Introduction:The goal for this research is to offer to my team a clear picture of the organisation of agriculture in Brazil (where are the different crops grown, who are the producers and the consumers, importance of government policies in the primary sector...). I will be remodelling this page as I find out more because some of the things I write might turn out to be irrelevant and I will eventually have something structured to write. For the time being I'm noting interesting facts read in books and ideas that emerge from them. The main idea is that there is plenty of arable land in Brazil outside the rainforest which is not totally used. If we strengthen the agricultural sector in these regions and better the export infrastucture in these regions where there are less environmental issues, it will lower pressure on land in rainforest.

Perspective: development of agriculture before 1990.
The Brazilian Economy: Structure and Performance in Recent Decades. 1997 (from Dewey)

    The agricultural sector has always functioned below growth potential. There has been discrimination against agricultural sector in part because of overvaluation of currency, increase in input prices and lack of public investment. The agricultural economy of Brazil was strongly controlled by the government and highly dependent on its protection. Until last decade, the market played a minor role. Indebtness, decapitalization and demotivation amongst farmers caused by the big crisis in agriculture after 1986. Since then, there has been more incentives for growth of agriculture (is it sufficient?).

      In the last decade there has been strategy of restructuration of the state (deregulation of eco activities, privatization, administrative reform) and of integration on world market (MERCOSUL, foreign trade liberalization)

     When the book was written, the expected incentives for agricultural growth were an adjusted exchange rate, lower import tariffs for input goods, export financing, reduction in port operation costs, reduction in transportation costs, reduction in export taxes. Have they been realized? Are they relevant things to do to strengthen agriculture?

      Here are a few variables influencing the growth of agriculture:
technological change (higher productivity, less costs; need improvement of human resources to get the farmers to adopt the technology),
exchange rate and tariffs,
 income distribution,
indirect taxes (there are high indirect taxes on food),
terms of trade,
commercial costs(a reduction would encourage expansion of cultivated areas in regions where there is good arable land like the Central Region),
international prices,
 external protectionism.

     This book presents estimation of agricutural growth for the last decade (so it's a bit outdated). It is very intersting because it offers different scenarios of growth and the one which shows the highest growth rate is the social growth scenario (growth with equity).
So maybe social development is not as long-term as we keep saying. Maybe it's the only true solution!
     The conditions for this scenario are high technological change, high devaluation in exchange rate, high external growth, more equal income distribution, elimination of indirect taxes, improvement in the terms of trade, much lower commercial costs, higher international prices, lower external protectionism. Should have a look at what happened during that decade. See whether those parameters have changed, whether we could help expanding some positive trends and stopping negative ones. To explore!

The state of Agriculture now. Policies of different markets
Agricultural Policies in Emerging and Transition Economies 1999 OECD (Organisation for Economic Co-operation and Development).

    An ambitious fiscal consolidation plan was implemented (emphasis on primary sector), plus there was agreement with IMF on lowering of exchange rate (this whole thing about exchange rates seems to be key) -> Capital market rates eased, outflow slowed down quickly in response to these measures. The situation worsened when Brazilian Congress rejected bill which aimed at raising social security contributions of civil servants (step towards fiscal consolidation). I'm not sure yet what this exactly means but it has had a big impact on economy (capital outflow, rising interest rates, big losses in foreign exchange, devaluation of the Real causing import prices to inflate). The study says that the only way to get out of that mess is to make fiscal reforms (reform of federal system, strengthening of government's privatisation plan, reforms of tax and social security system) leading to confidence of investors, less pressure on exchange rate and "virtuous cycle of sustainable, low inflationary growth"). -> need to discuss all this with team 1 to see whether it is relevant for us

    Following up comments from first book, this survey shows that the importance of agriculture relative to the overall economy has been rising throughout the 90s (11% of GDP and 25% of labour force and these numbers do not include upstream and downstream industries). explanation: growth of livestock sector, and bumper crops for coffee and orange juice (?).  Good idea (there is a market for it): production of tropical beverages should increase.

Here are a few facts for each main product of the primary sector. They might help us see how we can consolidate this sector and how land can be used effectively in Brazil:

