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Brazil - Agriculture Production
Agriculture
When examining the behavior of the agricultural sector in the postwar
years, it is possible to identify two distinct periods: horizontal
(geographical) expansion
from 1949 to 1969 and conservative modernization, from 1970 to the
present. In the immediate postwar years, Brazilian agriculture
included an export sector that relied heavily on coffee but also
on cotton, sugar, and a few minor commodities, and a semisubsistence
sector that produced for the domestic market. At the time, the country's
population, its per capita income, and its urban sector did
not yet impose a large demand on the agricultural sector. With import-substitution
industrialization, however, the situation changed drastically. This
particular industrialization strategy required that the agricultural
sector generate most of the economy's foreign exchange, produce
growing outputs of food and some industrial inputs, and transfer
resources for import-substitution industrialization. The transfer
mechanism was a tax on the foreign exchange earned by coffee exports
and the persistent implicit taxation of agriculture. The virtual
exclusion of many agricultural products from the world market was
caused by the highly overvalued cruzeiro, which resulted from this
strategy. Consequently, the cheap domestic food policy that prevailed
depressed prices in favor of the urban-industrial sector.
Paradoxically, the overall performance of agriculture during the
horizontal expansion period was adequate. Agricultural GDP increased
4.2 percent a year between 1949 and 1969, a considerably higher
growth rate than that of the population; between 1950 and 1959,
food production increased 5.4 percent a year, and the production
of exportables rose 4.1 percent annually. A major factor in this
performance was horizontal expansion, that is, the incorporation
of new land, especially along the agricultural frontier, made possible
by an aggressive policy of road construction (see Frontier Expansion
That Shaped Brazil, ch. 1). Moreover, the disincentives of the import-substitution
industrialization policies were circumvented by maintaining ample
access to land at concessionary terms for the landowning elite and
for commercial farmers, reproducing a pattern established early
in the colonial period.
By the late 1960s, it was clear that horizontal growth of agriculture
was reaching its limits rapidly and that increases in productivity
would be essential for a continued expansion of production. Moreover,
the growth strategy of the military regime required a fast expansion
of exports, including agricultural commodities. Thus, the government
implemented a conservative modernization strategy consisting of
technical change for a restricted number of subsectors and incentives
for the formation of agribusiness complexes.
Technical change involved the development and adaptation of green-revolution
technologies, geared mainly toward large agricultural operations
that had important roles for mechanization and chemical inputs.
Regarding the agribusiness complexes, the government provided strong
incentives for the creation and expansion of processing industries
and for the development and modernization of agricultural input
industries. Moreover, the agricultural phase of the soymeal and
oil, instant coffee, processed beef, poultry, orange juice, and
sugar and alcohol agribusiness complexes received subsidized credit,
guaranteed prices, and tax exemptions and subsidies when exported.
Traditional, unprocessed, agricultural products, however, were subjected
to heavy taxation and to price and other controls. As in the import-substitution
industrialization phase, the production of cheap food was required,
but only recently have government policies begun specifically to
address this need.
Brazilian Products
benefiting from agricultural modernization responded well to the
conservative modernization strategy. Their production methods underwent
considerable technical change, and their production and yields increased
markedly. Traditional products, however, failed to modernize and
tended to perform poorly. They had scant access to credit and to
the price-support policy. Moreover, they were frequently subjected
to price controls, to a maze of regulations and export restrictions
and quotas, and to competition from subsidized imports when they
failed to supply the domestic market adequately.
At the beginning of the 1990s, the main crops in the modern segment
were cocoa, cotton, rice, sugarcane, oranges, corn, soybeans, and
wheat; those in the traditional segment included beans, manioc (cassava),
bananas, peanuts, and coffee (see table 9, Appendix). Brazil is
also one of the largest exporters
of guavas, lemons, mangoes, passion fruit, tangerines, and tobacco.
Crop production between 1970 and 1990 shows that the components
of the modern segment grew considerably, both in production and
in yield, while those of the traditional segment stagnated or declined.
The growth in export crops allowed Brazil to become one of the world's
largest soybean producers and to earn needed foreign exchange. It
also allowed the substitution of sugarcane alcohol for imported
oil.
Data as of April 1997
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