On 17 August 2012, the government of Brazil stated that it is going to guarantee the minimum price for the wheat harvest of 2012 with a subsidy worth USD 163.7 million (330 million real).
 
The stated amount will be distributed through the Brazilian farmerincome support programs PEP and PEPRO as well as the government purchaseprogram AGF. Both income support programs are based on theauctionmechanism further described below. The subsidies will continueuntilthe stated volume has been allocated completely.
 
The announced programs constitute a production subsidy to Brazilianfarmers. Both domestic and international sales are eligible.
 
The design of the Brazilian farmer income support programs can be briefly summarized as follows:

• PEP / Program for Product Outflow (Premio para Escoamento doProduto): The government first sets a minimum price for the eligibleproducts. The government then auctions off a premium to buyers of theproducts on the condition that they pay the minimum price to theproducers. The buyer submitting the smallest premium wins the right toreceive the payment.
• PEPRO / Premium Paid to Growers (Premio Equalizador Pago aoProdutor): The government first sets a minimum price for the eligibleproducts. The government then auctions off a premium to the producers. The selling price represents the difference between the reference priceand the premium reached at the auction. The farmer submitting thesmallest premium wins the right to receive the payment.

 
The final instrument announced, the Aquisiçăo do Governo Federal(AGF) program, guarantees the minimum price through governmentpurchases.
 
The GTA includes state guarantees and other financial incentives thatare likely to affect the restructuring and performance of firms facinginternational competition, whether from imports, in export markets,andfrom foreign subsidiaries.