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Governor requests that a state of emergency be declared in the state of Mato Grosso - 03/24/2006 Locality: São Paulo - SP Source: O Estado de S.Paulo Link: http://www.estado.com.br/ Problems with soy leave farmers unable to honor their commitments The crisis in agribusiness may lead Governor Blairo Maggi to declare a state of emergency in Mato Grosso, something unprecedented in Brazil. Magi is awaiting the completion of a study coordinated by the State Attorney General's office to assess the possibility of such a declaration. "We need to conclude the study, because we do not wish to break contracts or anything like that. The situation, however, is grave", assessed the governor. Mato Grosso is the largest soy producing state in Brazil, a crop that is perhaps facing the worst moment in its recent history. Several problems have occurred at the same time: a rise in production costs, climatic problems that damaged the harvest and enabled dissemination of Asian rust, the falling dollar and a drop in soy prices. Heavily-indebted farmers are unable to pay their debts. The result was a severe drop in the revenue of the State and local governments. In the first two months of this year, tax revenue in Mato Grosso dropped almost R$100 million, according to official estimates. If the state of emergency is declared and recognized by the federal government, farmers will be able to postpone their rural credit debts and the State will be able to renegotiate payments of public debt, of roughly R$60 million a month, according to Blairo Maggi. "Between 20% and 22% of State tax revenue goes to paying public debt." The drop in revenue caused by the crisis has left the State in a delicate financial situation. Maggi says that the State is unable to rescue the farmers. "We have already made all production destined for exportation tax exempt. We cannot do any more than that, or we face the risk of not having funds to provide basic services such as education and health", he stated. Maggi confessed that he is unaware of the details of the Provisional Measure number 252 that is being studied by the federal government to support agribusiness. "I sure hope it's good though." In Mato Grosso, the situation is most serious in municipalities in the Central-Northern region. In Nova Mutum, the mayor and soy farmer, Adriano Pivetta says that municipal tax revenue dropped 7% from January to February. The disbursement of the Municipalities Participation Fund (which returns revenue collected through the State ICMS tax) fell a further 14%. "Everything is practically shut down. Local businesses are laying people off and giving collective holidays. It is the worst crisis we've seen in the region", he stated. The town of 25,000 inhabitants basically depends on soy farming, just as in Primavera do Leste, where the local government declared an emergency and is awaiting confirmation from the State government. Nearby towns such as Dom Aquino, Poxoréu, Tesouro, Novo São Joaquim, Santo Antônio do Leste and Campo Verde are also studying the possibility of declaring an emergency. Among farmers, the crisis is affecting everyone, but especially those who watched their harvests fail due to the weather and rust.
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