By Douglas Alencar (UFPA/CFC-GS)
The allocation of resources from the Northern Constitutional Financing Fund (FNO) plays a strategic role in the regional development of the Legal Amazon. Created with the aim of reducing regional inequalities and promoting sustainable economic activities, the FNO should, in theory, support investments aligned with environmental conservation and social inclusion. However, recent data reveal a strong concentration of resources in specific sectors, particularly in agribusiness. This text presents reflections based on the master’s thesis of Álvaro Marcelino Nunes, who investigated the use of the FNO and its environmental implications. Using a graph that synthesizes the main financing lines contracted in 2019, the discussion explores hypotheses about the factors that shape the current structure of the fund, with emphasis on the possible effects of financial regulation, the operational logic of credit agents, and the political influence of certain economic sectors.
I recently took part in the thesis defense committee of Álvaro Marcelino Nunes, a master’s student in the Graduate Program in Economics. In his dissertation, he discussed the use of the Northern Constitutional Financing Fund (FNO) and some of its implications for the environment.
The most striking graph in the study, presented below, highlights the high proportion of FNO resources allocated to the agribusiness sector.
The graph shows the most contracted financing lines in 2019 within the FNO, based on data from BASA (2020). The values are expressed in millions of Brazilian reais, and each bar represents the amount allocated to a given category, along with its percentage share of total financing granted that year.
The category with the highest volume of resources was Support for Agribusiness, totaling R$ 3.679.1 million, or 48% of all funds contracted. This figure highlights the central role of the agribusiness sector in the FNO’s financing policy in 2019, likely reflecting the strong presence of this activity in the Northern region and its importance for income generation and exports.
Next are the categories of Commerce and Services (R$ 1,594.4 million or 20.8%) and Infrastructure (R$ 1,528.0 million or 19.9%). Both represent significant portions of the resources, suggesting a diversification strategy within the fund’s operations, also targeting sectors that drive urban and regional development—whether through the provision of goods and services or through investment in essential infrastructure and systems.
By contrast, the Industry and Family Farming sectors received the smallest shares of financing: R$ 335.2 million (4.4%) and R$ 309.6 million (4%), respectively. These figures may reflect specific barriers to credit access, lower investment capacity, or different priorities in resource allocation. The low share directed to family farming is particularly noteworthy, considering its social and environmental potential in the region.
The fund’s purpose—at least in principle—should be to promote sustainable development and support the bioeconomy. However, a considerable portion of the resources continues to be directed toward agribusiness. This raises the following question: what factors explain the current distribution of FNO resources?
I propose three hypotheses that might help explain this outcome. The first is related to the regulatory framework imposed by the Central Bank; the second, to the technical behavior of BASA staff; and the third, to the possible political capture of the fund by the agribusiness sector.
Regarding the first hypothesis, the Central Bank—by adhering to the Basel Accords—imposes restrictions, controls, and supervisory mechanisms that may, in practice, favor financing to the agribusiness sector over others that are more dispersed or perceived as higher risk.
The second hypothesis concerns behavioral factors. For bank technicians, it may be less costly, in transactional terms, to lend R$ 1 million to a single large farmer than to distribute R$ 100,000 to ten different family farmers.
The third hypothesis points to the potential institutional capture of the fund by agribusiness. The sector’s political influence may be strong enough to steer public resources toward its own interests, thereby expanding its access to credit.
Personally, I find the first and second hypotheses more plausible. Nonetheless, it is crucial that further studies be conducted to better understand the dynamics behind FNO resource allocation.
The data presented reveal that most of the FNO’s 2019 resources were directed toward agribusiness, raising important questions about the fund’s effectiveness in promoting balanced and sustainable regional development. While agribusiness plays an important economic role in the Northern region, the limited participation of sectors such as family farming and industry suggests the existence of structural or institutional barriers to credit access. The hypotheses discussed—related to banking regulations, the technical rationality of credit agents, and the political influence of the agribusiness sector—underscore the need for in-depth studies examining the governance and allocation criteria of the FNO. Understanding these dynamics is essential for the fund to fulfill its mission as a tool for fostering a more inclusive and environmentally responsible economy.
