In addition to technological development in the sector, which has enabled unprecedented scale in its activities, the country has consolidated, over time, an agricultural financing policy that involves public resources through rural credit.

But behind this success story lies a complex relationship between rural credit policies and land concentration—a topic that deserves attention.

What Is Rural Credit and Why Is It Important?

Rural credit is the primary source of financing for Brazil’s agricultural sector, representing about 30% of the gross value of agricultural production. For the 2025–2026 crop year, more than R$ 500 billion were announced to fund activities such as operating costs, investments, and commercialization.

This credit is offered through institutions that are part of the National Rural Credit System (SNCR) that follow programs and lines of credit created by the Brazilian government and regulated by the Central Bank of Brazil. There are three main types:

• Subsidized Credit: The Treasury covers part of the interest cost to make financing affordable.
• Directed Credit: Resources come from mandatory allocations like demand deposits and rural savings defined by the National Monetary Council (CMN).
• Free Credit: Offered under market conditions by financial institutions.

Land Concentration: A Persistent Challenge

Brazil faces high land concentration. According to IBGE:

• 2% of large rural establishments control nearly 60% of rural land and 44% of production value.
• Small properties make up 92% of establishments, but only hold 25% of the land and 38% of production value.

The Gini index for land distribution in 2017 was 0.867, indicating extreme inequality—much higher than income inequality calculated through the Gini index.

This raises an important question: Does rural credit reinforce or reduce land concentration?

BNDES Rural Credit: A Shift Toward Small Producers

Producer size is typically correlated with the size of the rural property, so to assess the relationship between land concentration and rural credit, it is important to examine the profile of resource borrowers.

BNDES offers both subsidized and free credit. Since the Bank does not have branch offices, financing is carried out almost entirely through a network of accredited financial agents, who transfer the Bank’s resources to producers at the end point.

Percentage of rural credit granted to small rural producers, BNDES vs. other SNCR institutions, by crop year (2013–2014 to 2024–2025)

Recent data show a strategic shift by the BNDES:

• Between 2013/2014 and 2024/2025, the share of the BNDES’s resources allocated to small producers increased by 23 percentage points.
• Support for small producers has been focused on family farming through Pronaf, whose share of resources grew from 44.7% in 2013/2014 to 86.7% in 2024/2025.

The Bank focuses subsidized credit on small producers, mostly offering free and directed credit for bigger operations, of larger producers.

Moreover, the average property size financed by BNDES in 2024-2025 was 112 hectares, while the average property size financed by other institutions was 209 hectares, signaling a focus of the BNDES on smaller operations.

Average area of Rural Environmental Registry (CAR) in subsidized rural credit operations (in hectares), BNDES vs. other SNCR institutions, by crop year (2019/2020 – 2024/2025)

Note: CAR became mandatory in Sicor starting in 2019. For each credit operation, the area of associated CARs is summed. *Includes only rural credit operations with subsidized interest rates, using public resources or guaranteed by Proagro.

The Cooperative Factor

One key driver of this transformation is the rise of credit cooperatives:

• Before 2015, cooperatives accounted for less than 2% of BNDES rural credit.
• In 2024/2025, cooperatives and cooperative banks together handled 61% of BNDES rural credit, compared to 23% for private banks and 5% for public banks.

This integration with the cooperative system allows BNDES to reach smaller producers and smaller areas, promoting inclusive growth.

Why Does This Matter?

By prioritizing small-scale agriculture, BNDES is not only fostering income and wealth equality but also potentially contributing to reducing land concentration—a structural challenge for Brazil’s development.

Does Rural Credit Influence Land Concentration in Brazil?

The relationship between rural credit and land concentration is complex and often debated. In this post, we’ll explore key hypotheses, evidence from BNDES, and what the data reveals about this dynamic.

Hypotheses: How Credit and Land Concentration Interact

Several hypotheses can be formulated about the link between agricultural credit and land concentration:

• Credit may increase land concentration
• Direct effect: Credit used to purchase land.
• Indirect effect: Investments financed by credit expand production capacity, enabling future land acquisition.
• Land access may increase credit access
• Larger properties provide stronger collateral, making it easier to obtain financing.

However, evidence suggests that credit primarily intensifies land use rather than expanding land holdings—especially for small and medium producers who have room to increase productivity without acquiring new land. This effect is strongest for investment credit from BNDES, indicating that more credit does not necessarily mean more land concentration.

The BNDES Case: Is Rural Credit Linked to Land Concentration?

To understand this relationship, we compare BNDES credit with other financial institutions using two municipal-level indicators:

1. Rural Credit Volume as a Share of Agricultural GDP (calculated based on data from BCB and IBGE)
• Reflects the importance of credit in local agricultural production.
• Calculated using averages from 2020–2021 to 2024–2025 to smooth seasonal variations.
2. Gini Index of Rural Property Areas (CAR)
• Proxy for land concentration.
• Values closer to 1 indicate higher inequality.
• Based on data extracted in September 2025.

Visual Insights: Where Credit and Land Concentration Overlap

When mapping municipalities in the top quartile for both indicators, few areas show high rural credit/GDP ratios and high land concentration—except in parts of Mato Grosso, northern Minas Gerais, and the Northeast.

For BNDES credit, the disparity is even greater: its presence is strongest in the South, where properties are typically smaller. Other institutions show more overlap between high credit and high land concentration.

Municipalities in the fourth quartile of the distribution of the rural credit/agricultural GDP indicator (2020-2021-2024-2025) and of the Gini index of CAR areas (2025), BNDES and other financial institutions

Beyond Maps: Correlation Analysis

A simple linear regression at the municipal level reveals:

• Nationwide, BNDES credit has an inverse correlation with land concentration.
• This negative relationship is stronger for BNDES than for other credit sources.
• Interpretation: More BNDES credit is associated with lower land concentration, on average.

Coefficients of cross-sectional linear regressions of rural credit/agricultural GDP (average between 2020/2021 and 2024/2025) on the Gini index of rural environmental registry (CAR) areas (2025) for municipalities.

Note: Coefficients from log-log regressions (a 1% increase in credit/GDP is associated with X% change in land concentration). Estimates marked with an asterisk are statistically significant, as follows: *** p-value <0.01; ** p-value <0.05; and * p-value <0.1.

Regional Patterns

• South: Strong negative correlation. Small properties, high labor-to-land ratio, credit used for intensification.
• North: Similar trend, but with idle capacity and lower investment demand.
• Midwest: Positive correlation for BNDES credit—linked to agricultural frontier expansion and high demand for land and investment.

The Role of Cooperatives

The negative correlation between BNDES credit and land concentration is stronger where credit flows through cooperatives. This reinforces the importance of cooperatives in promoting inclusive access to financing.

Coefficients of cross-sectional linear regressions of BNDES rural credit/agricultural GDP (average between 2020/2021 and 2024/2025) on the Gini index of rural environmental registry (CAR) areas (2025) for municipalities, above and below the median share of credit channeled through cooperatives.

Note: Coefficients from log-log regressions (a 1% increase in credit/GDP is associated with X% change in land concentration). Estimates marked with an asterisk are statistically significant, as follows: *** p-value <0.01; ** p-value <0.05; and * p-value <0.1. The analysis considers only municipalities with BNDES credit during the period.

Although the data presented are indicative and require further analysis, the overall findings suggest that the Bank has played an important role in strengthening the sector without increasing land concentration, and highlight aspects that may help mitigate this phenomenon in financing operations carried out by BNDES.