Rio de Janeiro - Brazilian President Luiz Inacio Lula da Silva is preparing a broad package to incentivize food production and to combat the increase in the price of foodstuffs, the Brazilian Agriculture Ministry said Wednesday.

According to Agricultural Policy Secretary Edilson Guimaraes, the package includes an 11.43 per cent rise in loans for rural producers, set to amount to a total of 48.75 billion dollars in 2008-2009.

Guimaraes said this - together with the fact that there will be no re-adjustment in the annual interest rate on such loans, 6.75 per cent - is set to lead to a 5 per cent rise in the Brazilian grain harvest, expected to amount to 144 million tonnes in 2007-2008.

In an interview with the state news agency ABR in Curitiba, Guimaraes said the increase in production is set to allow Brazil to supply part the growing demand in foodstuffs around the world, and to support the fight against price increases in the field.

"Brazil and Argentina are the only two countries in the world that are in a privileged position to make the most of the window of opportunity and produce foodstuffs to cater for their internal consumption and for demand in the international market, whose availability of foodstuffs has virtually fallen to nothing," he added.

Of the total loans to be granted by the government, 8.125 million dollars will go to family agriculture - the small rural producers that are the main source of foodstuffs for internal consumption in Brazil.

Guimaraes noted that the Agriculture Ministry is hoping to create a stock of rice and corn to reduce the impact of rises in their international prices to prevent them from contaminating inflation figures. (dpa)