(Adds context, Rial quote from third paragraph)
CUIABÁ, Brazil, May 25 (Reuters) - An ongoing slide in Brazil's interest rates will allow private-sector banks to increase lending to farmers and commodities processors, Banco Santander Brasil SA Chief Executive Officer Sérgio Rial said on Thursday.
Speaking as the host of an agribusiness conference in Mato Grosso, Rial said he expected changes in the agricultural financing environment, long dominated by state-run Banco do Brasil SA.
Brazil's government, pressured by a fiscal crisis, is cutting the share of subsidized loans in the annual farm financing plan, increasing room for private banks to fund farmers at market rates.
Declining interest rates, as Brazil's central bank reacts to plunging inflation, make private bank lines more affordable.
Santander has hired several agronomists and streamlined credit analysis processes to expand its agricultural loan portfolio, the bank said in a statement distributed ahead of Rial's speech.
The bank has 17 branches in the state of Mato Grosso and will open at least another three in Brazil's largest grain-producing state, Rial said.
"With one-digit interest rates, private banks have an important role to play in agribusiness financing," he said.
His remarks underscore a push under Rial, a former executive of Cargill Inc and Marfrig Global Foods SA, to reposition Santander as a competitive agribusiness lender in Latin America's largest economy.
The agribusiness sector, which accounts for more than 20 percent of Brazil's $1.9 trillion economy, has been traditionally dominated by Banco do Brasil and large private bank Banco Bradesco SA.
Santander's agribusiness loan portfolio stands at 40.5 billion reais ($12.31 billion), the bank said.
At the event, Brazil's Agriculture Minister Blairo Maggi said the new farm financing plan should be announced next week.
He estimated interest rates could fall on average 1 percentage point from last year's plan but does not expect the total size of the package to rise.
$1 = 3.2887 reais Reporting by Ana Mano; Editing by Christian Plumb and Lisa Von Ahn