Cereals:
Maize (2 thirds of grain production in Brazil), soyabeans (70% of production are exported)grown in centre-west region, rice grown in Rio Grande do Sul and centre-west. New dry land rice varieties have been adopted (higher yields, better quality), wheat produced in Parana, Santa CAterina, Rio Grande do Sul
Oilseeds sector dominated by soyabeens (second largest producer). Largely processed domestically (so as to tax exports of soyabeens). Is it the case for other products (it's better to get things processed in country to use labour force and sell at higher price)
Look at climate in different regions and use of land in these regions (in particular,is there free arable land)
Sugar:centre-south, centre-west. about half of cane crop used for sugar production and half for ethanol processing. investment in export infrastructure has boosted export of sugar (in the port of Santos, a concession was given to private companies which invested in sugar terminators, international competiveness has been strengthened). export opportunities in Middle Eastern countries. Proalcool Program: provides 1.4 million jobs and alcohol fuel is less polluting that petroleum fuel, allows generation of electrical energy (through use of biomass), strategic source of energy. That definitely needs to be explored!
Coffee: grown in Minas Gerais, south west region (2 thirds are grown there). Trouble in exporting coffee. There seems to be no significant alternative market. To protect domestic processors, EU has put high import tax
Beef:
markets (good response to EU labelling requirements). Sells beef in EU under a "Brazilian Beef" brand with Federal Inspection Number, place and date of slaughter, age of animal... Import of live cattle. This shows that the better  the production is organised, the most effective it is to conquer markets. Only two states in Brazil are declared foot and mouth disease free (grande do Sul, Santa Catarina), Rise in cattle price of these states.
Pork: export to Russia (decline), stable domestic demand. In 1998, large pork processors have invested about 100 million$ in centre-west and South. States provide financial support  in the form of rebates of state taxes to encourage infrastructure development.  consumption has been boosted by swine breeders and pork processors marketing campaigns. But problem with this sector: retailers take high profit margins(why?).
Poultry: investments slow down. This sector had known a tremendous growth in exports because of access to cheap food for the animals, modern production techniques. Brazil was one of the top poulrty exporters until 1998. But some markets have collapsed. Programs launched by association of producers helped overcome this. These programs often associate another organisation (USDA) with the government. The latter only pays half of the promotion.  By the way, it is interesting to note there is a Brazilian Agency for Export Promotion (it would be interesting to see how they get their funds and what actions they take).
Dairy:large investment in improved herd genetics has boosted the production. There has also been investment in new processing methods which allows the milk to be produced in remote areas and transported economically to urban centers. development of UHT which has become very competitive.

This survey also includes description of developmental policies for the primary sectors. I have summarized them here. I don't know yet if it will be useful but it might help us see how policies can or cannot be effective and what are the things which need to be done to strengthen agriculture in Brazil.

Agricultural policies:
*the minimum price programme:
possibility for farmers to sell their product to the Commission for Production Financing at minimum price if market is not going well. The influence of this programme is declining. This might prove useful during the first year of launching of our model of a sustainable farm.
* market and price policy development:
surplus situation in 1998 in production of sugar-> the government purchased hydrated alcohol so the stocks shifted to public storage. mixing of hydrated alcohol with diesel fuel.
for dairy products and cereals, there have been policies but I don't understand them well enough yet to write them down here and to get inspiration from them. It'll come soon though...
* export promotion policies:
tax exemption for primary products in 1997
export credit programme: government provides interest rates guarantees to commercial banks (they finance export sale) -> Brazilian exporters have access to finance at rates equivalent to those in foreign markets. budget of 50 million $
* rural credit policies:
national rural credit system: loans for production and marketing of agricultural products. relatively low interest rates-> it is a subsidy.
national programme to strengthen family farming
provides credits at subsidised interest rates to small family farmers to finance planting, harvesting, machinery, infrastructures. Ceilings available if we figure we need them for our sustainable farm model.
This fund comes from Minister of Labour (through Worker Support Fund). The administration of this programme is decentralised: municipality level. Committees responsible for monitoring progress of the projects financed. Very important programme and is financing a large number of rural projects.
* land reform policies
special credit programme for agrarian reform:
to address the problem of land distribution (see land ownership ), the government has tried reform policies. Need of credit programme to ease start for new farm households. Half of all resettlements benefited from the programme but, as we know, there have been very few resettlements.
new rural land tax:
tax proportional to size of land and inversely proportional to productivity.Problem with the reporting of the land. Maybe there could be GIS control? (I know, that's expensive)
 

temporary conclusion for this research: The primary sector has grown during last decade due to very diverse strategies. But it seems that the efficiency in production and the exports could progress even more and the stability of this sector could also be  improved. A strong, diversified, well administered primary sector in the non rainforest regions takes pressure off from the rainforest regions. Most producers seem to be domestic. I haven't found figures yet and I don't know whether the retailers are mainly domestic or multinationals. I need to find more about fruit production (orange juice...) and tobacco.  It seems like the big producers are not in the rainforest. Only small farmers are there because they have been expelled from southern regions. Maybe this could be slowed down by keeping the big corporations from taking their land. There seems to be enough land in the southern  and centre-west regions for everybody (I have read that there is still lots of arable land unused). It is probably a logistic problem of distribution of land that can be dealt with in our plan. At this point, a map really becomes necessary to go further in this reflection. I have found maps that show the distribution of the land, the land use ... So now we can use all this information to devise strategies to strengthen the primary sector.