Brasília, January 30, 2004 (Agência Brasil - ABr) - The Minister o Agriculture, Roberto Rodrigues, said that, for the time being, the federal government will not intervene in Parmalat Brasil, which, according to him, currently owes around 40 million reais to small Brazilian dairy farmers. Rodrigues met yesterday (29) for three hours with other Ministers in the Presidential Civilian Advisory Office, in the Planalto Palace, to find a way to cover the bad debts of the Italian firm.

In the wake of Parmalat Brazil's filing for a composition, which may result in unemployment and the loss of Brazilian milk production, the government decided to purchase a thousand tons of powdered milk used by Parmalat as a way to pay small Brazilian farmers. Another government decision, according to Rodrigues, was to add over R$ 100 million to the credit line available, at 8.75% interest, to small producers' cooperatives, while farmers not affiliated with cooperatives will be entitled to special average interest rates.

Rodrigues affirmed that what the government can do now to provide breathing space for the country's dairy sector is to increase the credit line for small producers' cooperatives from the current R$ 200 million to R$ 300 million. "This credit line will serve for producers to finance their activities, in case they don't receive payment from Parmalat, or to purchase powdered milk, or to subsidize or finance a program to prevent the slaughter of dairy cattle," Rodrigues said.

According to the government, these measures will guarantee the income and activity of rural producers. As for possible government intervention further down the road, this will greatly depend upon how the courts rule Parmalat Brasil's request for a composition. "How long this will take, what the Judiciary will do in terms of commissioning someone to help administer Parmalat. So there is a series of moves that are still not clear, rendering the government incapable of deciding anything beyond what was decided today," he concluded. (DAS)