SAO PAULO, May 12 (Reuters) - Agricultural powerhouse Brazil will allow the country's farm sector to renegotiate repayment of 87 billion reais ($52 billion) in debt to incite growers to raise output, it's Agriculture Minister said on Monday.

By easing debt repayments, the government hopes to free up cash within the sector for investments that would lead to higher output of strategic crops in response to tight global food supplies and the spike in the price of staples.

The decision should raise incomes for farmers exporting their crops while prices remain high and help ease domestic inflationary pressure by increasing supplies of staple food.

"The objective is to reduce the impact of supply for the domestic consumer," Agriculture Minister Reinhold Stephanes said on Monday according to a statement from the ministry, which said target crops were rice, wheat, corn and beans.

Brazil's soy and corn producers are just coming out of the worst crisis in decades and other producers in areas that produce sugar cane, coffee, wheat and cocoa carry significant amounts of debt that limits investments in expansion and modernization.

Stephanes, speaking at a seminar hosted by the Sao Paulo Industry Federation Fiesp, said a provisional decree should be signed by President Luiz Inacio Lula da Silva this week, which would allow government-backed lenders to renegotiate terms to the benefit of the productive sector.

Brazil's government subsidizes farm-sector credit as an area of strategic interest. The main holder of agricultural debt in Brazil is the state-run Banco do Brasil, Latin America's largest commercial bank in terms of assets.