners with Brazil. The U.S. is Brazil's largest trading partner in general but for food crops, it's largely the European Union and China. And right now, the message we're being told is that is China's going to want to back out on some of the contracts they've signed. It's not adding to anyone's happiness level here, for sure.

COHEN: So, what does that mean for future seasons?

Mr. WILLOTT: It means our risks are only increasing. The future's much more of an unknown every day. This year, farmers are going to try and get by, apply a little bit less fertilizer, maybe plant a little bit less. But for the following season, normally we would start our planning process now already, and at this moment, it's just impossible to plan for the next 24 months.

COHEN: Brian, you're a bit different, I imagine, from some other farmers there in Brazil. I understand that you were formerly a commodities analyst in the U.S. How did you wind up farming soybeans in Brazil?

Mr. WILLOTT: I put together a group of investors to buy land here, people I'd met through my work as a commodity analyst. And we came here to invest together and buy land and raise soybeans. I'm unique in that most of Brazil, of course, is farmed by Brazilians, but there are a few other foreign interests in the region.

COHEN: Given what's going on now with credit and with the world, financially speaking, do you still think you made the right choice to go there?

(Soundbite of laughter)

Mr. WILLOTT: Oh, yeah. It's a rare day that I regret it here; very happy I made the switch. We're optimistic. Brazil goes through cycles like this. Each day's bringing us closer to the next boom.

COHEN: Brian Willott is a farmer in Bahia, Brazil. Thank you, Brian.

Mr. WILLOTT: Thank you.

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