The distribution of subsidized agricultural credit in Brazil: do interest groups matter?

This article examines the unequal distribution of credit and credit subsidies in the Brazilian agricultural sector from 1969 to 1990. Total credit subsidies exceeded US$ 40 billion in this period. The distribution across crops is studied econometrically. After controlling for area, the crops that benefited most had superior access to credit institutions, were tradeable, had high prices, and were not perennials. Proxies for collective action by crop were an unimportant determinant of credit policy, while a bias in favour of large producers was evident. Alternative explanations for this bias are discussed, including collective action by farm size and transaction costs in lending.